1

Feasibility Study for OFWs Financial Welfare

Adriana C. Aquino

Cedric James B. Ferido

Christine Ann Grace C. Velez

Hannah A. Recto

Jeanell G. Relumen

Mark Shayne P. Bueza

Reamark D. Margarito

Robert Neo C. Dela Cruz

Stephanie M. Changwayan

Vergel Ian G. Pagalunan

STI COLLEGE TANAY

General Mathematics

Mrs. Shaina Mae D. Iposada

October, 2023
 2

Table of Contents

Title Page……………………………………………………………………………………1

Table of Contents……………………………………………………………………………2

Introduction………………………………………………………………………………….3

Background………………………………………………………………………………….3

Objectives……………………………………………………………………………………5

Market Analysis……………………………………………………………………………...5

a. PSBank…………………………………………………………………………...6

b. BPI……………………………………………………………………………….10

c. PNB………………………………………………………………………………15

Recommendation…………………………………………………………………………….18

Conclusion……………………………………………………………………………………19

References……………………………………………………………………………………20
 3

Introduction

Money is the biggest requirement needed when working abroad hence, most Overseas

Filipino Workers (OFW) lean on bank loans to support their travel. OFWs leave the country

to support their household, to give them a more comfortable life, and provide necessities for

them. When working abroad, you are obligated to carry the responsibilities of providing to

your family. Not only that, but the expenses you will have to use abroad. Filipinos are known

for their courage, hard work, and generosity; therefore, they cannot disagree when friends or

neighbors asked for financial assistance. Because of this, aside from their income, most

OFWs lean on to banks that offer nice loans to finance their household. This study seeks to

find lending companies with favorable terms and condition to OFWs. Aside from that, this

research will give OFWs the best advice in which lending company is the best to lend or

invest money, in order for them to optimize the returns and still provide to their loved ones.

Background

As we all know, the Philippines is known for having a large number of Filipino

workers working overseas, and the most common reason is economic issues. For more than

40 years, the Philippine government has promoted and aided foreign labour migration. As

family members and acquaintances are dispersed across numerous cities and nations,

migrants and non-migrants alike are enmeshed in multifaceted transnational lifestyles.

Discriminatory labour markets make it difficult to transmit cultural capital across borders. In

the aftermath of their homecoming, migrants have acquired symbolic capital. (Christ, 2020).

Due to its recent rapid rise and apparent connections to development objectives, global labour

mobility has drawn attention. The Philippines has one of the highest rates of migration out of

the 197 nations in the globe. (Garcia et al., 2022). CNN Philippines reported that the
 4

department estimates that by 2023, the total number of deployed OFWs will have surpassed

two million, returning to pre-pandemic levels.

According to a study of Ma. Divina Gracia Roldan (2022) in order to solve internal

issues including unemployment and a shortage of dollar reserves, the Philippine government

has maintained a policy of exporting Filipino workers abroad since the 1970s. The Philippine

Development Plan now includes provisions for the country's labor export strategy, which has

evolved over time to include measures to ensure the welfare of migrant workers at home.

strange. In order to keep the economy afloat, the nation has continued to rely on remittances

sent home by overseas Filipino workers (OFWs). For its citizens, the Philippines has few

high-paying occupations and little prospects. These factors frequently encourage Filipino

workers, including nurses, doctors, and engineers, to seek employment abroad. On the other

hand, when Filipinos work overseas, they not only benefit their own families but also their

nation through the remittances they send, which in turn assist to reduce poverty in the country

as a whole and strengthen the Philippine economy (Philippine Daily Inquirer, 2019). As a

result, Filipinos who labour as foreign employees abroad are hailed as modern-day heroes.

(Astudillo III, 2022)

Moreover, aside from a greater wage, the most frequent and straightforward reasons

why OFWs prefer to work abroad are to send their kids to school, to have minor homes or

investments, and to work in a more favourable environment. As a result, many of them live

luxurious lives, owning three-story homes, vast farms, automobiles, the newest technology,

sending their kids to pricey private schools, and much more. However, before realizing their

aspirations, the money they invested in it had them work hard, be patient, and face

difficulties. (Bautista, et al., 2020) Over 153,000 OFWs have had to return home as a result
 5

of the COVID-19 epidemic halting a sizable chunk of the world economy (Mercere, 2020).

OFW remittances decreased by a total of USD 840 million (PHP 42 billion) from March to

June 2020 compared to the same period in 2019, according to Bangko Sentral ng Pilipinas

(2020) statistics from August. The repatriation of OFWs, who are viewed as both a resource

and a problem, has drawn the attention of the Philippine government in recent years, which

has prioritized reintegration programmes for them. (Banta, et al., 2021) In an effort to

streamline and improve the ease and comfort of doing business, the Philippine government

supports and pushes financial inclusion and digitization programmes, which intensifies

competition among FinTech firms. (Ngo, 2023). The researchers contend that the primary

step in resolving the issue is to provide the OFWs with the best advice on where to lend or

invest money. OFWs might escape the debt cycle that could affect the success or failure of

their international career with the help of the suitable lending institutions.

Objectives

Conduct an investigation into lending organizations, investment possibilities, and

terms provided by each; present the findings to a panel made up of officers from the

Department of Labor and Employment (DOLE) and the Overseas Workers Welfare

Administration (OWWA); and be able to suggest wise places for OFWs to put their money to

work or lend it out.

Market Analysis

There are numerous banks in the Philippines that offer great assistance to our OFWs.

The researchers were able to gather the data for all three (3) lending businesses after
 6

acquiring information. Here are the Philippine lending companies that provide our OFWs

with great assistance:

PSBank

The Philippine Savings Bank, also known as PSBank, opened its first branch on

September 26, 1960, in the heart of the historic Plaza Miranda in Quiapo, Manila. In the

Philippines, PSBank was the very first bank to offer Monday-Saturday banking, an online

electronic data system, banking by mail, and extended banking hours. This bank also offers

high-quality services, accessibility, and convenience, making it known as "The Friendly

Bank". The country's largest bank, Metropolitan Bank and Trust Company, bought the

majority of PSBank's shares in 1981, which helped the bank narrow its focus and expand by

enabling it to better serve its clients. Furthermore, the Monetary Board of the Bangko Sentral

ng Pilipinas authorized the Philippine Savings Bank (PSBank) in 1991 to carry out trust

banking duties, granting them years later a quasi-banking license. In the same year, PSBank

also became the country's first publicly traded savings bank.

In addition, PSBank continues its efforts to become the preferred consumer and retail

bank in the nation by developing new services and products to meet customer needs. The

Philippine Savings Bank continues to increase its branch and ATM network, with

approximately 500 in-branch and off-site ATMs and 250 branches as of today. The said bank

is also enhancing its online presence through the PSBank Online and PSBank Mobile apps,

which let users conduct real-time financial transactions using their own devices. Moreover,

PSBank increased its return on equity by increasing its net income for the first half of 2023

by 18% to PHP 2.17 billion from the same period in the previous year. As PSBank's
 7

productivity trend continues to rise, its foundation for providing excellent customer

experiences will become even more solid.

Types of loans offered by PSBank:

 PSBank Home Loan with Prime Rebate

OFWs can make their dreams of owning a home, buying a house and lot, a

condominium unit or residential lot, or a townhouse a reality by using PSBanks's quick loan

approval, practical housing loan conditions, and many other features.

 PSBank Home Credit Line

OFWs can broaden the use of their home by using this type of loan as collateral to

finance the renovation of their home. This type of loan offers flexible terms, low interest

rates, revolving credit lines, and easy payment options.

 PSBank Home Construction Loan

Each individual wants to create their home to suit their unique likes and preferences.

OFWs can remodel or build their own home more easily with a PSBank Home Construction

Loan since it has flexible terms, including the opportunity to defer the principle payment for

the first year and save on interest, a revolving credit line, and easy methods of payment.

 PSBank Auto Loan with Prime Rebate

The loan's flexible payment options, low interest rates, and 24-hour credit decisions

through SMS make it possible for OFWs to achieve their dream of owning a car. By paying
 8

their monthly obligations in advance or in excess, OFWs may be able to receive discounts on

their loans, reducing the total amount owed and cutting the loan's term.

 PSBank SME Business Credit Line

If an OFW has their own grocery store, this loan works best for financial needs to

increase working capital, stock inventory, and many more. The OFWs can expand their

enterprises with the aid of this kind of loan. It offers easy access, short-term borrowing

flexibility, convenience of availment, and interest charge savings. OFWs can apply for this

loan by submitting a completely completed and signed Statement of Assets and Liabilities,

Business Loan Application Form, two legitimate IDs, and further business registration

documents.

 PSBank Flexi Personal Loan with Prime Rebate

This is the first and only collateral-free personal loan product that combines a fixed-

term loan with a revolving credit line. Depending on how much has been paid back, a

person's borrowing capacity goes down or up. On a transaction-by-transaction basis, OFWs

may select any loan choice.

PSBank Flexi Personal Loan features:

 Revolving credit line and fixed term loan.

 Flexible loan amount of PHP 20,000 to PHP 250,000

 Loan tenors from 24 or 36 months.

 In a transaction involving a fixed-term loan, the borrower makes fixed payments over a

predetermined time.
 9

 2.5% monthly interest rate for the Revolving Loan

 1.75% monthly add-on-rate for Term Loan

 Effective Interest Rate P.A. of 34.49% for 12 months.

 Effective Interest Rate P.A. of 42.88% for 24 months.

 Effective Interest Rate P.A. of 41.29% for 36 months.

Eligibility:

 Residents of the Philippines who are Filipino

 22 to 54 years old at the time of application

 If employed, at least two years of continuous employment, including one year with the

same company.

 If running a business, it must have been profitable for the previous three years.

 A minimum monthly income of at least PhP15,000 for employed and PhP30,000 for self-

employed.

 An active credit cardholder.

Requirements:

 A fully completed application form

 A photocopy of one of the identification documents listed below: Company ID, SSS,

GSIS, PRC, Driver's License, Passport, or TIN (plastic card type), Firearms License, NBI

Clearance, or Integrated Bar of the Philippines

 A photocopy of BIR form 1701 for self-employed applicants who have two years' worth

of audited financial statements with the BIR stamp.

 A photocopy of BIR form 2316 for applicants who are employed.

 10

 Original copy of the most recent credit card billing statement for cardholders (showing

the customer as the PRINCIPAL cardholder).

Sample Computation:

Formula for calculating the payment amount:

n
r (1+r )
A=P
(1+ r)n −1

Where:

A = payment amount per period

P = initial principal (loan amount)

r = interest rate per period

n = total number of payments or periods

36
41.29 % 41.29 %
(1+ )
12 12
A=(60,000) 36
41.29 %
(1+ ) −1
12

0.03440833333(3.379966395)
¿(60,000)
3.379966395 −1

0.1162990104
¿(60,000)
2.379966395

¿(60,000)(0.04886582)

¿ PHP 2,931.95

Therefore, the monthly payment for PHP 60,000 loan payable for 36 months is PHP 2,931.95.

BPI
 11

The Bank of the Philippine Islands, often known as BPI, was established in 1851,

making it the countries and Southeast Asia’s first bank. During this time, BPI, then known as El

Banco Espaol Filipino de Isabel II after the Spanish queen and daughter of King Ferdinand VII,

Isabella II, carried out numerous duties such as printing and issuing money and extending credit

to the National Treasury, making it the nation’s first central bank. It was also the second

Philippine bank established under Spanish rule, following the establishment of a bank in 1830

by Francisco Rodriguez. Money and Banking in the Philippines states that the BPI issued the

country’s first bank note by royal edict in 1896, monopolizing note issuance to the tune of three

times its 1.5-million-peso capital stock. BPI also created the first ATM network eight years after

introducing electronic banking in 1982.

Nowadays, the Bank of the Philippine Islands, or BPI, continues to fulfill its mission of

strengthening and reshaping the economic landscape of our country. They provide their clients

with a comprehensive range of financial goods and solutions, along with their affiliates and

subsidiaries. Additionally, BPI provides a wide range of services that contribute to the

improvement of society, including corporate and investment banking, foreign exchange,

consumer banking and lending, insurance, payments, asset management, and many more. BPI,

which has more than 1,000 branches, centers, and an international presence in Europe and Asia,

is recognized as an industry pioneer and a pillar of the industry as a result of its

accomplishments throughout the course of the year.

Types of loans offered by BPI:

 BPI Auto Loan

 12

For OFWs who want to own a brand-new car or vehicle but don’t want to pay for it in

full, this type of loan is ideal. OFWs can benefit from low rates, flexible payment terms of up to

five years, and down payment alternatives as low as 15% with BPI Auto Loan. BPI provides a

simple, quick, and affordable loan application that will meet the demands and objectives of the

client.

 BPI Housing Loan

Any person can apply for a BPI Housing Loan to have the opportunity to buy their own

house and cease renting one in order to have a place to live. OFWs may think about buying a

home outright rather than paying rent. With this loan, the terms are based on the borrower’s

needs and current financial situation. Anyone of legal age or younger than 65 years old may

submit an application for the BPI Housing loan.

 BPI Business Loan (Ka-Negosyo Loan)

The BPI Business Loan, sometimes referred to as the Ka-Negosyo Loan, might make it

easier for OFWs to finance their business expenses. With this loan, they would be able to easily

capitalize on the growth of their business, no matter how big or small. This offers a fast,

convenient, easy, and flexible process with a minimum loan amount of PHP 300,000. To apply

for this loan, they should have at least three years of business operations, at least one year of

Philippine resident tenure, and be a Filipino citizen.

 BPI Personal Loan

With the BPI personal loan, anyone—including OFWs—can borrow up to PHP

2,000,000, or three times their gross monthly salary. Borrowers are not charged for making

advance payments, but a 5% penalty is applied for late payments. Additionally, with a fixed
 13

interest rate of 1.20%, monthly payments can be spread out over 12, 18, 24, 48, 30, or 36

months.

BPI Personal Loan features:

 Loan amount of PHP 20,000 to PHP 2 million

 The Annual contractual rate or Effective interest rate is 03% to 25.60% with monthly

interest rate of 20%

 Loan terms: 12 to 36 months

 Upon receipt of the necessary documentation and within 5 to 7 working days, loans will be

processed.

 Processing fee of PHP 1,500 which is deducted from the loan proceeds

 Documentary stamp tax is charged at the rate of PHP 1.50 for every PHP 200 of the loan

amount (applied to BPI loans over PHP 250,000 or those used for business reasons).

 5% of the amount owed as a late payment fee

 No pre-termination fees

 No-collateral loan

Eligibility:

 Must be a Filipino citizen

 Residing or working 30 kilometers away from the closest BPI branch

 A minimum age of 21 and a maximum age of 60

Requirements:

For Overseas Filipino Workers (OFWs):

 Government-issued photo-bearing ID (Passport, Driver’s License, SSS, PRC, etc.)

 14

 For Agency-based OFWS: POEA contract OR Employment contract with boarding date

 Direct-hire OFWs: Latest & Unexpired POEA Validated OR Latest POEA Overseas

Employment Certificate (OEC) and Latest Employment Contract (in Lieu of OEC print-out:

OEC Exemption Screenshot with OEC BM Online Profile) OR Consularized COE (if

remitter is a permanent resident in the country). Latest 3 months proof of remittance.

 Direct-hire Allottee: Latest & Unexpired POEA Validated Information Sheet OR Latest

Employment Contract OR Consularized COE (if remitter is a permanent resident in the

country), Latest 3 months proof of remittance.

For Employed Applicants:

 Valid Philippine government-issued, photo-bearing ID with signature

 Latest 3 months pay slips, or latest Income Tax Return (ITR) BIR Form 2316

For Self-employed Applicants:

 Valid Philippine government-issued, photo-bearing ID with signature

 Audited Financial Statements (3 years), or latest Income Tax Return

 DTI/SEC Business Registration Certificate

Sample Computation:

Formula for calculating the payment amount:

n
r (1+r )
A=P
(1+ r)n −1

Where:
 15

A = payment amount per period

P = initial principal (loan amount)

r = interest rate per period

n = total number of payments or periods

36
25.60 % 25.60 %
(1+ )
12 12
A=(60,000) 36
25.60 %
(1+ ) −1
12

0.02133333333(2.138110886 )
¿(60,000)
2.138110886 −1

0.04561303223
¿(60,000)
1.138110886

¿(60,000)(0.04007784548)

¿ PHP 2,404.67

Therefore, the monthly payment for PHP 60,000 loan payable for 36 months is PHP 2,404.67 .

PNB

On July 22, 1916, the Philippine National Bank or PNB was constructed as a

government-owned banking institution, alongside their old headquarters in Masonic Temple on

Escalota, Manila. The main objective of the Philippine National Bank (PNB) is to mandate

financial support in both agricultural and economic growth of the government. The country's

main exports saw tremendous demand as a result of World War I, which was raging in Europe at

the time. However, due to limited access in finance, companies are having a hard time to expand

their crops and meet the desired demand. Nevertheless, Henderson Martin, the Vice Governor of

the Philippines and Mr. Miguel Cuaderno, who would eventually become Governor of Central

Bank, came up with something to address this issue. The Philippine legislature issued Public Act

2612 on February 4, 1916, establishing the PNB to take the place of the modest P1 million
 16

government-owned Agricultural Bank. The Masonic Temple along Escolta, known as the "Wall

Street of the Philippines" at the time, was the location of PNB's first headquarters in the thriving

neighborhood of Sta. in Manila, Cruz. H. Parker Willis, an American, served as its first

President. Filipinos now have a bank of their own thanks to the founding of PNB. PNB is

permitted to provide both short- and long-term loans to business and industry. Then, the farmers

in the Philippines could obtain loans with annual interest rates ranging from 8% to 10%.

Additionally, PNB was permitted to open international credits, accept deposits, and rediscount

bills. As well, it was given the unique authority to issue currency. As a result, PNB served as the

nation's de facto Central Bank until 1949.

Furthermore, Philippine National Bank or PNB continues to serve its purpose up until

the current time. Proving that they are one of the best banks with their countless earned

achievements, and contributions in both agricultural and economic growth of the country.

Types of loans offered by PNB:

 PNB Small Business Loan

Also called Small Medium Enterprise Loan. This loan is for individuals who plans to

start or expand their business. Furthermore, this type of loan can help OFWs who wish to invest

their salary into a small business. This loan is a great helping hand to those who wants to stretch

their line of business.

 PNB Home Loan

This loan is intended for people who want to buy homes, land, condominiums, and other

types of property. This loan will be used to pay for any necessary home improvements or
 17

development as well as to refinance any existing loans. OFWs can apply this type of loan to

purchase their dream house while working abroad.

 PNB Auto Loan/Motorcycle Loan

An Auto loan is for people who want to refinance previous, similar auto loans in addition

to purchasing a new vehicle. OFWs can purchase vehicles with this form of loan for personal

use or public transportation, whilst working in another country. Commuting nowadays is hard,

and with the use of this loan individuals can buy self-use vehicles for easier transportation.

 PNB Personal Loan

From the name itself, Personal Loan offers freedom to its borrower to use it in private

expenses. Applicants can loan up to 2 million pesos with low monthly add-on interest rate. With

the help of Personal loan OFWs can use this to finance their travel outside and inside the foreign

country, especially if it’s an expensive place to live in.

PNB Personal Loan Features:

 Loanable amount up to Php 2 million (subject to approval)

 Flexible terms from 3 to 60 months

 No collateral needed

 Low monthly add-on interest rate

 Effective Interest Rate P.A. of 5.76% for 12 months.

 Effective Interest Rate P.A. of 11.52% for 24 months.

 Effective Interest Rate P.A. of 17.28% for 36 months.

Eligibility:

 Filipino Citizen
 18

 At least 21 years of age, but not more than 65 years of age upon loan maturity

 Employed or self-employed individual with a minimum annual gross income: Php 120,000

Requirements:

 PNB Personal Loan Application Form with Auto-Debit Arrangement (ADA) Enrollment

Form.

 One (1) Valid Identification Document (ID) with your signature and photo. Acceptable IDs

are listed below: Valid Passport, Driver’s license, Unified Multi-Purpose ID, Digitized BIR

TIN Card, SSS ID, GSIS e-Card, PRC ID, IBP Lifetime Membership ID, NBI Clearance.

 Income Documents.

 Proof of Residence/Proof of Billing.

Sample Computation:

Formula for calculating the payment amount:

n
r (1+r )
A=P
(1+ r)n −1

Where:

A = payment amount per period

P = initial principal (loan amount)

r = interest rate per period

n = total number of payments or periods

 19

36
17.28 % 17.28 %
(1+ )
12 12
A=(60,000) 36
17.28 %
(1+ ) −1
12

0.0144(1.673141453)
¿(60,000)
1.673141453 −1

0.02409323693
¿(60,000)
0.6731414535

¿(60,000)(0.03579223476)

¿ PHP 2,147.53

Therefore, the monthly payment for PHP 60,000 loan payable for 36 months is PHP 2,147.53.
 20

Recommendation

OFWs are mainly known as money generators. As a result of shortage in finance, OFWs

are experiencing financial challenges. When they are confronted with their family

obligations, saving money can be difficult for OFWs. However, choosing a reputed bank is

another wise financial decision you may make. Choosing a bank is an important step in the

loan selection process.

After doing extensive research on bank loans, among the three stated banks, the

Philippine National Bank (PNB) provided the finest prospects for OFWs. The bank offers a

decent interest rate and simply requests necessary information. According to Forbes

Magazine, Philippine National Bank (PNB) was named second in the "World's Best Bank"

ranking in the Philippines. Throughout their journey, PNB received numerous honors and

recognition. This demonstrates that PNB is trustworthy and worthwhile as an investment. Not

only that, but PNB has always extended a helpful hand to OFWs, providing them with easy

access to remittance and low-interest loans. As a result, PNB provided 5.6 percent of the

growth in OFW remittances in our economy. PNB provides OFWs with the financial freedom

and assurance that every debtor desires through its simple application and secure details. The
 21

main reason why this bank is suitable for investments, loans, and remittances is because it

consistently receives great feedback, performs well, and offers moderate interest rates that

workers abroad can afford while supporting their households.

Conclusion

In summary, the salary of OFWs is a complex and multifaceted topic. While some

OFWs earn relatively high salaries, others may have more modest incomes. It is important to

consider various factors such as location, job position, industry, living expenses, and currency

exchange rates when assessing OFW salaries. Ultimately, the goal for OFWs is to provide

financial support to their families and contribute to the Philippine economy.

 22

References

A hero’s welcome? Repatriated overseas Filipino workers and COVID-19. (2020, October
14). LSE Southeast Asia Blog.
About BPI. (n.d.). https://www.bpi.com.ph/about-bpi/overview/who-we-are

Bangko Sentral ng Pilipinas (2019). Consumer expectations survey – Fourth quarter 2019.

Bank of the Philippine Islands @ 171. (n.d.). Manila Bulletin.

https://mb.com.ph/2022/8/1/bank-of-the-philippine-islands-171

Eugenio, L. J. (2023, August 11). Overseas Filipino workers: the Modern-Day heroes of the

Philippines. Harvard International Review.

https://www.pnb.com.ph/index.php/the-beginners-guide-to-the-types-of-loans

List of requirements when applying for a personal loan | BPI. (n.d.).

https://www2.bpi.com.ph/personalloan/regular/requirements

List of requirements when applying for a personal loan | BPI. (n.d.).

https://www2.bpi.com.ph/personalloan/regular/requirements

Ofwgio. (2022, April 28). How to apply BPI OFW Loan. The Pinoy OFW.

https://thepinoyofw.com/bpi-ofw-loan/
 23

Ofwgio. (2022, April 28). How to apply BPI OFW Loan. The Pinoy OFW.

https://thepinoyofw.com/bpi-ofw-loan/

PFA | PSBank. (n.d.). https://www.pfa.ph/members/psbank

PSBank. (n.d.). PSBank Official |. https://www.psbank.com.ph/about-psbank/company-

history/