August 1, 2007

Her Excellency Gloria Macapagal Arroyo

President, Republic of the Philippines

Dear Madam President:

First and foremost allow us to commend you for the recent economic achievements of our country under your administration i.e., the spectacular 6.9% growth rate during 1^st Quarter of 2007 which is highest in 17 years, the stock market reaching an all-time high, the peso at 7-year high against the US dollar and the multitude of incoming projects you have mentioned recently in your State of the Nation Address (SONA).

We credit you for those achievements, for your sincerity to exert more efforts to guide our country to progress, to marginalize poverty and provide a better nation to every Filipino.

We are one with you in that cause and we will certainly give our support. We will not allow anyone to stand on the way of your programs.  We will serve as catalysts to your initiatives.  More importantly, we will continue to strive on our jobs in order to provide our nation the much-needed dollar inflow that keeps our country afloat.

We are writing to you to raise one of our concerns that affect the interest of more than 8 million OFWs at the expense of helping our country secure an abundant supply of dollar and improve its balance of payments.

We refer to the rather fast-paced appreciation of the peso which significantly hurt OFWs earnings.

Below are the predicaments posing us serious concern:

§         The climb of the peso from 56 to 45 versus US dollar has caused substantial decrease in our peso-equivalent earnings which can be translated much like to a 20% reduction on salaries.  This reduction certainly hurt our family’s budget and the over-all spending power of OFWs;

§         The extent of this reduction on OFWs spending power caused by decreased remittances is magnified even more by the consequent rising of prices of commodities which ironically should have decreased, if not stabilized due to the strengthening of the peso.  Now, not only our families suffer from decreased budget but also from increased prices;

§         Survey says that the increase in total OFW remittances yearly is due to more and better job offers, better salary packages as a result of increased demand for Filipino workers in foreign countries.  We say, partly it is true but a big chunk of that increase is mainly because we have chosen to cut our personal expenses abroad and employ belt-tightening measures in order to send more dollars so that our remittance can cope up with the lower exchange rate;

§         A lot of us now are becoming constrained to give up our jobs and get back to our country because of the declining peso-equivalent of our remittances.  We are concerned that the prospect of massive flight of OFW back home isn’t sustainable in the long run considering our vast number against the small number of jobs generated yearly.  According to World Bank, nearly half of the country’s population still lives on $2 a day.  We don’t want to put our families back into that category by joining into the millions of job hunters for a meager number of low-paying jobs.

§         In short note, our life abroad and the life of our families back home gets harder with the continuing rise of the peso.  Our families have to manage smaller budget against increased prices and we have to work longer hours and cut expenses to be able to remit more dollars.  Our common goal for a shorter timeline of working away from loved ones has no doubt been lengthened.  With the peso hovering around P44-P45 a dollar, it will now take us longer to achieve our plans of saving to build livelihood, if not impossible.

We are aware that your administration is looking into some measures to control the pace of peso appreciation but we are dismayed not to hear of any measures specifically designed to directly benefit us.  What your administration has only done so far was to circulate news of possible relief in the way of offering investment instruments and some news about putting up an OFW bank or other financial institutions that will service OFWs.

Sadly, all of them have been like old songs played by new singers.  Not one of them even comes close to the relief offered to the exporters of goods where your administration through DBP will put up $1Billion stabilization fund.  Besides, those proposed institutions (OFW Bank, Mutual Fund) if only to be run by the hungry capitalists of our society and not by OFWs, appears more as just another machinery designed to squeeze more dollars out of us rather than as instruments to help improve our earning power.

This is no doubt an uncertain time for the rest of 8 million OFWs and the multitude of our families depending on us for support.  Thus, we humbly appeal to you, Your Excellency Gloria Macapagal Arroyo, for a relief to stabilize our earnings.

Our families have enough to suffer from us being detached from them.  From the fear of letting time and distance tear us apart.  From the fear of us coming home one day defeated.  Do not allow those sufferings be compounded by fear of us losing what we have sacrificed for because our dollar earnings is being dwarfed by an unjustifiably fast-paced and unrestrained peso appreciation.

Madam President, it is our strong belief that your administration can do something to help us.  In this light we are respectfully submitting the following proposal for your sincere consideration: 

Establishment of a “Special Exchange Rate” exclusively for OFWs

We ask for a fixed 10% premium above the exchange rate prevailing in the market or a flat rate of fifty (50) Pesos to one dollar to be given to legitimate OFW.  This premium or flat rate shall be automatically lifted once the Peso reaches to P50-a-dollar.

As to where the government will source the funds, we propose the following:

§         The government to put up a stabilization fund similar to that conceived for the exporter of goods.  After all, we are exporters of labor that brings significant benefits to the economy and unlike exporter of goods; the government spends only very minimal cost on us, if at all.  If government can shell out some funds to benefit exporter of goods, surely they can do the same for more than 8 million OFWs and nearly 25 million family members (voters!) back home (from a ratio of 3 family members to 1 OFW).

§         The government can also enter into a collective “Forward Contract or Currency Options” with financial institutions in order to shield future dollar remittances against sudden unfavorable peso appreciation while taking advantage of exchange rate movement that favors OFWs.

As to how the government will implement this special rate, we are willing to sit into a committee to draft the implementing guidelines or provide inputs in any means we can.  We believe such is a secondary issue and it won’t take bright minds to formulate controls like imposing a monthly limit of convertible foreign currency (which could be the registered monthly salary of OFW or any reasonable amount that an appropriate committee may formulate; example, average family expenses, etc).

We fully understand that this proposition for special rate may entail costs to the government, which could be material.  But it is our position that these costs surely pales in comparison to the benefits we have hauled to the government in the past and the benefits it will get from us in the future.

We also believe that with political will, the issue of mechanics and implementation can be properly addressed by an appropriate committee assembled for such purpose.

Madam President, when you said with courage and conviction in your recent SONA: “From where I sit, I can tell you: a President can always be as strong as she wants to be.”.  We believed you.  We had faith in you.

Please don’t fail that faith.

Yours faithfully, 

OFW Task Force “Special Exchange Rate”