OVERSEAS Filipino workers are officially remitting an average of at least $7 billion a year, but most of these were used for excessive consumption rather than invested to make the money grow and serve as a driver of economic reform.

This was the finding of a study made through a $150,000 technical assistance from the Asian Development Bank that was approved in November 2003.

The report, titled Enhancing the Efficiency of Overseas Workers Remittances, identified how "migrant-sending" developing countries like the Philippines could improve the flow of remittances and maximize their impact on social and economic progress.

The study also showed that in 2003, $7.6 billion in remittances were recorded to have flowed through formal channels to the Philippines.

But the amount was believed to be only half of what was actually sent or received, due to money transfers made through unregulated channels.

Based on a limited survey carried out as part of the study, 80 percent of the formal flows moved through commercial banks. The availability of safe, reliable and affordable means of sending money -- such as cellular phones and smart cards -- has reduced the use of unregulated channels.

To improve further the efficiency of remittances to the country, the study suggested for the government to take bilateral initiatives in the opening of remittance windows for Philippine banks or remittance entities in host countries.

Such move is expected to enhance competition, drive costs down, and encourage more remittances through the formal sector.

Another suggestion was to enable OFWs with irregular status to have access to banking or other formal remittances, such as allowing the use of identity cards issued by Philippine consular officials for opening bank accounts.

Still another was for the government to negotiate with host governments for the proper accreditation of workers' academic and work experience, aside from improving local education and augmenting it with skills training.

Even then, the study said OFW remittances needed to be linked with efforts to develop the economy, considering that opportunities relating to this were already present in the country.

Two-thirds of OFWs come from the provinces, which suggested that community-based institutions such as rural banks, cooperatives, and micro-finance institutions could be used to link remittances to development;

The volume and continuity of remittances received by commercial banks meant such money could be used for developmental purposes through securitization where funds backed by future remittances are made available;

Nongovernment organizations or micro-finance institutions could help initiate programs on the use of savings, investments, credit access, or putting up businesses for OFWs and their families;

Local governments could issue bonds, guaranteed by their internal revenue allotments, to be offered as savings or investment vehicles to OFWs from these communities for funding local infrastructure;

Benevolent and economic activities by Filipino associations overseas should also be encouraged given the actual and potential huge inflows from this sector going into development projects.

The Philippines has become the third-largest migrant-sending country in the world next to Mexico and India, with more than 7.5 million Filipinos working overseas.

Around 2,700 Filipinos leave daily for foreign countries as immigrants, temporary contract-based workers or simply as tourists, hoping to find work in developed countries.