During a press briefing on October 11, 2023, Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona said, “There are many interested groups.” considering digital banking licenses in the Philippines. Among them are longtime advocates for overseas Filipinos (OFW contract workers and migrant Filipinos- permanent residents and naturalized or dual citizens).
In 2018, President Rodrigo Roa Duterte (PRRD) inaugurated the Overseas Filipino Bank (OFB) headquarters in Lawton, Manila. PRRD created the OFB as part of his campaign promise but ultimately fell short on the critical issue of bank ownership – overseas Filipinos can attain rights through preferred shares (non-voting, non-convertible), and those shares were not exclusive to overseas Filipinos. Overseas Filipinos were to be represented on the OFB Board of Directors through a presidential appointee selected from the overseas Filipino community. That representative was a pawnshop chain owner whose vested interest eluded the selection process. How can a pawnshop owner be expected to act against his own interest through favorable lending policies, meaning low interest? At the same time, he represented overseas Filipinos on the OFB Board. Even if this board representative were to be altruistic and act out of compassion, there was little hope because he would have been 1 of 9 Board members. Outgunned and outvoted.
PRRD created the OFB from the shell of the moribund Philippine Postal Bank – as with most roads to perdition; this undertaking was entirely of good intentions – at least theoretically. PPRD signed Executive Order 44 in September 2017.
Reliable sources have since expressed shock that certain members of the Board of Directors, including the Overseas Filipino representative, have never been invited to any Board meetings since the inauguration of the OFB. The OFB has remained item ‘600’ in the financial statements of the LandBank, which was tasked to capitalize on the OFB and oversee its transition sufficiently.
Why should the OFB be of any concern to overseas Filipinos (OFW contract workers and migrant Filipinos- permanent residents and naturalized or dual citizens)? There are 10-12 million overseas Filipinos. The Overseas Filipino Bank is a once-in-a-lifetime opportunity for overseas Filipinos and the country.
On May 10, 2016, President Benigno ‘Noynoy’ Aquino signed R.A. 10801, the Overseas Workers Welfare Administration (OWWA) Act, into law. As defined, the OWWA is a national government agency vested with the unique function of developing and implementing welfare programs and services that respond to the needs of its member OFWs and their families. It is endowed with powers to administer a trust fund called the OWWA Fund. Being a chartered institution, the OWWA shall not fall under any of the following categories: government instrumentalities with corporate powers (GICPs), government corporate entities (GCEs), government financial institutions (GFIs), and/or government-owned or controlled corporations (GOCCs). The OWWA shall be an attached agency of the Department of Labor and Employment (DOLE) then and under the new Department of Migrant Workers (DMW) today.
Under Section 6(c) of the OWWA Act, OWWA must provide social and welfare programs and services to member OFWs, including social assistance, education and training, cultural services, financial management, reintegration, and entrepreneurial development services.
The 2020 OWWA Financial Statement ALL FUNDS (latest available) reported a P1.435B deficit. The 2024 DMW budget is P15.54B, about half the requested P29.49B. It is unclear whether the government will eventually restore the coffers of the OWWA Trust Fund to its pre-pandemic balance of around P20B.
The Overseas Filipino Bank had a net loss of P123M in 2021, its paid-up capital down from P2.27B to P860M. As of 2021, OFB has a disappointing total of 62,518 accounts from a potential pool of 10-12 million overseas Filipino customers. P7.22B in 1,011,501 transactions, averaging P715.00 per transaction.
“Will PBBM and the Congress of the Republic of the Philippines have the political will to undertake the necessary executive and legislative reforms? More importantly, will the voters in 2025 be sufficiently discerning to elect candidates who will campaign against these advocacies? “
OFB has existed since 2018; the trends don’t bode well in its fifth year.
Since before its inception, this writer has been among the primary advocates for transitioning the ownership of OFB to overseas Filipinos – contract and migrant. This advocacy is premised on the overarching principle of country development, ergo, poverty alleviation, while simultaneously addressing the looming and often ignored generational existential threat of dwindling, if not vanishing, and untapped connection of the next generations of migrant Filipinos. While the present generation of overseas Filipinos never hesitated to finance family, sometimes even non-blood related friends, and random acts of charity between the gamut of disaster relief to livelihood generation, it is reasonable to believe that the next or future generations of overseas Filipinos will unlikely be as connected or as generous.
Not to oversimplify, overseas cousins are less likely to provide financial assistance to their cousins back in the Philippines, even if their parents were happy to offer the same financial aid to their own brothers and sisters and, by extension, their nephews and nieces. Have you ever had a dinner discussion where your sons or daughters asked if they are as obligated as you, their parents, to provide financial assistance to the children of their cousins? If you have, then you would have a better grasp of this question.
The Overseas Filipino Bank is among the most crucial of many tools that can be employed to address this fated financial generational existential threat. It can potentially attract much more investment than any sovereign wealth fund. The key is ownership of the OFB. If only the political leadership could overcome the suffocating lobby of the vested interests among the society elite and open the playing field of digital banking to overseas Filipinos via the OFB.
And if this concept eludes the brightest minds among the financial team of the government, please read on:
- (a) accept the idea of transitioning OFB ownership to overseas Filipinos (again, both contract and migrant Filipinos) and overcome all regulatory hurdles
- (b) based on the financial impact of the combined bank and cash remittances (around $70B annually, or P3.79Trillion, equivalent to 68% of the national budget of P5.678Trillion) on the Philippine economy, which generates a minimum of P456B annually in Value Added Tax (12% VAT), the Philippine government, as it has granted concessions to other sectors of the economy, should consider transferring ownership of OFB to overseas Filipinos as a grant (P2.72B as of December 2021 OFB paid-up capital from the LandBank)
- (c) transfer the OWWA Trust Fund and/or AKSYON Fund to OFB as a depository bank
- (d) allow overseas Filipinos to accrue common shares (voting shares) of OFB based on their contributions to the OWWA Trust Fund in the case of contract workers and account activity for both contract and migrant Filipinos in addition to or instead of account rewards based on average account balances or purchases through an OFB-issued credit/debit card, remittances, loans, direct deposit, bill payments, credit card use, etc.
- (e) amend both Executive Order 44 and R.A. 10801 to allow these changes. Ownership, through account activity or outright purchase of common shares, will be the critical factor for broader acceptance of the OFB. By amending PRRD’s Executive Order 44, President BongBong Marcos can revise the composition of the OFB Board of Directors (BOD) to the majority of overseas Filipinos by reallocating the 6 LandBank seats or adding seven seats for overseas Filipinos, allowing overseas Filipinos to have the majority in the BOD of OFB, appointed by the President from a list of recommendations from accredited overseas Filipinos groups or associations – (1) land-based workers (3) sea-based workers (3) retired contract workers (4) women overseas workers or those with disabilities (5-7) migrant overseas Filipinos (permanent resident, naturalized or dual citizen Filipino).
“Rest assured – the question will be asked of those candidates, and their responses will be made known. In the end, will we, the overseas Filipinos, register and vote, then even try to influence our family and friends abroad and in the Philippines to vote accordingly?”
The Overseas Filipino Bank, as envisioned here, will attract any number of the 10-12 million migrant Filipinos, including the 2 million contract workers. With ownership, overseas Filipinos will guarantee the viability of their own bank. With profits, the Overseas Filipino Bank will invest and market to its own ownership base. The possibilities are endless. The impact on the Philippine economy is immeasurable. Most importantly, the next generations of overseas Filipinos and their descendants will retain their economic ties to the homeland where their financial interests shall be planted, and that harvest be shared with countless Filipinos, buttressing their limitless prosperity.
A reality check. “I am for taxing the rich, but given the present composition of the Philippine Congress, I’d rather engage in more fruitful endeavors,” said Finance Secretary Benjamin Diokno. Do these honest words apply to the long-winded aforementioned advocacy above?
Will PBBM and the Congress of the Republic of the Philippines have the political will to undertake the necessary executive and legislative reforms? More importantly, will the voters in 2025 be sufficiently discerning to elect candidates who will campaign against these advocacies? Rest assured – the question will be asked of those candidates, and their responses will be made known. In the end, will we, the overseas Filipinos, register and vote, then even try to influence our family and friends abroad and in the Philippines to vote accordingly?
ABOUT THE AUTHOR: Dr. Crispin Fernandez advocates for overseas Filipinos, public health, transformative political change, and patriotic economics. He is also a community organizer, leader, and freelance writer.
