Philippines approves bill to protect OFW remittances

MANILA – The Philippine House of Representatives has approved on final reading two landmark bills aimed at enhancing the financial security of Overseas Filipino Workers, or OFWs, and their families. The provisions target remittance protection and financial education to address long-standing concerns over migrant workers’ supposed exploitation through exorbitant transaction fees and financial mismanagement.

Remittances from migrant workers are vital to the Philippine economy. The proposed laws aim to ensure that the workers’ hard-earned money reaches its intended beneficiaries in full.

Provisions on remittance transactions

The first measure, House Bill 10959, focuses on regulating remittance transactions and prohibiting financial malpractices. The proposal outlines several key prohibited acts to ensure fair practices, including:

1. Misappropriation or conversion of remittances

Individuals or entities found guilty of misappropriating or converting remittances will face penalties.

2. Unauthorised taking of remittances

The legislation bans the unauthorised taking of remittance funds without the sender’s consent.

3. Excessive fees

Remittance service providers are prohibited from charging excessive fees beyond the statutory limits.

4. Failure to display exchange rates

Service providers must display exchange rates clearly for transparency.

5. Failure to consult authorities on fee adjustments

Any fee changes must first be approved by the relevant authorities.

Remittances from overseas Filipino workers to the Philippines have averaged over US$30 billion annually, ranking as the fourth highest in the world after India, Mexico, and China, House Speaker Martin Romualdez said.

This financial lifeline has sustained the local economy for several decades.

“This is one way of showing our unsung heroes, our more than 10 million OFWs across the globe, that we really care for them, and we have the compassion to help them lighten their burden for all their sacrifices, being the breadwinners of their families,” Romualdez said.

Violators will face penalties ranging from PhP50,000 to PhP750,000, and prison terms from six months to six years. The hefty fines aim to prevent the exploitation of workers and protect the integrity of the remittance system.

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Financial education for migrant workers

The second piece of legislation, House Bill 10914, establishes the Free OFW Financial Education Act, which mandates financial literacy training for all OFWs. The training will be integrated into the existing Pre-Departure Orientation Seminars and Post-Arrival Training Seminars, covering key financial topics such as:

• Consumer protection and safeguarding against financial scams
• The protection of collateralised properties
• Avoiding high-interest loans
• Understanding credit transactions and managing debt
• Investment products (stocks, bonds, and mutual funds)

Seafarers will be able to access flexible training options, either at their points of hire or upon returning to the Philippines. Families of OFWs will also have online access to the training, ensuring they are involved in financial planning.

The Free OFW Financial Education Act aims to empower OFWs to make informed financial decisions, avoid predatory practices, and secure their financial future. The training provides workers with essential knowledge on managing their earnings and planning for long-term financial stability.

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Economic and socioeconomic impact

These legislative measures carry substantial importance for both OFWs and the broader Philippine economy:

1) Protecting remittance-dependent families

The proposed laws will help protect millions of Filipino families that depend on remittances for their daily needs, ensuring the integrity of funds sent back home.

2) Empowering OFWs through financial education

With financial literacy, OFWs can avoid exploitation and manage their money effectively, leading to a more secure financial future for themselves and their families.

3) Boosting economic stability

By equipping OFWs with financial management skills, the government ensures their contributions to the Philippine economy are maximised, which benefits both workers and the national economy.

4) Long-term benefits for the country

As OFWs and their families become more financially literate, there could be a reduction in poverty, greater investment in local businesses, and long-term economic benefits for the Philippines.

The new measures provide significant protection for OFWs, who are a crucial part of the Philippine workforce. With stricter remittance regulations and comprehensive financial education, the government is working to secure the financial wellbeing of migrant workers and their families, while also contributing to the long-term stability and growth of the Philippine economy.