Lon
Republic of the Philippines lee

HOUSE OF REPRESENTATIVES
Quezon City

16 CONGRESS
First Regular Session

House BILLNo. 4283 __

Introduced by Representative REGINA ONGSIAKO REYES
Lone District, Marinduque

EXPLANATORY NOTE

The Overseas Filipino Workers (OFWs) who according to the
latest 2012 Survey on Overseas Filipinos (SOF) conducted by
the National Statistics Office estimated a total of 2.2 million
Overseas Filipino Workers (OFWs) deployed all over the world
during the period April to September 2012', continue to be the
subject of several studies on migration—their contribution to the
country’s economic resilience, the effects (both positive and
negative) of migration to society and the family, and the bleak
prospects for employment here in the country.

The Philippine government has touted OFWs as modern
heroes—and with good reason. With more than eight million
Filipinos spread across 214 countries, OFW’s have somehow
become the international visage of the country and the backbone
of its national economy.’ Their annual remittances have helped
keep the economy afloat, with a substantial portion of our
country’s Gross Domestic Product (GDP) coming from OFW
remittances. In fact, in the last four decades, our country has

* www.census.gov.ph/content/total-number-ofws-estimated-22-million-resu
overseas-filipinos
* “Analysis: The Perils of Our Labor Export Policy” by Richard Javad Heydarian, September 11, 2011.



become one of the world’s most remittance-based economies?
The Bangko Sentral ng Pilipinas (BSP) reports that in 2013,
Overseas Filipinos remittances reached US$ 21.3 Billion*, Next to
India, China and Mexico, the Philippines is the country receiving
the fourth largest amount of remittances.> This growth in
remittances is attributable to the following factors: diversity of the
skills and expertise of the OFW’s, new and expanded markets for
labor migration, and expansion of bank and non-bank services
tallored-fit for OFW’s.’ These remittances boost domestic
consumption and are also the biggest source of foreign exchange
for the country. These hard-earned remittances have not only
Constituted a growing share of our total €conomic output, but they
have also resuscitated our embattled economy in periods of acute
economic crisis.” OFW remittances also contribute so much to the
€conomy’s growth on a macroeconomic level since it promotes
Competitiveness in terms of the exchange rate.® On a
microeconomic _ level, however, the remittances affect a
household’s consumption patterns and it enhances the household’s
Propensity to save.?

According also to the BSP, remittances from OFW’s are
beneficial, for aside from boosting our economic growth, it
underpins _ private consumption, raises savings, increases
investment in human capital, especially in relation to the education
and health of the beneficiaries thereof, and it broadens the middle
class sector of society.!° These remittances have also allowed us
to amass record-high levels of foreign exchange reserves, thereby
protecting us against sudden Currency devaluation and allowing us
to preserve a healthy balance of trade, The remittances sent

bid.

“ http//vww.bsp.gov,ph/statistics/keystat/ofw htm

¢ hitpZAsiteresources.worldbank org/INTLAC/Resources/Facthook2011-E book pdf

"Reducing the Cost of Remittances and Channeling Remittances Towards Development: The
Pailippine Experience” by Imelda M. Nicholas, Chairperson, Commission on Filipinos Oversees (cro),
January 2012.

{ “Analysis: The Perils of Our Labor Export Policy” by Richard Javad Heydarian, September 11, 2011.
* "Remittances as Avenue for Encouraging Household Entrepreneurship Activities” by John Paolo
sivera and Paolo Reyes, Journal of international Business Research, December 1, 2011,

®° ‘Ibid.

* “Reducing the Cost of Remittances and Channeling Remittances Towards Development: The
Philippine Experience” by Imelda M. Nicholas, Chairperson, Commission on Flipinos Oversee (cro),
January 2012.

“analysis: The Perils of Our Labor Export Policy” by Richard Javad Heydarian, September 11, 2011.


home by OFW’s is a key driver of consumption, which fuels the
engine of the economy more than government spending does. It
also stabilizes the peso and keeps the balance of payments in
surplus.’? Indeed, our migrant workers are indispensable to our
national economic survival. Recognizing the _ significant
contributions of our overseas Filipinos, various laws are enacted in
their favor.

Aside from sending remittances to their relatives in the
Philippines, many Filipino associations overseas send donations to
humanitarian projects, scholarships and microcredit schemes in
their towns of origin.“* Other OFWs express their intent to help
the country by investing.’

The State aggressively promotes investment in our country
to prevent shifting business investments abroad since it will reduce
economic growth and wage. Investments cause flow of money into
the economy which stimulates economic activity. It will also result
to increase in employment opportunities, give domestic producers
an incentive to become more efficient and increase stakeholders in
the government of the country. According to the BSP, investments
increase the pool of resources available to both households and
corporate borrowers for their credit needs, and this help sustain
economic activity.®

The Philippines is one of the desirable countries to invest in
due to its workforce, with higher education priority, the literacy
rate in the country is 94.6% -- among the highest. Not to mention
that the Philippines is located right in the heart of Asia - a
strategic business location. As an archipelago, the Philippines offer
diverse natural resources, from land to marine to mineral
resources. Finally, the Philippines is sought after by foreign
corporations because it has one of the lowest cost of doing
business since wages are typically less than a fifth of that in the
United States.’”

FW Pushing Pinoys Out of Poverty”, www.catanduanesforum.com

«analysis: The Perils of Our Labor Export Policy” by Richard Javad Heydarian, September 11, 2011.
4 supra

3S http://overseaspinoyinvestor.com/category/inspirational/

*S«Bangko Sentral Notes Growing investments by OFWS”, The Philippine Star, June 14, 2009.

¥ Department of Trade and Industry website; hitp/www.dti.gov.ph/dti/index.php?p=137



The State has likewise sought investment by our Overseas
Filipino Workers. In fact, the BSP has created an investment
Program for OFWs to channel remittances into developing the
capital market. These include encouraging OFWs and their families
to increase savings and investments through bank investment
products and services, hedging program and Long-Term
Negotiable Certificates of Deposit for OFWs, as well as
microfinance. The BSP, in a report, also said that the number of
Filipino households investing a portion of the money they receive
from loved ones abroad is steadily increasing. A survey conducted
by the BSP in January, 2012 showed that 8.5% of households
that depend on remittances invested a portion of the money
usually in small businesses. It also said that putting money in
investments creates a higher multiplier effect for the economy,
given that micro businesses generate employment and contribute
to the increase in overall incomes. !®

These investments, if entered into by our OFW's, would help
generate more new jobs for those who are currently unemployed.
This will only be a Possibility, however, if the Philippines will accept
that its comparative advantage is on the export of manpower,
through the OFW’s, and if it will harness the massive volume of
remittances that flows to the economy. If the remittances of the
OFW’s are made productive through investments in
entrepreneurial activities, then it can provide domestic
employment which, obviously, addresses the unemployment rate
in the domestic labor market and will thus reduce dependence on
remittances,”°

Should the OFW _ invest by venturing into business
enterprises through the use of remittances, it will potentially
increase household income on the microeconomic level and
address national issues specifically poverty through the provision
of employment. According to some studies, the households who
receive remittances earn more on their investments than their
non-receiving counterparts. This can be a source of motivation for

‘3 “More PH Families Investing OFW Money, BSP Says”, Philippine Daily Inquirer, April 1, 2012.

* «Remittances as Avenue for Encouraging Household Entrepreneurship Activities” by John Paolo
Rivera and Paolo Reyes, Journal of International Business Research, December 1, 2011,

” Ibid.


entrepreneurship, which promotes financial independence and
decreases the dependency for further remittances in the future.
One way for OFW’s to invest is through the establishment of new
businesses, specifically, small businesses, also known as micro
small and medium enterprises or MSME’s, whose objective is to
maximize profits. Should the OFW decide to stay in the Philippines,
this is now an alternative source of income since getting another
contract abroad is not guaranteed. Meanwhile, MSME’s will provide
employment and contribute to national income growth, Investment
in a business means placing remittances into productive use and a
rational entrepreneur will always drive its business to its maximum
potential.”*

The State, therefore, should do its share in encouraging
OFW’s to make such investments possible and undertake positive
action to uplift the quality of their lives, and it may do so through
government intervention, with the help of LGU’s and even NGO's,
The government must also promote good governance and reduce
political risks for economic stability to address the problem of risk
aversion which is a concern in entrepreneurship, Furthermore, by
successfully encouraging OFW’s to engage in business, the State
will promote household development, which can diffuse to other
households through employment generation.”2

However, the State’s present programs are clearly
insufficient to encourage our OFWs to invest their hard-earned
money in our country and assist them in attaining financial stability
to facilitate their reintegration and improve the quality of their
lives. While there are various laws enacted giving incentives for
investments in the Philippines” in general, however none of which
specifically caters for our OFWs and their immediate family
members. Recognizing their contributions to our economy and the
strong possibility of economic boosts due to their investments, this
bill therefore, seeks to grant additional benefits to our overseas
workers by allowing them to enjoy financial incentives and other
related benefits.

» ibid
® Ibid
® htpiliwww.dti.gov.ph/uplaads/DownloadableForms/Incentives pdt



This bill also aims to give reductions on the required
business charges and fees should the OFW and his/her immediate
family members decide to establish businesses or engage in
entrepreneurial activities in our country, with such businesses
creating more employment opportunities for many of our
unemployed countrymen and thus, contributing too to our
country’s economic growth. Such incentives and reductions will
not have any negative impact on the aim of the government to
gain more avenues for it to function properly and deliver the basic
services to the people. On the other hand, considering that the
investments by the OFW’s involve new businesses, the incentives
and reductions proposed under this bill would redound to the
benefit of the government in the long run. This is because the
new businesses would create more jobs and sources of income,
which will then be the source of more taxes to the government,
and such businesses may even attract potential foreign investors,
which will then trigger further economic growth for our country.

With the enactment of this bill, it is hoped that it will now be
easier for the OFWs and their families to establish businesses or
enter into investments with other businesses, as well as with the
government, and serve as valuable partners for our nation’s
Progress. More significantly, this bill is geared towards promoting
the welfare of millions of our OFWs and their families by helping
them attain financial stability and enabling them to have a more
secured future in our own country, with highest aspirations that
they may be encouraged to come back here in the Philippines to
stay - not merely as an OFW spending a much-needed vacation -
but as a Filipino returning to their true home for good.

In view of the foregoing, the enactment of thig bill into law is
earnestly sought.



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

16" CONGRESS
First Regular Session

HOUSE BILL NO, __ 4283

Introduced by Representative REGINA ONGSIAKO REYES
Lone District, Marinduque

AN ACT

PROMOTING THE WELFARE OF THE OVERSEAS FILIPINO

WORKERS AND THEIR FAMILIES BY GRANTING
FINANCIAL INCENTIVES AND OTHER RELATED BENEFITS
TOWARDS ATTAINING THEIR FINANCIAL STABILITY AND

UPLIFTMENT OF THE QUALITY OF THEIR LIVES,

AT THE SAME TIME CONTRIBUTING TO LOCAL
ECONOMIC GROWTH, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives
of the Philippines in Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the
“Overseas Filipino Workers Economic Upliftment Act of
2012.”

SECTION 2. Declaration of Policy. - The State shall
afford full protection to labor, local and overseas, organized and
unorganized, and promote full employment and equality of
employment opportunities for all. Further, the State recognizes the
significant contribution of Overseas Filipino Workers (OFWs) to the
national economy through their foreign exchange remittances and
their valuable role as a partner for our nation’s progress.


Pursuant to these policies, the State shall promote the
welfare of the Overseas Filipino Workers as well as their families
and assist them in attaining financial stability and upliftment in the
quality of their lives by encouraging them to invest in our country,
For this purpose, the State shall provide financial incentives,
access to government financial institutions and other benefits to
Overseas Filipino Workers and their immediate family members
who shall engage in business and invest in the Philippines in order
to effectively aid their reintegration through the productive use of
their remittances and at the same time contribute towards the
development of local economies.

SECTION 3. Coverage. - The financial incentives and
other benefits provided for in this Act may be availed of by any
Overseas Filipino Worker who is a registered and active member of
the Overseas Workers Welfare Administration (OWWA); Provided,
however, That an Overseas Filipino Worker who is no longer an
active member of OWWA but has been a previous member thereof
for at least three (3) years may also avail the financial incentives
and other benefits provided for in this Act .

Provided, further, That the immediate family member/s of
the Overseas Filipino Worker who are recipient/s of the
remittances of the OFWs may also avail of the financial incentives
and other benefits provided for in this Act. For purposes of this
Act, immediate family members of the OFW shall include his/her
spouse and children, or his/her parents, brother(s) and sister(s) if
the OFW has no spouse and/or children,

SECTION 4. Applicability. The financial incentives and
other benefits provided for under this Act shall only apply to new
business entities which may be established after the effectivity
thereof,

SECTION 5. Investment Incentives for Overseas
Filipino Workers and/or their Immediate Family Members,
= The following investment incentives may be availed of by an


Overseas Filipino Worker and/or the immediate member of his/her
family under this Act:

a) Overseas Filipino Workers and/or their immediate
family members shall be accorded unlimited and preferential
access to financing from government financial institutions at rates
below the market rates;

b) Fifty percent (50%) reduction from payment of the
required and necessary fees and fast facilitation of business
documents if the investment by the OFW and/or a immediate
family member is a business that is related to food or goods that
are consumed by the general public (i.e. restaurants, fast-food
chains, bakeshops, catering services, __sari-sari_—_ stores,
supermarkets, food manufacturing companies, etc.);

c) Forty percent (40%) reduction on the required
business fees and charges if the investment by the OFW and/or a
family member is a business that will help foster the education of
the youth and help them achieve their goals in life (i.e. private
schools and teaching centers, bookstores, publishing companies
that publish school books, etc.); or investment that are intended
for retirement (i.e. retirement homes and facilities, health clubs,
etc.); or a business that is intended to boost Philippine tourism
(i.e. leisure parks, resorts, cultural exhibition centers, zoos, etc.);

d) Thirty percent (30%) reduction on the required
business fees and charges, and fast facilitation of the processing of
the necessary documents, if the business invested in is put up in
an underdeveloped area in the country, which business may pave
the way for the said area to be promoted as a potential industrial
area;

e) Twenty percent (20%) reduction on the required fees
and charges, and fast facilitation of processing of the necessary
documents, for all other types of business which are not stated
above.


SECTION 6. Tax and Tax-related Incentives for
Overseas Filipino Workers and/or their Immediate Family
Members. - The following tax and tax-related incentives may be
availed of by the Overseas Filipino Workers and/or their immediate
family members:

a) — Income Tax Holiday for a period of five (5) years from
the date of the start of the operation of the business which the
Overseas Filipino Worker or his/her immediate family member has
established;

b) _ Fifty Percent (50%) reduction from income tax for a
period of five (5) years commencing from the expiration of the
Period referred to in the immediately preceding paragraph;

c) _ Fifty percent (50%) reduction on real property taxes to
be paid by the Overseas Filipino Worker and/or an immediate
member of his/her family to the Local Government Unit where
his/her real property used for business purposes is located,
Provided, that the said land or building is used for the
establishment of a business which is related to education; or foods
and/or goods that are consumed by the general public; or is
established with the intention of boosting the Philippine tourism
industry; or will showcase Filipino heritage and culture; or used for
establishment of facilities intended for retirement;

d) Twenty percent (20%) reduction on the required
national, local or business taxes, as the case may be, if the house
of the Overseas Filipino Worker or an immediate member of
his/her family, which is currently used as a family home or for
residential purposes, is converted into a business establishment;
Provided, that the said rate shall be thirty percent (30%), _if the
business establishment to which the residence is converted to is
one which caters to the general public.

SECTION 7. Simplification of Tax and Investment
Procedures, - The Bureau of Customs shall simplify the customs
Procedures on the importation of goods and merchandise
exclusively used for the business established by the Overseas


Filipino Workers and/or their immediate family members, The
Bureau of Internal Revenue, and the Local Government Units with
respect to local taxes, shall likewise simplify internal revenue
procedures and local tax procedures for the availment by the
Overseas Filipino Workers and/or the immediate member(s) of
his/her family, of the tax incentives provided for under this Act.
The Department of Trade and Industry shall also simplify the
procedures before its agencies to ensure the prompt processing of
the business documents and effectively assist the Overseas Filipino
Workers and/or the immediate member(s) of his/her family to
establish their intended investment.

SECTION 8. &stablishment of One-Stop-Shop
Business Processing Centers. The |ocal government units,
with participation of the various government agencies such as, but
not limited to, the Department of Trade Industry, Bureau of
Internal Revenue, Social Security System, Pag-IBIG fund,
Philippine Health and Insurance Corp., and the Securities and
Exchange Commission, shall establish a one-stop-shop business
processing centers to facilitate an expedient means of registration
and eliminate red tape.

Provided, That if the local government unit concerned has a
One-stop shop business processing center as referred to hereof,
and the application with its completed submitted requirements is
not acted upon by the local government unit within thirty (30)
days, the same is considered as approved, Provided, however,
That if the local government unit concerned has no such one-stop
shop, the application is deemed approved if it is not acted upon
within sixty (60) days,

SECTION 9. Financial Literacy Program for Overseas
Filipino Workers and/or the Immediate Members of their
Families; Information Dissemination. To ensure that the
benefits provided for under this Act shall be effectively harnessed
and maximized, the Overseas Workers Welfare Administration
(OWWA), the National Reintegration Center of OFWs (NRCO) and
the Technical Education and Skills Development (TESDA) shall


institutionalize the conduct of financial literacy programs and
capacity building seminars on entrepreneurship and investment
programs for the Overseas Filipino Workers and/or the immediate
members of their families.

Provided, That in the conduct of pre-employment/pre-
departure orientation —_ seminars, post-arrival/reintegration
seminars, the financial literacy programs shall likewise be
incorporated as an integral part thereof,

Provided, further, That the OWWA, NRCO, TESDA and all
other relevant government agencies with respect to Overseas
Filipino Workers, such as the Department of Labor and
Employment (DOLE), Philippine Overseas and Employees
Administration (POEA), Commission on Migrant Workers (CMW),
Department of Foreign Affairs (DFA) and all local government
units, shall extensively carry out information dissemination on the
benefits and programs provided for in this Act.

SECTION 10. Periodic Review and Monitoring of this
Act. The agencies involved in the implementation of this Act, to
be convened by the OWWA, shall conduct a regular and periodic
review and monitoring of the implementation of this Act and shall
submit report thereon to the Joint Congressional Oversight
Committee on the Overseas Filipino Workers Affairs and the
Committee on Ways and Means of both Houses of Congress.

SECTION 11. Implementing Rules and Regulations.
- The implementing agencies mentioned in this Act, shall, within
ninety (90) days from the effectivity of this Act, promulgate the
necessary rules and regulations for the effective implementation of
this Act.

SECTION 12. Separability Clause. - If any provision of
this Act shall be declared as invalid or unconstitutional, the other
provisions which are not affected thereby shall remain in full force
and effect.


SECTION 13. Repealing Clause. - All laws, Republic
Acts, Presidential Decrees, Executive Orders, Provincial, City and
Municipal Ordinances, Rules and Regulations, and Circulars and
Orders issued by Government agencies or quasi-judicial bodies, or
parts thereof, which are deemed inconsistent or in conflict with
any or all of the provisions of this Act, are hereby repealed or
modified accordingly.

SECTION 14. E&ffectivity Clause. - This Act shall take
effect fifteen (15) days from its publication in the Official Gazette
or in at least two (2) national newspapers of general circulation,

APPROVED.