MANILA -- Remittances from Filipinos working abroad set another record in 2017, but a recent labor policy could partially hold back the rising tide, at least temporarily.
Total cash remittances sent home by overseas Filipino workers rose 4.3% to a record $28.1 billion last year, according to data that Bangko Sentral ng Pilipinas released on Thursday.
BSP, the nation's central bank, had projected growth of 4%.
The 2017 expansion was slower than the 5.04% growth recorded in 2016, partly due to the lingering effects of the oil price slump in prior years that left many Filipinos in the Middle East either jobless or with lower-paying work.
Remittances from the Middle East, where around 2.5 million migrant Filipinos are deployed, rose 3.4% last year, while remittances from the U.S., home to 3.5 million Filipino expats, increased 5.5% despite U.S. President Donald Trump's anti-immigration steps.
The Philippines' Department of Labor and Employment on Feb. 12 ordered a ban on the deployment of Filipino workers to Kuwait and launched a program for 10,000 migrant workers already in the Gulf state to return home.
The day of the announcement, a Philippine Airlines flight bound for Kuwait departed with 30 or so passengers, down from the usual 300. Also on that day, more than 100 Filipino migrant workers arrived in Manila as part of the repatriation program.
The ban and repatriation were President Rodrigo Duterte's response to the death of seven Filipino workers in Kuwait, including that of a domestic helper whose body was found inside the freezer of her employer. Over 250,000 Filipinos work in Kuwait; many of them as maids.
Duterte's moves may have a "temporary" adverse impact on remittances, said Ruben Asuncion, chief economist at Union Bank of the Philippines. But Asuncion does not expect the ban to dent remittance growth for long. "Filipinos always find a way to go somewhere," he said, "and they usually wait or look for opportunities somewhere else."
Duterte is promoting China and Russia as alternative destinations for workers brought home from Kuwait.
Remittances from the Philippines' 10 million expats create a lifeline for the $305-billion Southeast Asian nation's economy. Together with revenue from outsourcing work done in the Philippines, the remittances shore up the central bank's foreign currency reserves and fuel domestic household consumption.
Sustained remittance growth is crucial for the Philippines' current account, which has come under pressure from a widening trade deficit. Duterte's infrastructure drive has played a role in the trade imbalance by triggering more imports of steel and equipment.
Early this week, the Philippine peso touched its weakest level in over 11 years.
The Philippines ranks third in Asia, behind China and India, when it comes to remittance inflows. As such, it has attracted cryptocurrency traders.
Every month in the first half of 2017, an average of $8.8 million worth of Philippines-bound remittances traveled via virtual currencies, particularly bitcoin. In 2015, the average was $2 million a month, according to the BSP.
Despite crackdowns in Indonesia, China and South Korea, the Philippines has kept its door open to cryptocurrencies, arguing that the digital assets can lower the cost of sending cash home.The BSP last year issued licenses to two virtual currency exchanges; it continues to process 12 more applications.
Bloom Solutions, a bitcoin remittance software startup, has seen a growing number of overseas Filipino workers, or OFWs, sending money through bitcoin, according to Luis Buenaventura, the company's chief technology officer.
Bloom Solutions' OFW clients are mostly based in Hong Kong, Singapore and Australia, with individual transactions ranging from $200 to $400. "The growth continues to rise steadily with no marketing effort from us," Buenaventura said. "It's purely word of mouth."