Charges on money sent by overseas Filipinos from 14 major remittance-sending countries teeter to meeting the 3% target set by the 2030 Sustainable Development Goals (SDGs).
Latest data from the World Bank’s quarterly Remittance Prices Database (first quarter of 2024) show that average remittance charges range from 1.8 to 4.6% if low-to-high end usual remittances are transferred.
Indicator 10.c.1 of the United Nations SDGs shows that the transaction costs for migrant remittances should reach below 3% by 2030 if migrants send US$200 or its local currency equivalent.
The other part of indicator 10.c.1 adds that the SDG target is to eliminate remittance corridor charges (i.e., from one remittance-sending country to one remittance-receiving country) of 5% and above.
The first component is that transaction costs for migrant remittances should be 3% or less by 2030. This transaction cost should be intended as “Global average total cost of sending $200 (or equivalent in local sending currency) and expressed as % of amount sent”.
This indicator is readily available and published on a quarterly basis by the World Bank in the Remittance Prices Worldwide database, which covers 365 country corridors, from 48 sending to 105 receiving countries. The second component is to eliminate corridor where cost is 5% or higher.
These rates are significantly lower than the first-determined average remittance fees by banks and money transfer organizations (MTOs) when the World Bank first surveyed charges from 11 countries at least 16 years ago, and at least from eight years ago in three other countries.
Remittance-sending countries to the Philippines surveyed by the World Bank are Australia, Canada, Italy, Japan, Kuwait, Malaysia, New Zealand, Qatar, Saudi Arabia, Singapore, Spain, United Arab Emirates, United Kingdom and the United States.
Among the low-end average remittance amounts sent by these countries, the lowest average remittance charges was seen in Kuwait at 2.29% of the principal (65 KUW Dinar or P11,860). Kuwait is some 7,797 kms from the Philippines.
On the low-end of charges also, the most expensive remittance charges on average was seen in Japan at 5.93% when money sent is some 17,000 Japanese yen (P6,601) on average. Japan is some 3,070 kms from the Philippines.
Not surprisingly, when migrants send their average remittance amounts, the charges or fees are lower. And among the 14 countries surveyed, Kuwait again charges the lowest on average (1.2% for every KD150 sent [P27,369], or some KD1.8).
On the high-end principal amounts sent, Japan again charges the highest on average (3.68% for every Y42,000 [P16,303]).
In the second quarter of 2016, the World Bank conducted a survey on remittance services in Kuwait, finding that the average charges for sending money ranged from 2.75% for a transfer of KD65 to 1.62% for sending KD150.
When the World Bank first surveyed the remittance industry in Japan during the second quarter of 2008, average remittance charges range from 12.41% (wiring Y17,000) to 8.51% (remitting Y52,000).
Current remittance charges for low-end usual remittances sent by Filipino migrants to the Philippines fall on the following averages as of the latest World Bank data:
- 3.4% in Australia (AU$200, charging AU$6.8);
- 4.6% in Canada (CAN$200, charging CAN$9.2);
- 3.29% in Italy (€140, or €4.6 in charges);
- 3.41% in Malaysia (MYR610 or MYR20.8 in charges);
- 5.53% in New Zealand (NZ$260 or NZ$14.4 in charges);
- 3.39% in Qatar (QD730, or charges worth QD24.7);
- 3.96% in Saudi Arabia (SD750, charging SD29.7);
- 3.22% in Singapore (SG$260 or SG$8.4 in charges);
- 2.96% in Spain (€140, or €4.1);
- 2.85% in the United Arab Emirates (AED735 or charges worth AED20.9)
- 3.86% in the United Kingdom (£120, or charges worth £4.6); and
- 4.42% in the United States (US$200 or charges amounting to US$8.84).
In the same 14 countries surveyed by the World Bank for Philippine-directed remittances, 11 of them charge on average below 3%.
Nevertheless, all the average charges for remittances to the Philippines fall below the global average of 6.35% as per the Remittance Prices Database.
A September event by the World Trade Organization in Geneva, Switzerland saw WTO deputy director general Xiangchen Zhang call for further reductions to remittance costs to developing countries.
“We need to collaborate with other (international organizations) and banks. We need more discussions, collaborations, technical assistance, transparency and digital technology to help developing countries reduce remittance costs,” Zhang said in a Philippine Star report.
The United Nations said a reduction in remittance costs may raise the disposable income of remittance-receiving families worldwide by about $20 billion annually.
Cash remittances to the Philippines have recovered since a slight year-on-year reduction (some 0.75%) happened in 2020. Given the historic high of US$33.49 billion of cash remittances in 2023, the Philippine financial system has received US$528.934 billion in cash remittances from 1975 to 2023 (say data from the Bangko Sentral ng Pilipinas).
The remittance channels the World Bank surveyed includes banks and money transfer organizations in the migrant destination country.
Jeremaiah M. Opiniano is from the OFW Journalism Consortium, a nonprofit news service writing stories on overseas Filipinos and the country’s migration phenomenon.
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