How To Make The OFWs An Economic Powerhouse?

With economic power comes respect. How can we make our OFWs an economic powerhouse? Are we already content that the OFW money sent home has become part of the financial statistics often bannered on news headlines? Can we do more than being a statistical number?

There is a pending Senate Bill aimed at establishing an OFW Bank by collecting money through compulsory contributions from the OFWs through OWWA and use that money to buy and salvage the old, badly managed and losing Postal Bank that has bad assets and bad loans and other questionable liabilities based on the way I understand their 2009 financial report. 

And because it is through OWWA and a Senate Bill which becomes a Republic Act, then that implies that their proposed version of an OFW Bank will just be another government controlled and operated corporation run by government-appointed business managers who were not really known for efficient and profitable management of any government corporation! Tapos idadamay pa ang pera ng OFWs para pang-solve sa problema ng Postal Bank na owned, operated and managed ng government appointees din tapos pag nabili na ng OFWs government appointees din ulit ang magpapatakbo?

I don't subscribe to that idea. The senator may have the best intentions but I don't see the light there for the OFWs, masusunog lang ang pera nila. At ang delikado pa niyan, baka gawing bagsakan pa yan ng housing loans applications from low-cost housing na inaabunuhan ng developer ang pang-monthly amortization for the first year just to get off the 1-year buyback requirement and then no more payments for the succeeding years because di naman talaga pala totoong mga paying buyers yun in the first place, so the bank will be saddled with a huge non-performing loans just like what crippled the NHA program, the SSS/GSIS housing program and even PagIbig Fund housing program before.

And these non-performing loans and assets were sold palugi through the SPAV Law where these bad assets were sold at around 70% discount through SPAV. Ang nakinabang dito ay ang SPAV companies that were mostly owned by foreigners like Lehman Brothers noon, etc...nakinabang because after buying them at 70% discount they sell them back to the Filipinos at present market values!

Why buy an old bank with heavy liabilities (mostly non-performing) when in fact the OFWs can even put up an OFW Commercial Bank very easily in as far as
capitalization is concerned, if only the OFWs will realize that they are actually an economic powerhouse.

You see, based on recent OWWA figures, the documented OFWs in 2009 is already at 1.479M and that population is increasing at 14-15% a year so by simple extrapolation the 2010 figure is at least 1.686 million OFWs already and if everybody will just save P500 per month for just 4 months (say from January to April 2011) the OFWs can raise a total of P3.372 Billion capital which is much much more than enough to put up a big OFW COMMERCIAL BANK that is similar to these big commercial banks in the Philippines. The minimum cash capital requirement for a commercial bank per BSP rules is only P2.4B actually.

Ok I can almost hear people saying napakaliit naman noong P500, so let's make it P1,000 savings per month for 4 months that's P6.744B capitalization! And if that OFW Bank with that cash capital will just earn say 12% a year (which is napakaliit masyado if you compare that to industry average figures among commercial banks) then that gives you P809M more money every year.

What happens when the 1.686M OFWs save P1,000 per month from January to December 2011 that will raise some P20.232 Billion initial capitalization by December 2011, napakalaking bangko po ang kayang itayo ng OFWs with that money and that is a real threat to BPI, Metrobank, BDO, PNB, etc.

Why just P500 or P1,000 a month? Para kayang-kaya makasali ang mga maliliit na OFWs kahit yung pinakamababa ang sweldo para may pagkakataong lumaki ang bawat OFW. Of course I know the doctors and nurses and engineers and caregivers and physical therapists and scientists and field experts and other OFWs who receive bigger salaries will be content to save a mere P500 or P1,000 a month as their future investment to an OFW bank siyempre mas malaki yung kaya nilang itabi. 

So assuming that 30% of our OFWs are in that category and they will save say P5,000 a month instead, that gives us an additional potential capitalization of P24.278B and add that up to your original P20.232B that brings us to P24.3B capitalization by end of December 2011! 

Pag may ganun kalaking bangko pwede ka nang mamili ng mas maliliit na bangko na may maraming branch na kumikita ng maganda dahil pag ganun biglang dami na kaagad ng iyong branches na operational and making money na kaagad. Because it actually takes time to get the BSP approval for additional branches, di yan tulad ng sari-sari store na kung kelan at kung saan mo gustong magtayo ng branch ay pwede dahil sariling desisyon mo lang ang masusunod but with banking it's very different because it is a heavily regulated industry. 

If you are interested with this idea it might be worth your while to invite other OFWs to also check what you have learned from here and encourage them to contribute their ideas here. Some have already contributed a lot of ideas here, and even their apprehensions and doubts.

Malay natin professional banking executive ka pala dyan sa ibang bansa at gusto mo na sanang umuwi, this might be the best opportunity for you. Or if not, at least you can give some inputs on how to put up that OFW Bank. Initial inputs are published and can be viewed here too. At least I was able to show here that capitalization is not an issue. Katumbas lang po yan ng isang araw nyong merienda yan dyan.

Let's go for that OFW Commercial Bank! Mabuhay!