Asean economies see Q2 drop in remittances

MIGRANT worker remittances in the Asean region have fallen amid the Covid-19 pandemic, in a worrying sign for household incomes and local economies.

Earnings transfers to Cambodia, Indonesia, Thailand and the Philippines shrank year on year in the second quarter of 2020, reversing the previous year's growth.

That's as deadly outbreaks of the novel coronavirus have fuelled job losses across the region, including among migrant workers, according to research published on Wednesday (Dec 2) by the Asean+3 Macroeconomic Research Office (Amro).

Second-quarter remittance receipts contracted by 8.7 per cent in Cambodia, 22 per cent in Indonesia, 1.3 per cent in Thailand and 9.3 per cent in the Philippines.

Permanent economic scarring, protracted travel curbs, and a structural shift in labour markets may mean that the job opportunities are already lost and re-deployment of migrant workers "may not be fully possible", the Amro report warned.

As such, the authors urged countries that typically send migrants abroad to expand social safety nets, support training schemes, and strengthen domestic labour markets.

Such measures are meant to better cover returning workers in the medium term, especially as weak remittances also hit trade balances and tax revenues.

"They have been hard hit by layoffs and forced repatriations, as well as fewer deployment opportunities," the report said of migrant workers.

"Remittances have thus dropped in many economies, and their outlook remains weak, likely until vaccines become widely available."

To be sure, the global trend showed an improvement in remittance in-flows after April and May, the report noted, as economic activity resumed after the epidemic's first wave.

But the authors added that "the rebound might hide ongoing weaknesses", such as an increasing reliance on formal remittance channels that could have buoyed official in-flow figures despite unchanged or even decreasing remittance values.

As more migrants move towards digital money transfers, countries could also help to ensure that transaction fees for remittances are "affordably low" and regulations are put in place to enable efficient and safe transfers, they suggested.