The Interview continues:
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QUESTION:
To you, what are the implications of the emerging middle class from OFW families? Would this affect the way companies do business? How the financial sector will package their products? Will this impact on universities, consumer companies, and others?
RESPONSE:
The positive implications of OFW’s as the emerging middle class is already very much evident in the hyperactive realty and property sector plus all the shopping that you see. We have so many property/condominium developments focused on OFW’s because these are the only sector at the moment that can afford to pay the prices of these real estates (no offense to those middle/upper class in the Philippines). You’d see these real estate companies do a lot of tradeshows in the US, Europe, the Middle East and Australia. This impacts the GDP because there is a demand for construction materials, building materials and so the economy is ignited. This is like a ferries wheel where one sector gets ignited and the other one moves. Thus in terms of economic activity, certainly the resources flowing from the OFW’s created the magic.
I’m not very knowledgeable as to how the Philippine Financial market has reacted to the OFW’s newfound income as compared to let’s say the real estate market where they are very active with the OFW’s. However, the financial market certainly could redesign their strategy, refocus their products and design it in such a way that they could capture a certain percentage of the almost $12 billion market. I mean, I’m sure they must have done this already. I just don’t know what programs they have at the moment.
One thing that they can do is offer an online trading where OFW’s can invest similar to let’s say eTrade. Or is there one, right now? I just don’t have any idea.
Now on the education side, I believe that schools and universities have a lot to gain from OFW. Remember my response on question number 1 ? it’s not just being in the middle class, it’s all about consistently being one by being able to sustain that of being a middle class. There’s certainly two things that universities can do:
a.) Offer training courses and classes to improve OFW’s skills. My problem with this one is that it still focuses on sending the OFW abroad and not helping him stay in the Philippines.
b.) Offer savings, investments and entrepreneurial courses to OFW’s and assist them to firmly get a foothold in the Philippines so they can stay here. I think, this is the better proposition that I would agree on.
In other words, this a $12 billion business opportunity that’s up for grabs and if the business sector, the financial sector, schools and universities, the consumer market don’t grab this opportunity to help OFW’s better their lives in the Philippines, it would be a mind boggling lost opportunity.
But the bigger question becomes, these investments in real estate driven by OFW’s income, could this be sustained in the future when peso is appreciating and the OFW’s earnings are essentially decreasing? Are we creating a fake housing boom?
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{ 1 comment… read it below or add one }
I think the Government is really warped. Remittances are a huge deal, but I don’t think they should shift their focus strictly to OFW’s. What about creating opportunity at home? Sending skilled workers for years at a time away from their families is not the norm. OFW’s are not a natural phenomena. It’s a byproduct of failed governmental policies and the pseudo-oligarchy that has risen after Marcos fell. Right now, most of the wealth is still concentrated on the very few. For a true middle class to emerge, the rich will have to give up some of their land, money, and power. The ever-resourceful Filipino has had to look to faraway lands just to feed his family.
As far as investments, I think most Filipinos invest into tangible things ie, house, land, jewelry, small businesses. I think the general distrust of the Philippine Stock Exchange is really what’s keeping investments from doing as well as their other Asian counterparts. Let’s face it. Insider trading runs amock in the Exchange and to partake it’s advisable that one should be a member of the Makati Business Club. It’s all about trust. Will you trust your money to a trader in the Exchange? Do you feel that the exchange is trustworthy enough that you can sink a lifetime of savings in there? I think not. Also, the political stability affects the Exchange, more so than any other country. Another EDSA Revolution will send it tumbling.
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