30

In an effort to encourage Filipinos to save

more, the government is starting them
young. Early in August, the Bangko Sentral
ng Pilipinas (BSP) launched the Banking on
the Childrens Future program that aims to
instill the value of saving among children.
Toward that end, the central bank and 12
universal, commercial, and thrift banks
signed a memorandum of agreement to
accept savings accounts for deposits of P100
or less from children.
According to a BusinessWorld report on the
launch, BSP Governor Amando Tetangco Jr.
said the national savings rate remains low,
as he cited BSP data indicating the banking
system had 36.3 deposit accounts worth
A look at factors that impact
savings in the Philippines
By Marishka Noelle M. Cabrera
Why Filipinos
Dont Save
nearly P5 trillion, but also noted that 64%
of those accounts had balances of P5,000 or
less.
For decades, the Philippines has been
battling the perennial problem of low
household savings, which makes Filipinos
exLremeIy vuInerubIe Lo mucroeconomIc
changes.
Results of the 2009 Family Income
und ExpendILures Survey show total
family income at P3.8 trillion, while
expendILures were uL P.z LrIIIIon. ToLuI
savings amounted to P565 billion, or
nearly 15 percent of total income. By way
of comparison, household savings in India
CONTENTS WORLD NATION BUSINESS
Household savings
Chinas and Indias household saving rates continue to rise.
(percent of household disposable income)
Korea
India
China
35
30
25
20
15
10
5
1990 92 94 96 98 2000 02 04 06 08
Sources: CEIC Data; and authors calculations.
31
came up to 32% of household disposable
income in 2008, while Chinas household
savings rate was 28% in 2008, according
to the article Rebalancing Growth in
Asia, in the December 2009 edition of the
International Monetary Fund quarterly
publication Finance and Development.
The chart below, also from the article, notes
not just the two countries high household
savings rates, but also that they continue to
trend upward. (See chart 1)
On the whole, the Philippines overall
savings rate has always been modest,
26.6% of Gross National Income in 2009,
lower than the 27.9% registered in 2008,
according to BSP data from 2001 to 2009.
The Philippines continues to lag
behind fellow ASEAN members.
In the Asian Development Bank (ADB)
report, Philippines: Critical Development
Constraints, data shows that despite
some improvement in recent years, the
Philippines continues to lag behind other
ASEAN members. The Philippines low
domestic savings rate was likely one of the
impediments to the country attaining the
high and sustainable growth rates achieved
by many of its neighbors in the past several
decades, the paper surmised. (See chart 2
on LIe nexL puge)
A low domestic savings rate for a country
means mean less potential for investment in
key areas that can foster overall economic
growth, such as infrastructure and human
capital.
On the other hand, high savings and
IIgI InvesLmenL ruLes cun sIgnIhcunLIy
transform economies, as in the case of
Hong Kong, Indonesia, Japan, Republic of
Korea, Malaysia, Singapore, Taiwan, and
Thailand between 1960 and 1990. The ADB
Economics April 2009 working paper on
Saving, Investment, and Current Account
Surplus in Developing Asia posits that
factors such as sound macroeconomic
policies, limited price distortions, human
capital accumulation, strong civil service
Chart 1
Why Filipinos dont save
CONTENTS WORLD NATION BUSINESS