Filipinos from oil-rich United Arab Emirates have been confronting the economic impact of oil price slowdowns by sending more money to their loved ones back home.
Last June, nearly a million Filipino workers there sent home the second-largest monthly sum, worth US$230.071 million. That is a follow-up to the largest monthly sum from UAE —US$236.294 million— registered last March.
And over a six-month period year-on-year, 2017 remittances from the UAE (US$1.173 billion) are higher by 18 percent from a year ago (US$US$994.408 million). The flows last March and June pushed the uptick.
On the year the Middle East first experienced slowdowns in global oil prices, Filipinos from UAE sent a historic high of US$2.224 billion in 2014. Not surprisingly, the 2015 total —US$2.03 billion— was lower from that of the previous year.
Two years on from the start of the oil price slowdowns, Filipinos remitted US$2.155 billion last year. The six-month total for 2017 is on track, if that total is doubled, to set a new high for annual Filipino remittance flows from the UAE.
Since September 2016, the dirham was depreciating yet Filipinos from the UAE tried sending more money [see Figure 1].
From January 2016 to last June, there were six months of negative monthly growth rates for remittance inflows from the UAE [see Figure 2]. But the record-high March 2017 numbers led to a 38.97 percent monthly growth rate compared to last February.
UAE is among the world’s top producers of crude oil (three million barrels per day) but the price slowdowns brought down the country’s government revenues. Fitch-owned BMI Research projected last month that UAE’s real gross domestic product growth to slow down this year to 2.2 percent.
Dwindling oil revenues have then pushed the UAE to enter into the taxation regime so that the country diversifies its income sources.
UAE just published its first-ever domestic value added tax (VAT) law, as well as excise or “sin” taxes for tobacco and liquor this month. By this coming January 1, the Emirate will implement a five percent VAT for the entire Gulf Cooperation Council (GCC) countries.
UAE’s Ministry of Economy projected that VAR could generate AED12 billion (US$3.266 billion) in 2018 and AED20 billion (US$5.443 billion) the following year. However, there is fear of increasing consumer prices on goods as a result of the VAT.
But how these taxes impact on UAE-based foreign and Filipino workers’ remittances remains to be seen.
OFW Journalism Consortium