If these remittances had been converted into pesos of purchasing power, consumer markets would have boomed in 2005. But there has been widespread reporting of declining sales of most consumer products such as food and beverage, personal care and pharmaceutical products, and home appliances. Only certain types of real estate products have enjoyed brisk sales in the last quarter of 2005.

Where have all the remittances gone? A research on the consumer behavior of relatives of overseas workers is being undertaken by some industrial economists at the University of Asia and the Pacific. Most research findings on this topic — including those cited by publications of the International Monetary Fund and the Asian Development Bank — are at the macroeconomic or aggregative level. Until more micro data are available, it is prudent to suspend judgment about the overall benefits of OFW remittances to the economy. I question some of the sweeping generalizations about the unproductive use of remittances by the OFWs and their relatives.

Until the consumer behavior research is completed, I can only surmise from anecdotical information I have gathered by talking to retailers, local officials, NGO workers, bankers, educators and economists on their perceptions of the use of OFW remittances.

Contrary to statements attributed to some international agencies, a large portion of OFW remittances is spent on education, an item that, as the bankrupt educational plan companies have realized, has become much more expensive with skyrocketing tuition fees and other related costs. In fact, most overseas workers go abroad with the intention of financing the education of children or siblings. Especially if these OFWs have in mind that their children and other relatives should follow their example of trying their luck abroad in the future, they would be keen in providing them assistance to reach the highest level of education possible to maximize their earnings when they go abroad in such more knowledge-intensive careers as medicine, nursing, physical therapy, IT, accounting, teaching, etc.

This high priority given to education may explain why, despite the record amounts of remittances in 2005, consumer markets were generally weak. As an anecdotical evidence here, an entrepreneurial nephew of mine—Michael Arcenas—who operates over 20 Nike Palace outlets all over the country—told me that their Tutuban store, that used to rake in big volumes of sales from even D and E households, had to be closed down in 2005 because of poor sales. An explanation I can give here is that many households receiving foreign exchange remittances have decided to save their money to be able to pay for the tuition fees and other education expenses of their children, especially considering the widespread failure of college assurance plans.

Another expenditure that is easy to monitor is that on housing. As can be verified by anyone who travels to the provinces from which OFWs predominantly come, significant amounts of OFW remittances are spent on building homes. I have seen these houses — some appearing like mansions—in many towns of Ilocos Norte, Pangasinan, Batangas (especially the famous town of Mabini), Iloilo, Laguna, Cavite and even more remote places like Siquijor Island in Central Visayas. The construction of these houses employed workers from the community and pump primed the local economy through the purchases of construction materials. I wouldn’t consider them as totally unproductive. In fact, a good number of them can be converted into bed-andbreakfast facilities for domestic and foreign tourists, especially in those provinces still lacking hotel facilities.

Much can be done by NGOs, trade chambers and educational institutions to train some of the relatives of the OFWs and even the OFWs themselves (seamen usually spend three full months every year in the Philippines) for micro-entrepreneurship so that they can expand the possibilities of the business ventures in which they can invest part of their savings. But even now, for lack of training, most of their investments are in low-risk ventures like jeepneys or tricycles and sari-sari stores. Although returns on these traditional small businesses are small, I do not think that there is a high rate of business failures.

Although I share the concern about the social cost of fathers and/or mothers leaving their homes to work abroad, it must be pointed out that more than fifty percent of the women who go abroad for work are single and generally do not have children left behind. Some of these single women may face other problems like exploitation, requiring protection from both governments of the Philippines and the host countries.

A final word about where the more than US billion went. It is highly possible that the OFWs and other relatives are sophisticated enough to know that the strength of the peso is temporary. Like a number of the more realistic analysts, they are convinced the peso will go back to levels of P55 or higher by the first quarter of 2006. They, therefore, decided to hold on to their dollars, Euros, or yens in expectation of a depreciation of the peso. This may be good news for some business establishments who complained about weak sales in the last quarter of 2005. Christmas for them may still come in February once the relatives of the OFWs start converting their foreign exchange into a depreciated peso. A weaker peso may also encourage exporters who still have to suffer from poor infrastructures and high energy costs. For comments, my email is bvillegas@uap.edu.ph.