Why OFWs have a hard time saving | ABS-CBN News
This is the first of a two-part feature by Pru Life UK on the challenges overseas Filipino workers face when it comes to saving, and tips on how they can become more prudent with their finances.
MANILA, Philippines – The overseas Filipinos worker (OFW) has long been heralded as the country’s new breed of heroes, and with good reason to do so. It takes strength, determination and a drive to have a better life for your families in order to survive working long hours in a foreign land – away from your family, friends and basically everything that you work for.
OFWs have also been cited as being major contributors to the Philippine economy for 2012. According to the Bangko Sentral ng Pilipinas (BSP), remittances from OFWs will grow further this year, and the government does not expect a drop in the demand for workers abroad real soon. For 2011, the Philippines was the fourth-largest remittance receiving country, with only India, China and Mexico topping the country in that category.
But on a more personal level, what should be ensured is that the sacrifices of these OFWs do not go to waste? Ideally, these overseas workers are working in order to give their families better lives – that implies having enough money to send their children to school, pay for their household expenses back at home while also having enough in their pockets to sustain their daily living in the foreign land they are in.
In the end, OFWs should have enough savings to invest and start a new life with when they go home.
“OFWs leave the country for the promise of financial stability in the short and long term. The financial goal should be that: stability for the future,” said Pru Life UK Senior Vice President and Chief Marketing Officer Belle Tiongco.
“Stability is possible if you have enough funds for both aspirations (education, your own house or business) and unknowns (illnesses, accidents and other catastrophic events).”
The challenge of saving
The Philippines is not a savings-oriented country, according to Pru Life UK President and CEO Antonio de Rosas, and this financial behavior is something that most OFWs will have to combat.
“Our country’s savings rate is one of the lowest in Asian region, and this is mostly due to a lack of financial literacy,” he said.
There are three main reasons why OFWs have a hard time saving:
Debt
A big number of the OFWs are already in debt even before they leave the country. Most manpower agencies would require the OFW to pay for their placement fees which will usually take them about two years to settle.
Overspending
Since they live away from their families, OFWs tend to compensate for lost time by buying things for their family they don’t really need. De Rosas said: “since the breadwinner is not at home to manage the expenses, their families tend to just spend the allowance being given to them on a monthly basis without proper budgeting.”
Cost of living abroad
What the OFW needs on a daily basis in the country where he or she is domiciled may cost more. This could also be a big hindrance to what they can save if they are not careful.
DMCI-Marubeni bags $1.1-billion MRT-7 project
MANILA, Philippines – DM Consunji Inc. (DMCI), a wholly-owned subsidiary of DMCI Holdings Inc. and Japan’s Marubeni Corp., have signed a contract for the engineering, procurement, construction and commissioning of the Metro Rail Transit System of the MRT-7 project with Universal LRT Corp. (BVI) Ltd. for $1.1 billion.
The Marubeni-DMCI consortium will execute and warrant the works for the 22-kilometer rail system which starts from San Jose del Monte, Bulacan and ends at the integrated MRT Line 3- MRT Line 7 station at North Avenue, EDSA in Quezon City, with combined elevated and at-grade guideway sections for a period of 42 months.
Company officials said this infrastructure project will further address the transportation needs of the riding public and alleviate traffic in Metro Manila, particularly traffic going to and coming from Northern Luzon.
It was earlier reported that diversifying conglomerate San Miguel Corp. (SMC) has signed a memorandum of understanding with the controlling owner of MRT-7 for the acquisition of a majority stake in the railway project.
SMC president Ramon Ang earlier told The STAR that an MOU has already been entered into with businessman Salvador “Buddy” Zamora III, who owns 63 percent of Universal LRT Corp. (ULC), which, in turn, wholly owns the MRT-7 project, whereby Zamora will sell his majority interest in ULC to SMC.
Zamora acquired majority control of the ULC consortium in 2008 from its original proponent, Israeli businessman Eli Levin.
Ang also revealed that they are also exploring possible investment in a light rail transit project in Cebu, as well as other projects in Cagayan de Oro, Davao and Iloilo.
The STAR earlier reported that SMC is interested in building a bullet train railway that will run the Laoag-Manila-Bicol route. Ang said they have commissioned a group that includes international companies with experience in bullet trains to study the possibility of building a bullet train railway that will run from the north to the south end of Luzon.
Meanwhile, when asked how much the 63 percent stake in ULC would cost and when the actual sale will be made, Ang said SMC is still undertaking due diligence work.
MRT 7 is a build-“gradual transfer”-operate, maintain and manage project for the development, financing, operation and maintenance of a 22-kilometer light rail transit route that extends from the MRT Line 3’s North Edsa terminal to San Jose del Monte, Bulacan.
ULC earlier said that it has tapped Morgan Stanley as its financial advisor to raise equity and debt needed to finance the construction of the project.
ULC vice-chairman Roberto de Ocampo said that while it is true that Morgan Stanley has approached SMC to be part of the project, there are other interested parties who are also in talks with the financial advisor.
In response, a source from SMC said Zamora may just have failed to inform De Ocampo that an agreement has already been reached between SMC and Zamora.
Earlier, SMC said it has been offered a majority interest in MRT 7 and that the company is negotiating with the members of the consortium of the project. There were reports that SMC was already in the “advanced stages of negotiation” to take control of ULC, the consortium tasked to build the MRT 7 project.
Aside from Zamora, other stakeholders in ULC include the SM Group of Companies, which plans to put up a mall in San Jose del Monte, Bulacan that will have an access to the MRT 7 line.
SMC has been expanding from its core food and beverage business and into heavy industry such as power, infrastructure and telecommunications to fuel faster future growth.
The MRT 7 project involves the construction of a 22-km light rail transit system carrying at least half a million passengers a day.
The project also includes an intermodal transport terminal—a transportation hub for buses and other forms of public conveyances—in San Jose del Monte, as well as a 22-km, six-lane feeder highway from the northern end of the line to Bocaue, Bulacan. This highway will link the intermodal terminal to the North Luzon Expressway.
As envisioned by the proponents, the rail component of MRT 7 project will initially operate 108 rail cars in a three-car train configuration. Initial capacity is projected at 448,000 passengers a day, but will eventually be expanded to accommodate as many as 850,000 passengers daily.
The rail line will have 14 stations, namely: North EDSA, Quezon Memorial Circle, University Avenue, Tandang Sora, Don Antonio, Batasan, Manggahan, Doña Carmen, Regalado, Mindanao Avenue, Quirino, Sacred Heart, Tala and Araneta San Jose Del Monte.
The intermodal terminal, on the other hand, will be able to accommodate 60 buses and will also feature passenger facilities and amenities.
The entire project is expected to be fully completed in 42 months, although parts of it may be made operational in phases.
Once completed, ULC will operate and maintain the rail service, the intermodal terminal and the highway for a period of 25 years. The government will get a 30-percent share of net passenger revenues and a 20-percent share of other earnings.
The rail and road network is expected to cost as much as $1.3 billion, while the commercial and residential developments that are expected to rise along the route would cost another $2 billion.
World Bank extends $275-million loan for wastewater management
MANILA, Philippines – The Philippines has been included in the roster of the so-called Next 11 Emerging Markets but has lagged behind other countries in terms of investments, according to PhilDev trustee Winston Damarillo.
PhilDev (formerly Ayala Foundation USA) is a public charity registered with the United States Internal Revenue Service (IRS) as a tax-exempt organization composed of Filipinos and Filipinos-based overseas. Its focus is on building “an ecosystem of science and technology-based enterpreneurship and innovation for social and economic development of the Philippines.”
Diosdado Banatao is PhilDev’s chairman, Fernando Zobel de Ayala is vice chairman, while Damarillo is a trustee and a member of the World Economic Forum (WEF).
Damarillo said the members of the Next 11 Emerging Markets are Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, South Korea, the Philippines, Turkey and Vietnam. They follow the BRIC nations consisting of Brazil, Russia, India and China.
The PhilDev trustee said that since 2003, two-thirds of foreign investments in infrastructure have gone to Vietnam, and the Philippines was getting “change” compared to the amount of trade investments coming into Asia and the rest of the Asean nations.
Damarillo, quoting WEF data, said that one of the major reasons for the lack of trade investments is the lack of power or inexpensive power sources. The Philippines is a net importer of crude and coal.
Yet the rest of the Asean has increasingly tapped renewable energy (RE) sources. In fact, Asean as a group is the leader in cheap and sustainable RE.
The Philippines is the second largest user of geothermal power and has the potential to develop RE, especially biomass-sourced power. The Asean nations are also a net importer of oil but a natural gas exporter.
“It is estimated that the Asean will be increasing the use of hydro energy sources from a little over 12 percent in 2008 to nearly 15 percent by 2035. In the same time frame, it will likewise outpace the rest of the world in the use of geothermal, marine, biomass, solar, and wind as energy sources,” Demarillo said.
Damarillo, who is the chief executive officer of MorphLabs (California), noted that the Asean bloc consumes more food than it produces, and that it was forecast that potable water needs will outpace energy demand in Asia.
