Remittances, Entrepreneurship and Local Development in the Philippines: A Tale of Two Communities

Transcription

1 Remittances, Entrepreneurship and Local Development in the Philippines: A Tale of Two Communities Celia M. Reyes Tereso S. Tullao, Jr. John Paolo R. Rivera Anne Bernadette E. Mandap Jasminda Asirot-Quilitis Joel E. Bancolita Marsmath A. Baris, Jr. Erica Paula S. Sioson Novee Lor C. Leyso Steffie Joi I. Calubayan PEP Asia-CBMS Network Office DLSU Angelo King Institute for Economic and Business Studies 10 th Floor De La Salle Angelo King International Center Estrada Corner Arellano Ave., Malate, Manila, Philippines celia.reyes@benilde.edu.ph celmreyes@yahoo.com Tel. No: (632) or loc Fax No: (632) Page 1 of 145

2 Remittances, Entrepreneurship and Local Development in the Philippines: A Tale of Two Communities Abstract This paper investigates the behavior of households with OFW members toward business creation with respect to individual and household characteristics and their receipts of remittances. Using macro-level data from the Family Income and Expenditure Survey, Labor Force Survey, and Survey of the Overseas Filipinos conducted in 2003, the study was able to determine that number of dependents, food expenditure, level of wages and salaries received by the household and construction of shelter are inhibiting factors. On the other hand, age of OFW members, number of members with job, and specific occupation of household members facilitate entrepreneurship. Meanwhile, using micro-level data from the Community-Based Monitoring System (CBMS) surveys in Carmona, Cavite and Mabini, Batangas conducted in 2013, this study was able to determine that household size, number of members in school, having a household member with an illness, number of dependents, debt payment, and asset accumulation pose a hindrance in engaging in or growing a business. On the other hand, age, educational attainment and skills of OFW members as well as length of sending OFWs were identified as facilitating factors in a household s decision to engage in an entrepreneurial activity. Keywords: Overseas Filipino Workers, remittances, entrepreneurship, local development Page 2 of 145

3 Contents List of Acronyms List of Figures List of Tables Executive Summary Chapter 1 Chapter 2 Chapter 3 Chapter 4 Introduction Review of Related Literature Conceptual Framework and Research Methodology Research Results Facilitating and Inhibiting Factors on OFW Household s Decision to Engage in Entrepreneurial Activities: Evidence from National Representative Surveys Facilitating and Inhibiting Factors on OFW Household s Decision to Engage in Entrepreneurial Activities: Evidence from the CBMS Chapter 5 Summary, Conclusion and Recommendations Annex Table 1. Heckman Selection Model, 2003 SOF-FIES-LFS Table 2. Test of significance of Heckman rho using Bootstrap, 2003 SOF-FIES-LFS Table 3. Model with Odds ratios, SOF-FIES 2003 Table 4. Model with Odds ratios, CBMS data Table 5. Univariable Cox Regressions Table 6. Initial model estimates Case Studies Page 3 of 145

4 List of Acronyms CBMS DOLE DTI FDI EDT FIES HPQ LFS LGU NCRO NGO NLDC OFW OWWA PCE PFA SOF Community-Based Monitoring System Department of Labor and Employment Department of Trade and Industry Foreign Direct Investment Entrepreneurial Development Training Family Income and Expenditure Survey Household Profile Questionnaire Labor Force Survey Local Government Unit National Reintegration Center for OFWs Non-Government Organization National Livelihood Development Corporation Overseas Filipino Worker Overseas Workers Welfare Administration Philippine Center for Entrepreneurship Philippine Franchising Association Survey of Overseas Filipinos Page 4 of 145

5 List of Figures Figure 1 Literature map/conceptual map Figure 2 Entrepreneurial process affecting national economic growth Figure 3 Scatterplot of OFW remittance and entrepreneurial income, SOF-FIES-LFS 2003 Figure 4 Odds ratio in terms of difference in age of OFWs, SOF-FIES-LFS 2003 Figure 5 Odds of investing in business by obligations serviced through remittance Figure 6 Probability of establishing a business over time by site Page 5 of 145

6 List of Tables Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 Table 9 Table 10 Table 11 Table 12 Table 13 Table 14 Table 15 Table 16 Sample households, Carmona, Cavite and Mabini, Batangas, CBMS Survey 2013 Dependent variables and levels of measurement Explanatory variables for the model specification for 2003 SOF-FIES Explanatory variables for the model specification for CBMS data Households with and without entrepreneurial activity, by remittances received indicator Profile of households with OFWs who received remittances, with or without entrepreneurial activity, 2003 Income, savings, and expenditures of households with OFWs who did or did not receive remittances, with or without entrepreneurial activity, 2003 Households who received remittances, with or without entrepreneurial activity, by income quintile, 2003 Regression model of OFWs and entrepreneurship Logit model estimates Multinomial logit of business and skills Proposed model estimates Summary of characteristics of OFWs, by site Summary of characteristics of OFW households, by site Summary of households who used remittance for business, by site Summary of impacts of remittance to local development Page 6 of 145

7 Executive Summary Issue This study tackles the important question of which factors facilitate or inhibit business creation among households with members who are working overseas. This is a research area with immense implications for policymaking, especially in the context of the Philippines where 10 percent of its population are living and working in various countries around the globe. For one, it can provide a framework on the decision-making process of these households regarding the productive use of the remittances they receive. This, in turn, can help the government incubate policies that can aid and provide support for Overseas Filipino Workers (OFWs) in terms of managing and growing their money. A number of studies have already been made on the key determinants of self-employment or entrepreneurship and these are comprehensively mapped out in the conceptual framework of this paper. However, very few have set out to investigate the linkage between receipt of remittances and business creation among households with members who are OFWs. Another important contribution of the study is the manner by which it investigates the research problem--it utilized two data sets: one coming from national representative surveys and another one from a subset identified from the census of target communities using the Community-Based Monitoring System (CBMS) methodology. Moreover, case studies were built which aim to provide empirical as well as anecdotal evidence at the household level on the relationship between overseas remittances and entrepreneurship development. Methodology An analysis of households with Overseas Filipino Workers (OFWs) was built up first to provide a context at the national level by using the following surveys conducted in 2003: Family Income and Expenditure Survey (FIES), Labor Force Survey (LFS) and Survey of the Overseas Filipinos (SOF). The SOF is conducted as a rider to the LFS and is released in response to the need for more accurate data on the number of overseas Filipinos. It covered a total of 2,791 individuals who were abroad, approximately seven percent of whom were not working at the time of the survey. Only those who were working (2,591 OFWs) were used as a sample in describing the characteristics of OFWs and households with OFWs. These sample OFWs were merged with the FIES and LFS datasets to further explore their composition, demographic and economic characteristics and to determine their probability of being involved in an entrepreneurial activity. The FIES, on the other hand, is a triennial survey conducted by the National Statistics Office (NSO) nationwide. Being the primary source of income and expenditure, the study make use of data on entrepreneurial income, wages, savings, food, housing and debt-related expenditures from the FIES. Meanwhile, the LFS dataset provided information on the occupation of the working members. Meanwhile, data from the CBMS was used to provide micro-level insights about the effects of various selected factors on the decision of households with OFW members to engage in entrepreneurial activities. The CBMS is an organized way of collecting ongoing or recurring information at the local level to be used by local governments, national government agencies, NGOs, and civil society for planning, budgeting, and implementing local Page 7 of 145

8 development programs, as well as for monitoring and evaluating their performance. Fundamentally, it is a tool for improved local governance and democratic decision-making that promotes greater transparency and accountability in resource allocation. The data collection was conducted in nine barangays in the municipalities of Carmona, Cavite and Mabini, Batangas. In the municipality of Carmona, respondents were taken from the urban barangays of Lantic, Maduya, Mabuhay and Milagrosa. In the municipality of Mabini, respondents were taken from the urban barangay of Solo, and the rural barangays of Gasang, Pulong Balibaguhan, San Francisco and Talaga Proper. A total of 76 households were interviewed: 37 from Carmona and 39 from Mabini. Results Using classical linear regression, logistic regression and Cox proportional hazards on the national dataset, the study was able to determine that there are a host of factors which stand in the way for households with OFW members to invest or engage in an entrepreneurial activity. These factors include number of dependents, food expenditure, level of wages and salaries received by the household, and construction of shelter. There are also facilitating factors such as age, number of members with job, and specific occupation of household members. Highly educated OFWs also tend to have higher entrepreneurial income compared to less educated ones. Furthermore, OFWs with members who are professionals or technicians are likely to have higher income from entrepreneurial activity. On the other hand, a descriptive model of propensity to invest in business of households with OFW members was developed using CBMS data. The results from the survey in Carmona, Cavite and Mabini, Batangas suggest that there are similar findings between the CBMS and the national model. For instance, the same direction of coefficients is found in terms of age. To illustrate, a 20-year old OFW may be unlikely to invest until he s 35 years old. Moreover, under the CBMS model, an OFW who reached college level may invest 1.5 times that of a high school level OFW while a college graduate is 1.7 times likely to invest compared to a college level OFW. The only difference in this case as reference to national model is that males are more likely to invest compared to females. The duration that the household has been sending workers abroad also increases the propensity to invest as shown by the different models. Furthermore, OFWs with members skilled in business planning and management are more than twice likely to invest compared to those OFWs whose households have no skill in business planning and management. OFWs with household members skilled in marketing, sales and finance are also six times more likely to invest than those without this kind of skills. Meanwhile, household size, number of members in school, having a household member with an illness, number of dependents, debt payment, and asset accumulation pose a hindrance in engaging in or growing a business. The 30 case studies drawn from the 76 households surveyed in both sites also suggest that age, educational attainment, and skills of OFW members as well as length of sending OFWs are facilitating factors in a household s decision to engage in an entrepreneurial activity. In terms of age, for instance, the mean age of OFWs in the case study households was 42.7 which is higher than the average age of 37.8 among OFWs in the sample households. The same is true for educational attainment: 52.3 percent of the OFW members in the case study households are college graduates while only 34.5 percent of OFWs in the sample households were college graduates. Meanwhile, in terms of length of time that OFWs have Page 8 of 145

9 been working abroad, the case study households posted an average of 14 years while it was only about 13 years for the sample households. Overall, these findings seem to suggest that households who spend or use remittances for consumption and investment goods such as food, education and housing as well as those who use the same for debt servicing and healthcare for members with illness tend to put off investing in entrepreneurial activities. This is presumably due to the fact that these eat up a large slice of the household budget thus leaving less for savings that could be channeled toward business creation. On the other hand, age, educational attainment, and skills of the OFW as well as the number of years that the household has been sending a member to work overseas are positively related to business creation. This supports findings from earlier studies that these variables are essential in the decision to engage in entrepreneurial activities. Conclusion and Recommendations The survey results in Carmona and Mabini reveal that businesses of households with OFW members are usually small in terms of asset size and number of employees and thus, their impact on their respective communities in terms of local development is limited. Pooling of resources of OFWs to finance bigger entrepreneurial activities may therefore have to be explored. All businesses covered were single-proprietorship and this may be one reason why businesses were relatively small. Further pooling of resources of OFWs can also be utilized to finance bigger projects for the development of the community. Moreover, reintegration programs particularly trainings on value formation, financial literacy, entrepreneurial development, techno-skills and capacity building for returning OFWs should be strengthened. Another finding of the study is that the average start-up capital is about Php127,000. This means that OFW households have to save up over a period of time to come up with sufficient capital. This points to the importance of making available various financial instruments for OFWs and their families to promote savings. The study also revealed the preference of many remittance-receiving households to build better and bigger houses rather than use the money as capital for businesses, particularly in Mabini. More information on business opportunities could encourage them to allocate a bigger proportion of remittances to putting up businesses. Page 9 of 145

10 Chapter 1 Introduction Almost close to forty years of temporary labor migration have established the Philippines as one of the world s top economies of origin of migrant workers. Undoubtedly, money transfers from Overseas Filipino Workers (OFWs) significantly improve the Philippines state of economic health by increasing foreign exchange reserves, specifically USD, and boosting consumption levels. Nevertheless, there is an escalating concern that while remittances keep the Philippine economy afloat, these has not led to sustained and longterm development. For instance, while the sheer volume of remittances that the country receives yearly holds vast potential for spurring development through entrepreneurship, this has yet to be translated to more sustainable livelihoods and enterprises at the local level. Given this backdrop, this study shall investigate the behavior of households with OFW members towards business creation with respect to individual and household characteristics and their receipts of remittances. Hence, this study s primary research question is: How do characteristics of these households affect their decision to invest their money in entrepreneurial activities? Specifically, this study has the following objectives: To determine, using both macro- and micro-level data, the effects of various selected factors on the decision of a household with OFW member to engage in entrepreneurial activities; and To provide recommendations for the government, local government units (LGUs), non-government organizations (NGOs), business sector, and OFWs themselves in terms of the entrepreneurial activities available for them. Addressing the abovementioned objectives will provide a framework on the decisionmaking process of these households regarding the productive use of the remittances they receive. Instead of just spending the money entirely on consumption goods, they could diversify the use of remittances into more income generating activities. On the other hand, the government will incubate policies on how to aid and provide support for the OFWs in terms of managing and growing their money. An important component of this strategy is to enhance the potential of remittances and other migration benefits to develop the country s micro, small, and medium enterprises (MSMEs). In fact, there is ample international evidence supporting the case that indeed remittance from OFWs can be harnessed for generating local investment opportunities. However, despite policies providing an enabling environment for the growth of MSMES, this sector still suffers from low access to capital and technology, low productivity, unskilled workers, and lack of access to productive inputs. It is argued that gains from OFWs (i.e., remittances, new skills, new technology, social capital, and others) can help create opportunities for enterprise development and entrepreneurial activities. Page 10 of 145

11 Chapter 2 Review of Related Literature The Philippines has been a manpower exporting economy registering 10 percent of its 90 million people, as of 2010, as living and working in at least 200 destinations across the globe. The literature on Filipino migration shows that between the 1970s and 1980s, migration was generally undertaken by few people and was more permanent in nature (Paul, 2011). Further, it suggests that migration of Filipinos abroad occurred in three distinct waves. The first wave started in 1903 and reached its peak in the 1920s and 1930s (Young, 1982; Tolentino, 1996). The second wave was from 1945 to the 1960s (Tolentino, 1996). The third wave, which is considered to be more massive (Tolentino, 1996) and is continuing up to the present, began in the 1980s. The export of Filipino labor became an official government policy in the 1980s (Semyonov & Gordzeisky, 2004). According to Battistella (1999), Philippine labor export policy began with the well-known intent of participating in the construction projects in the Middle East in the early 1970s (p.230). In 1974, it found its way to the Labor Code of the Philippines via President Ferdinand Marcos Presidential Decree 442 which was clearly aimed at promoting overseas employment and, implicitly, at expanding the market for overseas Filipinos as well as ensuring the best possible terms and conditions of employment for them (Battistella, 1999). Docot (2009) adds that the labor export policy was formulated as a measure to combat deflation and to increase dollar remittances in the country (p.5). Docot (2011) notes that Three decades later, after the institutionalization of labor exports from the Philippines, what started as an interim strategy for debt payment and response to inflation has become a permanent and legitimized government program (p.5). The Philippines is presently one of the top exporters of labor. Paul (2011) cites an October 2005 survey where 33 percent of adults surveyed expressed want to migrate abroad, work and live there (Asis, 2006, cited in Paul, 2011). Asis (2006, cited in Paul, 2011) argues that a culture of migration has been created in the country, spurred by the Philippines continuing economic difficulties, the institutionalization of the migration industry, the large volume of remittances sent back by Filipinos each year, and the substantial Filipino diaspora spread throughout the world that can provide migration assistance to relatives and friends in the Philippines who seek to leave the country as well (p.1846). Add to this the continuous heralding of overseas workers by the government through tagging of various heroic names: They have been called modern-day heroes (de Guzman, 2003) by the Aquino administration, citizens of the world by the former Chair of the Commission of Filipinos Overseas, Dante Ang (2005), economic saviors by Estrada (1999), and overseas Filipino investors by Arroyo (2001). To give credence to the contributions of Filipino overseas migrants to the country s economy, to recognize their status as somewhat accomplished citizens, and to laud their crucial roles in international diplomacy, they have been called the new aristocrats (Guevarra, 2006) and the new ambassadors of goodwill (Guevarra, 2003) (Docot, 2009, p.6). Page 11 of 145

12 Amid increasing structural impediments and economic crises, the recent years saw a continuous increase in Filipino migration. Currently, the Commission on Filipinos Overseas reports a stock estimate of Filipinos worldwide in 2012 to be at 10,489,628. According to the Philippine Overseas Employment Agency, the number of deployed OFWs in 2012 reached 1,802,031, the most popular destinations of which include Saudi Arabia, the United Arab Emirates, Singapore and Hong Kong. Of the 458,575 deployed land-based new hires in 2012, service workers constitute a big number (155,831). By occupational group, service workers constitute majority of the deployed new hires in 2012 (222,260). In addition, Remo (2012) reported that about 10 percent of Filipino households are considered to be partly or fully dependent on remittances sent by overseas-based families. Limited domestic employment opportunities and the high compensation package relative to the Philippines attract them to seek overseas employment. According to Macaraeg (2005), Filipinos are in demand abroad because of their aptitude in English, their schooling in Western standards of education, their reputation of being hardworking, ingenious, pliable, and patient employees with a willingness to accept a lower compensation, and as a value added to some employers, their observance to some religious (Christian) values. In contemporary periods, this scenario has become a fixture in the country affecting the social, economic and cultural make-up of Filipinos. The magnitude of Overseas Filipino Workers (OFWs) and the increasing amount of remittances that they sent to their families on a regular basis amounting to USD20.1 billion as of 2011 and USD17.5 billion as of January to October 2012 as per the statistics from the Bangko Sentral ng Pilipinas (BSP). OFW remittances contribute so much to the economy s growth on a macroeconomic level since it promotes competitiveness in terms of the exchange rate. On a microeconomic level however, the effects vary. Typically, OFWs work abroad in order to augment family income. Hence, remittances affect a household s consumption patterns, which results in more expenditure on food, education, and leisure. It also enhances the household s propensity to save. Accumulated earnings allow investments that would not have otherwise been made due to credit constraints and large capital requirements (Yang, 2008). The vast opportunities abroad stimulate the desire of Filipinos to earn more. This international migration continues to be an important component of Philippine development especially among households with migrant workers, the proportion of which is steadily increasing (Orbeta, 2008). Existing literature have not exhaustively delved into how OFWs and their households utilize remittances in terms of new business creation. Human capital and entrepreneurial ideas however, may be accumulated when working overseas which may be used for business (McCormick & Wahba, 2001). OFWs, who engage in business, venture into different types of businesses. Some settle for a micro-store that caters to the needs of the immediate community while some engage in a more complex business model like real estate (Aldaba, Chua, Guarnes & Ong, 2010). Furthermore, food franchises were ranked as the top business ventures that OFWs likely go into (Llamas, 2010). This type of venture has the potential for quick profit and requires minimal capital which makes it attractive. A successful business venture primarily depends on the skills and training the entrepreneur possesses. Engaging in business further augments household income of OFW families and for most, serve as the incentive for going into business further. Knowledge transfer is also positively related to business creation (Brinkerhoff, 2006). This allows a concept of brain gain as opposed to the concept of brain drain. Page 12 of 145

13 Chapter 3 Conceptual Framework and Research Methodology Conceptual Framework Facilitating and Inhibiting Factors of Entrepreneurial Activities: Individual There are certain personal characteristics that may facilitate or inhibit individuals to pursue entrepreneurial activities. Although it is very difficult to measure certain qualities that may engender entrepreneurship, there are certain indicators such as, but is not limited to, education, age, wealth, and work experience. Likewise, existing literature has documented various key determinants of self-employment or entrepreneurship wherein environmental factors, demographic factors, and individual intrinsic characteristics influence decisions on becoming an entrepreneur as shown in Figure 1. As argued by Pinoy-Business (n.d.), OFWs must not rely on favorable exchange rate and must not consider working abroad simply as workers they must become entrepreneurs since some are better equipped due to their exposure to foreign cultures that force them to work harder, be on time, be disciplined, and be confident. That is, they are naturally exposed to new ideas abroad. Education Education is deemed to be a facilitating factor because the skills and knowledge acquired in higher education can be applied through entrepreneurial activities. The educational attainment of a potential entrepreneur may have a positive effect on engaging in entrepreneurial activities if the education was really pursued for this purpose. That is, courses in business management, computer technology, as well as the technical and vocational course may have some entrepreneurial bent. However, there are also possibilities that education will have an inhibiting effect on entrepreneurial activities since courses, particularly in higher education, are intended for formal employment. Highly educated individuals may take entrepreneurship as an option because of difficulties of finding employment in the formal sector. Hence, there is a need to examine which is more prominent the facilitating effect or the inhibiting effect. Various literatures have posited that education is also an essential factor in the decision to engage in entrepreneurial activities - that the educational attainment of an individual has a direct relationship with the creation of businesses and its success. According to Bruderl, Preisendirfer & Ziegler (1992), the chance of survival of a new business is positively affected by the length of stay that the owner had in school. Also, Mata (1996) suggested that entrepreneurs and business owners who are better educated create larger companies. Hisrich & Brush (1988) found out that research experience, educational level, managerial skills have impacts on success of entrepreneurship. Page 13 of 145

14 Figure 1. Literature Map / Conceptual Map Individual Factors Household Factors Environment al Factors Wealth, Income, and Savings McCormick & Wahba (2001); Verheul, Wennekers, Audretsch & Thurik (2001); Hisrich & Peters (2002) Mesnard (2004); Lingelbach, De La Vina & Asel (2005), Ang, Guntur & Shikha Education Hisrich & Brush (1988); Bruderl, Preisendirfer & Ziegler (1992);Robinson & Sexton (1994);Light & Rosenstein (1995); Mata (1996);Rogoff, Lee & Heck (2001);Hosseini, Mirdamadi & Nejad (2009); Rivera & Reyes (2011) Age Delmar & Davidsson (2000) Carroll, Holtz-Eakin, Rider & Rosen, (2000);Lin, Picot, & Compton (2000) Georgellis, Sessions & Tsitsianis (2005);Millán Tapia, (2008); Thurik, Carree, Van Stel & Audretsch (2008);Rivera Work Experience Freemann (1982); Evans & Leighton, (1989);Roberts, (1991); Delmar & Davidson, (2000); Klepper & Sleeper Entrepreneurial Activities Family Size Storey (1994); Gajigo (2007); Verheul, et al. (2001); Ciarili, Parto & Savona (2009); Rivera & Reyes (2011) Receipt of OFW Remittances Rivera & Reyes (2011), Other Stochastic Factors Social Factors Casson (1982),; Granovetter, (1985); Koller (1988)); Aldrich (1999);Hills, Hybels & Lumpkin (1999); Burt, (2004); Urbano (2006), Thornton, Ribeiro- Economic Environment Baptista, Escaria & Madruga (2005); Fuduric (2008) Institutional Factors Apalisok, (2009); Unlad Kabayan (n.d.) Page 14 of 145

15 The reason for this positive relationship has been argued by Rogoff, Lee & Heck (2001) that education increases an individual s personal confidence and self worth, which are considered to be necessary characteristics for entrepreneurial success. Venturing into business is always accompanied by risks. Based on the findings of Robinson & Sexton (1994), increases in educational attainment amplify the probability of venturing into business; leading to increased business longevity; which also leads to a direct relationship with revenue brought about by increases in self-confidence that mitigate the risk that an entrepreneur has to experience. Light & Rosenstein (1995) provided empirical evidence wherein each additional year of education increases the chances of a worker venturing into self-employment by 0.7 percent. Meanwhile, Robinson & Sexton (1994) measured this relationship at 0.8 percent together with the USD 1, increase in revenue for each additional year of education. Hence, education plays a significant role for the success of salaried workers and the success of those who are self-employed. Furthermore, Rogoff, Lee & Heck (2001) emphasized that highly educated entrepreneurs have the tendency to utilize technology as a tool of success that aid businesses to be more successful in terms of financial and size scale. Finally, results by Hosseini, Mirdamadi& Nejad (2009) revealed that there is a need for more training and education especially for rural women to improve their entrepreneurial activities. Age Age is another important personal characteristic (Bates, 1995; Beugelsdijk & Noorderhaven, 2005; Davidsson & Honig, 2003; Dunn & Holtz-Eakin, 2000; Hout & Rosen, 2000; Thurik, Carree, Van Stel & Audretsch, 2008). Usually, young people are more entrepreneurial since they are more mobile occupationally, more creative, and have lower opportunity costs. Likewise, they are less risk averse and are very much willing to try a number of options. Young individuals may explore entrepreneurial routes since they may have some difficulties entering the formal labor market and are still accumulating work experience. On the other hand, it can be argued that most entrepreneurs are from the middle age and retired individuals. Some have learned the ropes of the formal sector and are constrained by the rigidities of the formal sector. Middle age individuals may become entrepreneurs to enhance its capacity to generate income, which is constrained by the formal employment route. Hisrich & Brush (1988) found that age the age of the entrepreneur may affect entrepreneurial activities indirectly due to the other key determinants such as accumulation of human capital (Carroll, Holtz-Eakin, Rider & Rosen, 2000; and Millán Tapia, 2008), financial capability, social capital (Millán Tapia, 2008), risk aversion (Holtz-Eakin, Joulfaian & Rosen, 1994) and health status (Weber & Schaper, 2003). However, the study of Mata (1996) suggested that older entrepreneurs are more inclined to create larger companies which may be attributed to the higher human capital gained through years of prior work and experience. However, it can also be perceived that entrepreneurs and business owners is not restricted to older people due to changing trends in the business community. Still, the literature is not converging on a unified conclusion. Delmar & Davidsson (2000) derived a negative relationship while Borjas & Bronars (1989) and Lin, Picot, & Compton (2000) concluded on a positive relationship. Meanwhile, Rees & Shah (1986) and Georgellis, Sessions & Tsitsianis (2005) reported a non-linear relationship. On Page 15 of 145

16 the other hand, most experimental studies suggested a positive and concave shaped relationship between the individual's age and entrepreneurial activities. Wealth, Income, and Savings Similar to labor force participation rate, a large wealth, mostly physical and land, may hold back a wealthy individual from seeking employment, formally or informally. These individuals are satisfied with the income they receive from the returns of their accumulated assets. Retired individuals may have relative wealth and may not be willing to gamble their wealth in entrepreneurship activities. On the other hand, the wealth that they possess is a viable source of capital that can be used to further increase income and their stock of wealth. Likewise, there are inconsistent findings on the influence of income on the level of selfemployment (1) if the wage rate is high then the opportunity cost of self-employment is high; and (2) high salaries are an indicator of an affluent economy with above average rates of small business survival; and (3) high income levels indicate that founders find start up financial capital and at a lower cost Verheul, Wennekers, Audretsch & Thurik (2001). According to the Asian Development Bank [ADB] (2006) and Ang, Guntur& Shikha (2009), the households who receive remittances earn more from their investments and save more than their non-receiving counterparts. This can be a source of motivation for entrepreneurship, which promotes financial independence and decreases the dependency for further remittances in the future. Seed money, sourced from an entrepreneur s personal savings, is also a crucial factor whenever an entrepreneur is starting a new business venture. Hisrich & Peters (2002) claimed that entrepreneurs rely heavily on their personal savings because it is readily available once needed; and are a good signal in attracting external sources of funds from bank loans, investors, and venture capitalists. Likewise, according to Lingelbach, De La Vina & Asel (2005), entrepreneurs rely on informal sources of financial funds, which include personal savings and household savings to start their own business. Hence, it can be concluded that external funding plays a limited role in entrepreneurial funding. Also, Basu & Parker (2001), agreed that self-financing is a key determinant in starting up a business. According to Woodruff & Zenteno (2001), access to capital provided by savings of returning migrants or remittances from family members may affect the decision to start an enterprise, the size of the enterprise conditional on start-up, or the probability the firm remains in business. Moreover, Woodruff & Zenteno (2001) concluded that entrepreneurs finance their investment almost entirely through personal savings and loans from family and friends. About 24 percent only of the firms reported having received loans to start their business and 80 percent of which reported that the source of loan was from a family or friend, meaning only 20 percent of those that received loans are from sources other than savings (i.e., financial institutions and microfinancing). Similarly, according to McCormick & Wahba (2001) and Mesnard (2004), individuals who have higher savings are much more inclined to become entrepreneurs. McCormick & Wahba (2001) established that increase in overseas savings, defined as the money kept within the migrant worker s pockets, results in Page 16 of 145

17 an increase in probability of entrepreneurial activity. Overseas workers usually face capital constraints in fuelling productive investments but given overseas savings, capital constraints will be less likely a problem once they return home (McCormick & Wahba 2001). Likewise, Mesnard (2004) indicated that there is no evidence to reject the exogeneity of savings and further results showed that savings positively affect the probability of migrant workers upon return to be self-employed. According to the ADB (2006), remittances in the Philippines are used for basic financial activities wherein aside from consumption, 82 percent of recipients maintain a savings account, while 19 percent uses the remittances to keep a small family or commercial business and 15 percent uses remittances to take out a mortgage loan. Thus, savings can reinforce entrepreneurial behavior due to the increase in excess income. Work Experience An individual s work experience is related with his or her age. Most of the entrepreneurial activities were learned from the formal employment sector, locally or internationally. It may be that the experience they have acquired may be a facilitating factor. However, workers who have participated in the international labor market may not engage in entrepreneurship. From the study of Fuduric (2008), two aspects of life or work experience have proven to increase the probability that individuals will discover opportunities, namely, job function and experience variety. Individuals in specific careers (i.e., natural sciences, engineering and R&D) are more likely to see new venture opportunities. The nature of these jobs seems to provide easier access to new knowledge and technology (Freeman, 1982; Klepper & Sleeper, 2001; and Roberts, 1991). Regarding experience variety, it has been shown that individuals with greater variation in employment experience and in the places that they have lived (geographic mobility) are more apt to become entrepreneurs (Evans & Leighton, 1989 and Delmar & Davidson, 2000). Facilitating and Inhibiting Factors of Entrepreneurial Activities: Household Family Size Household size is also regarded as a factor of entrepreneurship. Ciarili, Parto & Savona (2009) reported that household size has a positive effect on the probability of entrepreneurship. A large household size in a labor-abundant economy is more inclined to have small businesses due to survival and risk diversification. This implies that in the Philippines, larger households are more likely to engage in entrepreneurship. However, Gajigo (2007) observed the number of individuals in a household has little effect on the probability of individuals engaging in business or self employment. Meanwhile, on a macroeconomic level, according to the International Labor Organization [ILO] (1990), the population growth rate is a statistic that can have various interpretations for enabling entrepreneurship - economies experiencing population growth have a larger portion of entrepreneurs in their workforce than population not experiencing growth. However, population changes have other indirect effects on entrepreneurship levels. First, according to Storey (1994), if a nation is experiencing rising levels of immigration, levels of entrepreneurship tend to increase as well. Population growth, as per Verheul, et al. (2001), has the tendency to put pressure on wages; thus, lowering the opportunity cost of starting a Page 17 of 145

18 business. This would make entrepreneurship a more attractive career option. Third, population growth has the effect of increasing demand for consumer goods which increases market opportunities for new products and services. External Remittances By and large, according to Rivera & Reyes (2011), the reasons why an overseas worker prefers to work abroad revolve around the ultimate objective of achieving financial security. A migrant worker can be deployed in white and blue collared jobs. These migrant workers, who are often deployed in developed countries, are able to earn a higher income relative to what they can earn in the Philippines. Hence, due to the much higher income, in the form of remittances, earned by overseas workers; the probability of entrepreneurship rises because they are able to provide the financial resources to start their own business. Therefore, remittances can induce entrepreneurship of OFW-dependent households as seen by the positive and statistically significant impact of remittances on the probability that a household will engage in entrepreneurial activities. However, it must also be noted that an overseas worker has other alternatives aside from engaging in business. Some overseas workers invest in financial instruments such as stocks, bonds, time deposit, and other financial investments. On the other hand, some overseas workers invest in the human capital of their members and investment in physical assets. Lastly, another feasible alternative is to invest remittances in MSMEs such as convenience stores, franchises, and other business concepts, whose objective is to maximize profits. As such, this will augment household income and provide a continuous flow of income if managed properly. Note that earning profits from business activities is not guaranteed because of the probability of earning a net loss. Hence, if ever an OFW will reside in the Philippines, there is now an alternative source of income since getting another contract abroad is not guaranteed. Meanwhile, MSMEs will provide employment and contribute to national income growth. In addition, investing in a business means placing remittances into productive use and a rational entrepreneur will always drive its business to its maximum potential (Rivera & Reyes, 2011). For instance, as per the reports of Remo (2012), more OFW-dependent households reliant on remittances are expected to venture into business as the appreciation of the Philippine currency has cut the value of the foreign currency they receive from abroad. According to Esquire Financing Inc. 1 as cited by Remo (2012), with the strong domestic currency pulling down the value of remittances, recipient households may be pushed to engage in business to boost or augment their income. Entrepreneurship among OFW-dependent household is being driven by the positive outlook on the economy and the strengthening of the PHP, which is expected to continue in the years ahead. Hence, if this continues, the income of OFW-dependent household will shrink if the family will not engage in other incomegenerating activities. Moreover, according to the BSP, there is a gradual rise in the number of OFW-dependent households who are investing the money received from family members abroad. As cited by Remo (2012), in a survey conducted by the BSP, during the first quarter of 2012, 8.5 percent of remittance-dependent households in the country reported to have invested some of the money sent home by family members working abroad. This was up from 6.4 percent recorded in the same period last year. Moreover, as cited by Remo (2012), 1 Esquire Financing Inc. caters to the credit need of small and medium scale enterprises (SMEs). Page 18 of 145

19 the BSP has projected that remittances will grow by at least 5 percent this year from last year s USD 20.1 billion. In Peso terms, however, economists expect remittances in local terms to post minimal growth because of the appreciation of the Peso against the greenback. Meanwhile, according to Pinoy-Business (n.d.), businesses oftentimes require a huge capital - something that the small entrepreneurs may not have at their disposal; however, imagine if the OFWs liaise to form a cooperative, they will indeed benefit from it not only because they themselves are the customers, but they'll generate income from it. However, its feasibility is still something to be seen. According to Andes (2012), there are many success stories of OFWs that turned into entrepreneurs; however, some also fail (who were not able to build their own homes; whose children did not finish school; and whose business ventures flopped). Likewise, some OFWs begin establishing businesses while still abroad that in addition to their savings, they take out additional loans for their venture; when their venture suffer financial loss, they are buried in debt. This is because of mismanagement Andes (2012) emphasized that OFWs in quite a number of cases entrust their business to family members or relatives who are not able to jumpstart the business due to lack of knowledge and experience financial management skills could be lacking. On the other hand, success stories of OFWs turned entrepreneurs have the following common elements proper planning; cutting household expenses to increase savings; handled by people who have enough knowledge in and passion for the type of business chosen. These OFWs were able to avoid the scenario wherein they end up renewing their overseas contract over and over again because nothing happens to the businesses they establish (Andes, 2012). The succeeding paragraph presents some success stories of OFWs turned entrepreneurs. Back in December 2006, five OFWs were renowned for their success in entrepreneurship as listed by Pinoy-Business (n.d.). These inspiring and successful OFW-entrepreneurs are the following: (1) Agnes Marrero from the Mountain Province now managing a family resort, a dry goods store, and a banana plantation in Tadian, Mountain Province, a mother of four, she worked as a domestic helper in Hong Kong SAR, China for 15 years; (2) Eugenio Tayag from Tuguegarao, Cagayan Valley a medical doctor, now has a farm and a ranch in Tuguegarao, while at the same time working as the City Health Officer of Tuguegarao, he previously worked in Jeddah, Saudi Arabia; (3) Consuelo Valencia from London, United Kingdom became a successful businesswoman by setting up remittance, freight and travel services, ventured into the sales of phone cards and real estate and recruitment and publishing house business, she was a domestic drudge in London; (4) Michael Abubakar from Sulu a civil engineer, he returned home to build homes for the homeless in conflictstricken Sulu, he worked in the Saudi Arabia for 27 years; and (5) Norma Macalindong from Batangas successfully ventured into selling Filipino food and products in Rome, Italy, she previously worked in Rome as a part-time domestic helper. Facilitating and Inhibiting Factors of Entrepreneurial Activities: Environment Economic Environment Entrepreneurship exists under any economic condition; that is, the state of an economy influences the tendency and form of entrepreneurial activity. According to Fuduric (2008), economic conditions affecting the type of opportunities available are: the stability of Page 19 of 145

20 macroeconomic conditions and the level of economic growth, employment levels, income disparity, capital availability and taxation. When an economy experiences stable macroeconomic conditions and sustained economic growth, investor confidence increases and the higher the likelihood that the form of entrepreneurship being manifested is also of a higher value to society. Often in such environments, low-value, low-innovation entrepreneurship will decrease in favor of employment and high value, innovative entrepreneurship will increase because the environmental conditions have improved enough to provide higher value resources. The state of economic health and enhanced entrepreneurial activities possesses a dual relationship or a feedback effect. The reverse causality indicates that higher entrepreneurial activities will generate employment opportunities in a country and thus will result in higher economic activities. This is reflected in the study of Baptista, Escaria & Madruga (2005) that investigated on whether a high level of new business formation stimulates employment. That is, the indirect supply-side effects of new firm births, whether due to greater competition, efficiency or innovation, seem to be at least as important as the direct effects associated with employment creation by the new entrants. Their finding suggested that new entrants bring about improvements to overall regional competitiveness, but that such improvements only become significant after some time. As a matter of policy on a macroeconomic level, Motohashi (n.d.) emphasized on (1) foreign direct investment regulation through growth by inward FDI, which can be a national strategy for industrial development; (2) differentiation in industry and product architecture, for instance between modular electronics vis-à-vis integral automobile; (3) positioning oneself inside the global supply chain is vital to build indigenous capabilities. That is, innovations in SMEs become an important policy. Moreover, as reported by Beduya (2011), the incumbent Aquino Administration included entrepreneurship and innovation policy to its flagship programs to achieve inclusive development. In the Philippines, enterprise by necessity is entrenched in the social framework, expediting the process from entrepreneurship to innovation by policy is a viable option to achieve real inclusive development. Beduya (2011) asserted that even if modern macroeconomic planners can say that innovation and entrepreneurship do not manner in their models; pragmatic individuals managing actual businesses say they do matter. For instance, infrastructure-focused publicprivate partnership is a trickle-down strategy designed to bridge a financing gap between savings and investment since investment and growth are related. Page 20 of 145

21 Figure 2. Entrepreneurial Process Affecting National Economic Growth Source: Beduya (2011); Global Entrepreneurship Monitor (GEM), Website: Social Factors According to Aldrich (1999), Casson (1982), Koller (1988), Hills, Hybels & Lumpkin (1999), and Urbano (2006), beyond simple economic decision making, it was the social conditions of entrepreneurs combined with the social nature of entrepreneurial opportunities that affected the entrepreneurial process; that is, entrepreneurship is as much a social as an economic phenomenon because it is a vital way individuals receive information. Hence, as per Thornton, Ribeiro-Soriano & Urbano (2011), because social capital is widely assumed to be a pivotal asset affecting the probability of funding for new ventures and their longerterm success, the concept has attracted the attention of policy-makers who aim to promote new business venturing as a strategy to improve economic performance among their constituencies. That is, assisting individuals to build their social capital by forging links between inventors, potential entrepreneurs, venture capitalists and other related key actors who control start-up resources. Meanwhile, Audretsch, Aldridge & Sanders (n.d.) as cited in Thornton, Ribeiro-Soriano & Urbano (2011) provided evidence that networking is a determinant for individuals to establish new business ventures. Overall, their findings revealed that the networking event they have established in the study did facilitate entrepreneurship and innovation by those who participated. This can be explained by the fact that entrepreneurs require help to mobilize social capital. However, it is not just building networks that is important but also how they are built that counts in terms of the value of an entrepreneur s social capital and the capacity of their relationships to manifest strategic resources whether it be finding a job (Granovetter, 1985) or discovering and maximizing value on an entrepreneurial idea (Burt, 2004). Thus, according Thornton, Ribeiro-Soriano & Urbano (2011), the contingent value of Page 21 of 145

22 different network structures in the start-up context is vital wherein under what conditions it is better for the entrepreneur to have cohesion or structural holes in their networks represents important unexplored areas in which to elaborate and apply existing network theory to entrepreneurship scholarship. Lastly, according to Zhang, Soh & Wong (n.d.) as cited in Thornton, Ribeiro-Soriano & Urbano (2011), social networks are useful information channels and entrepreneurs are more likely to turn to interpersonal ties for seeking contacts or acquiring resources. It revealed the importance of both formal and informal institutions and organizations in understanding the contingent value of social capital to entrepreneurial activity. Institutional Factors One of the most common ways by which individuals become entrepreneurs is through starting-up their own business, in the form of a micro-store, by using the savings they have from working either in the domestic labor market or abroad. These stores are a viable option especially for households in the lower income margin. Another productive way on how individuals can use up their savings is to invest in franchising or by pooling funds to invest in a larger business ventures and to harness economies of scale. Investing in small businesses may potentially result in having a higher income than working abroad. Usually, an individual who wants to engage into business will start as a stockholder or associate of a certain firm that will provide more knowledge on the operations of the business prospect before venturing alone. Meanwhile, some entrepreneurs start at once without even having a sustainable business plan; however, this decreases the probability of having a stable and successful business. Another way to acquire knowledge on business prospects is by attending seminars offered by the government and NGOs. Business and investment seminars are being provided to individuals who plan to seek business opportunities in the country. Such seminars are being conducted by the Department of Trade and Industry (DTI) and the Philippine Franchising Association (PFA) (Apalisok, 2009). Moreover, the Overseas Workers Welfare Administration (OWWA) and the Department of Labor and Employment (DOLE) provide benefits and services to migrant workers through reintegration programs that provide business counselling, financial literacy seminars, and livelihood programs to returning OFWs. Furthermore, OWWA partnered with the National Livelihood Development Corporation (NLDC) to provide OFW households with seed money through loans. (Overseas Welfare Workers Administration [OWWA], n.d) On the other hand, NGOs also have their own programs to help Filipinos become entrepreneurs. For instance, Unlad Kabayan has developed the Migrant Savings and Alternative Investment for Community Development and Reintegration (MSAI-CDR), which provides workers with investment mobilization, credit services, business incubation, enterprise development services, technical skills training, and partnership building (Unlad Kabayan, n.d.). The opportunity to become an entrepreneur in the Philippines is indeed feasible. The government, together with NGOs, has been doing initial steps by establishing several programs that will help OFWs enter into entrepreneurship. Venturing into business enterprises through the use of remittances can potentially increase household income on the microeconomic level and address national issues specifically poverty through the provision of employment. One of the advocacies that see the opportunity of entrepreneurship as means of poverty reduction is the Go Negosyo. It is an advocacy of the Page 22 of 145

23 Philippine Center for Entrepreneurship (PCE) that aims to change the risk aversion of Filipinos towards entrepreneurship. Through their caravans, business seminars, multimedia campaign, and publications, Go Negosyo believes that it can influence entrepreneurship as an alternative for unemployment and temporary labor migration. Generally, it is an advocacy serving as an avenue for Filipinos seeking business opportunities to various programs, partnerships, and seminars that will potentially entice them to engage in business. Likewise, it aims to develop entrepreneurship among Filipinos which could serve as a catalyst in spearheading the Philippine economy. There is also the Flexi-Fund Program of the Philippine Social Security System (SSS), a voluntary provident fund that caters to OFWs financial security. It encourages OFWs to save while they work abroad. Also, it is a program where OFWs can save more for the future by paying an amount aside from regular monthly SSS premiums. Alternatively, an OFW can pay his or her contribution to the provident fund anytime after the payment of the maximum required regular SSS membership monthly contribution has been made. Hence, any amount paid in excess of the required maximum regular monthly contribution will be automatically applied to the fund. A worker may continue paying the contribution to the fund even after the termination of employment, as long as the worker continues to pay the required maximum contribution to the regular SSS program. Payments shall cease upon filing of a final claim under the regular SSS program. It must be noted that the accumulated funds will not be subject to tax and it can be acquired as early as 3 years from date of membership. Because the flexi-fund is a provident fund, total accumulated amounts shall only be acquired by the member. Members who have availed and will avail this program will be able to utilize the funds for the accumulation of the funds for financial needs, early withdrawals for financing, holding onto the fund until retirement, as well as business ventures (GMANews.TV, 2008). Methodology To investigate the behavior of households with OFW members towards business creation, this study utilized two data sets: one coming from national representative surveys and another one from a subset identified from the census of target communities using the Community-Based Monitoring System (CBMS) methodology. Underlying trends in the data will be explored and analyzed using aspects identified in the literature as well as descriptive statistics and econometric analysis through probabilistic models. National Representative Surveys An analysis of households with Overseas Filipino Workers (OFWs) was built up first to provide a context at the national level by using the following surveys conducted in 2003: Family Income and Expenditure Survey (FIES), Labor Force Survey (LFS) and Survey of the Overseas Filipinos (SOF). The SOF is conducted as a rider to the LFS and is released in response to the need for more accurate data on the number of overseas Filipinos. It covered a total of 2,791 individuals who were abroad, approximately seven percent of whom were not working at the time of Page 23 of 145

24 the survey. Only those who were working (2,591 OFWs) were used as a sample in describing the characteristics of OFWs and households with OFWs. These sample OFWs were merged with the FIES and LFS datasets to further explore their composition, demographic and economic characteristics and to determine their probability of being involved in an entrepreneurial activity. The FIES, on the other hand, is a triennial survey conducted by the National Statistics Office (NSO) nationwide. Being the primary source of income and expenditure, the study make use of data on entrepreneurial income, wages, savings, food, housing and debt-related expenditures from the FIES. Meanwhile, the LFS dataset provided information on the occupation of the working members. Community-Based Monitoring System Data from the CBMS was used to provide micro-level insights about the effects of various selected factors on the decision of households with OFW members to engage in entrepreneurial activities. The CBMS is an organized way of collecting ongoing or recurring information at the local level to be used by local governments, national government agencies, NGOs, and civil society for planning, budgeting, and implementing local development programs, as well as for monitoring and evaluating their performance. Fundamentally, it is a tool for improved local governance and democratic decision-making that promotes greater transparency and accountability in resource allocation. Coverage of the Study The sites for the project were chosen based on the following considerations: (a) had completed at least two rounds of the CBMS census; (b) had a long history of out-migration and had been traditionally a migrant sending area and a regular recipient of remittances; (c) had local industries that are distinct from the other site to be chosen; (d) had a significant number of OFWs that can be covered for the study, and (d) willingness of LGU/local partner to provide permission to undertake the study in the identified project sites. The data collection was conducted in nine barangays in two municipalities in the Philippines. In the municipality of Carmona, province of Cavite, respondents were taken from the urban barangays of Lantic, Maduya, Mabuhay and Milagrosa. In the municipality of Mabini, province of Batangas, respondents were taken from the urban barangay of Solo, and the rural barangays of Gasang, Pulong Balibaguhan, San Francisco and Talaga Proper. A total of 76 households were interviewed: 37 from Carmona and 39 from Mabini. Survey Instrument The CBMS Household Profile Questionnaire (HPQ) was administered to gather data on the socioeconomic conditions of as well as information on remittances received by the households. In addition, a rider questionnaire, the Remittance and Entrepreneurship module, was developed and used to obtain information on the businesses that have been supported by remittances. Page 24 of 145

25 Sampling and Population The survey utilized a purposive sampling method. The 2009 CBMS results from Mabini, Batangas and the 2011 CBMS results from Carmona, Cavite were first used to identify the households with overseas Filipino workers (OFWs) and with business. An initial list containing the names of all households with OFW members was drawn up from these databases. Initially, a household listing operation was deemed necessary to validate who among the listed households with OFW members have existing businesses. However, after a preliminary field visit, it was found out that most OFW houses, particularly in Mabini, were mostly unoccupied with only caretakers left. It was then suggested that the household listing operation be undertaken by barangay officials from the four barangays in Carmona and two barangays in Mabini. The listing operation yielded 132 possible respondents from Carmona and 58 from Mabini. Of the 132 households listed, 108 were visited. About 70 percent were interviewed and were eventually included in the sample. About 18 percent of the households visited were unavailable for the interview while around 7 percent refused to be interviewed (Table 1). Table 2. Sample households, Carmona, Cavite and Mabini, Batangas, CBMS Survey 2013 Number of households Proportion Response category All Carmona Mabini All Carmona Mabini Total Interviews Ineligible Nobody home Refused Respondent is busy / unavailable to be interviewed Econometric analysis and model specification Trends on relevant factors that facilitate or inhibit entrepreneurship among households with OFW members were investigated using the merged 2003 SOF-FIES data. The findings were mirrored or contrasted at the local level using the CBMS data depicting differences or similarities in the two communities. Aside from descriptive and exploratory techniques, econometric analyses were employed to establish these trends. Classical, Logistic and Cox Proportional Hazards Regression Since the objective of the study is to examine the different determinants of entrepreneurship, there were three levels of measurement available on the phenomenon of interest that were investigated: Page 25 of 145

26 Table 2. Dependent variables and levels of measurement Dependent variable Level of Measurement Usage Approach 1 Income from entrepreneurial activity 2 Entrepreneurship / business indicator 3 Time until investing in business Ratio (continuous) 2003 SOF-FIES Classical linear regression Categorical 2003 SOF-FIES; Logistic regression (dichotomous) 2013 CBMS Time 2013 CBMS Cox proportional hazards Factors affecting entrepreneurial activities The common objective in building the model is to find relevant factors, i.e., through a set of explanatory variables X (based on literature) to the dependent variable. The first dependent variable is the classical linear regression, i.e., for a set of explanatory variables X (see Table 3), the mean or expected value of the dependent variable is E (eainc) = X which can be estimated through ordinary least squares (OLS) or maximum likelihood estimation (MLE). Table 3. Explanatory variables for the model specification for 2003 SOF-FIES Variable Description entrepind ofwremitind lnofwremit OFW Characteristics Household characteristics ofw_age ofw_age2 ofw_sex ofw_yrs ofw_educ continent hsize depratio lnexpfood debtind wsave newhouseind wagessr Household with entrepreneurial activity With remittance from OFW Log of OFW remittance Age of OFW Age of OFW squared OFW is female OFW years stayed abroad Educational attainment of OFW OFW continent of work Household size Dependency ratio Log of food expenditure With debt related expenditures With savings withdrawal Constructed a new house Income from salaries and wages (square root) Employment characteristics wprofessionals wlaborers woperators wtrades nwjob With members who are professionals With members who are laborers With members who are machine operators With members who are engaged in trades Number of members with job Page 26 of 145

27 Determinants of propensity to engage/invest in business For the second dependent variable the common econometric model is the probabilistic model on the following probability = P( entrep = 1) where entrep denotes whether the family / household of the OFW invested in business or engaged in entrepreneurial activity. From this, the odds of investing in business or engaging in entrepreneurial activity is defined as = 1 Now, the objective is to express the probability in terms of X, i.e. P ( entrep = 1) = ( X). Hence, the odds ratio ( ) given two events X = x } and X = x } is ( x a, x b { a { b ( X X = x a ) ( X X = xb ) ) = 1 ( = ) 1 ( = ) X X x a X X xb Since entrep ~ Be( ), modeling entrep in terms of X (see Table ) can be done through the logit link 2, i.e. 1 ( X) logit( entrep X ) = log 1 p = j X 0 ( X) j= 1 and given the model, the odds ratio ( ) given two events X = x } and X = x } can be expressed by { a j { b ( x a, xb ) = exp logit( entrep X = xa ) logit( Y X = xb ) For instance, given a univariable model dichotomous variable X, (1,0) = exp{ ˆ} while for a univariable model with continuous variable Z, the odds of { Z = z c} compared to { Z = z} is ( z c, z) = exp{ c ˆ} 2 Bernoulli distribution is a member of the exponential family under Generalized Linear Models (GLMs), see Hosmer and Lemeshow (2004). Page 27 of 145

28 This is under the assumption that the model is a main effects model 3. Table 4. Explanatory variables for the model specification for CBMS data j Variable Description Household characteristics 1 carmona 1 - Carmona; 0 - Mabini 2 ofwsqrt Square root of income from OFW remittance 3 hsize household size 4 illshock household members got sick 5 nmemschool Number of members currently attending school including college 6 depratio Ratio of number of members below 15 and 65 and above to number of members waginc Income from wages (in 10,000) OFW characteristics 8 ofw_age, ofw_age2 Age of OFW, Age of OFW squared 9 ofw_sex 1-female; 0-male 10 ofw_years Number of years the household has been sending OFWs 11 ofw_coll2 OFW educational attainment 12 continent Continent of work Usage of remittance 13 useremit_healthmaint Household of OFW has allotted share of remittance for health and related expenses 14 useremit_debt Household of OFW has allotted share of remittance for OFW and other related debts 15 useremit_assetbldg Household of OFW has allotted share of remittance for building assets such as house, lot, vehicles, etc. 16 useremit_savebank Household of OFW has allotted share of remittance for saving in bank Skills 17 bus_plan Household of OFW: with skill in business planning and management 18 sales_mktg Household of OFW: with skill in sales and marketing How soon do OFWs invest in business? The last variable depicts the length of time until OFW households invest in business. The previous dependent variable represents the question what is the chance that an OFW will invest earnings in business? Here, the chance will be extended to temporal time until an OFW household invests in business. Let T represent the time until a household with past or current OFW establish a business, the probability that a particular household invests before t is F T ( t) = P( T t) 3 For more detailed discussion, see Hosmer and Lemeshow (2004). Page 28 of 145

29 which is the cumulative distribution function (CDF). establish a business after t is The probability that a household S ( t) = 1 F ( t) T which is the survival function in literature. The interest is also on the conditional probability given that the household has not invested yet at time t, what is the probability that it will invest in the near future, i.e. between t and t t. This is denoted by the hazard function h( t) t = P( t < T < t t T > t) For a differentiable F T (t) and for small t (instantaneous), the hazard function becomes P( t < T h( t) = lim < t t T t T > t) FT ( t t) FT ( t) f = lim = t 0 [1 F ( t)] t S T t 0 T T t or the probability density function (PDF) over the CDF. Note that in this study, the converse of the term hazard is being used. 4 Loosely, this maybe viewed as the rate of establishing a business by the OFW households. The cumulative hazard function is H ( t) = t h( u) du Which can be expressed in terms of the survival function as H ( t) = log S ( t) 0 T ( t) ( ) In the nomenclature of this study, t = 0 is the time when the first OFW member of the household went overseas for work. In addition, in the event that the household has not established a business yet during the time of the survey, this is censored. In the literature of survival analysis, censorship is an instance wherein the occurence event of interest in some of the subjects being surveyed or monitored cannot be ascertained. Let c i be the event/censor variable, c i 1, = 0, with business censored One popular way of estimating S T (t) is using the non-parametric Kaplan-Meier (productlimit) estimator, 4 A parallel application of this technique was done by Dendir (2006) examining duration of unemployment in poor developing economies. Page 29 of 145

30 and Nelson-Aalen estimator for H (t), m i Sˆ( t j ) = 1 i: t t ni i j Hˆ ( t j ) = i: t i t j mi n i where m i is the number of households who established a business and n i is the number of households who have not yet established a business at time t i. To depict the rate of investing in business in terms of p 1 explanatory variables X (almost similar to Table ), the Cox Proportional Hazards Model was employed, p h( t, X, β) = h0 ( t) exp j X j=1 where h ( ) is the baseline hazard function and β is a vector coefficients corresponding to 0 t covariates X. Estimation and interpretation of the model is almost similar to logit models in the previous section j Page 30 of 145

31 Chapter 4 Research Results Facilitating and Inhibiting Factors on OFW Household s Decision to Engage in Entrepreneurial Activities: Evidence from National Representative Surveys OFW Households and Entrepreneurship OFW households with or without entrepreneurial activity were identified using the data on entrepreneurial income gathered in the Family Income and Expenditure Survey (FIES) in Those households having an income of greater than 0 for the past twelve months of the interview period in 2003 were categorized as households with entrepreneurial activity. On the other hand, if the recorded entrepreneurial income is equal to zero, then these households are considered as households without entrepreneurial activity 5. Among all those households with OFWs in 2003 who received remittances during the reference period, 59.3 percent reported to have an entrepreneurial activity while 40.7 percent said that they were involved in any entrepreneurial activity. The difference in the proportion of those who used their remittances in entrepreneurial activity to those who did not is statistically significant at 5 percent. Those who did not receive remittances was also looked at in terms of their involvement in entrepreneurial activity and the results show that a little more than 60 percent indicated an income from entrepreneurship. Even with the remittances received by the households, it is evident with the results presented in Table 5 below that 40.7 percent still have no income from an entrepreneurial activity. Table 5. Households with and without entrepreneurial activity, by remittances received indicator HHs with remittances received HHs without remittances received Total No. % No. % No. % HHs with entrepreneurial activity 1, , HHs without entrepreneurial activity Total 1, , z statistic * *Statistically significant at 5% significance level Source: FIES-SOF, 2003 The socio-economic characteristics of these OFW households who received remittances with or without entrepreneurial activities are further explored. It can be observed from Table 6 below that households with entrepreneurial activities have larger household size at 5 Strictly speaking, this means zero income from entrepreneurial activity since a zero income from entrepreneurial activity can mean zero net income. However, for simplicity in the nomenclature without entrepreneurial activity is used. Page 31 of 145

32 5.0 than those without entrepreneurial activities at 4.9. It is worthy to note that those households with entrepreneurial activities are headed more by males (70.9%) as compared to those households without entrepreneurial activities who are female-headed (55.0%). Furthermore, in terms of age, the data suggests that household heads who are in the younger age ranges (15-40 years old) are mostly not yet involved in any entrepreneurial activities. Older household heads, starting at the age of 41-50, tend to be involved more in entrepreneurial activities (60.3%). The proportion of engagement in entrepreneurial activities is even higher at 70.5 percent for household heads who are 51 to 65 years old. However, on the average, those households with entrepreneurial activity are younger at 35.5 years old than those without at Another factor considered is the educational attainment of household heads. The proportion of those involved in entrepreneurial activities is higher for household heads who did not even manage to reach college. Household heads who got college education and is involved in any entrepreneurial activity is just 41.3 percent. Moreover, the proportion of households with greater than 1 dependency ratio is higher in those households with entrepreneurial activity. Table 6. Profile of households with OFWs who received remittances, with or without entrepreneurial activity, 2003 Characteristics HHs with Entrepreneurial Activity HHs without Entrepreneurial Activity ALL HHs who received remittances No. % No. % No. % HH Size Sex of HH Head Male , Female Average Age Age Range of HH Head years old years old years old years old years old above 65 years old Educational Attainment of HH Head No Grade Completed Elementary Undergraduate Elementary Graduate High School Undergraduate High School Graduate College Undergraduate College Graduate Average Dependency Ratio Dependency Ratio > Page 32 of 145

33 > > Source: FIES-SOF, 2003 Note: One household head has missing information on age A comparison on income, savings and expenditures of households who received remittances, by entrepreneurial activity indicator is presented in Table 7. As seen below, generally, those households who received remittances have higher annual and per capita income than those who did not receive remittances. For those who received remittances, it should be noted that even if households have entrepreneurial activities (PhP261,526.6), still those households without have higher annual income (PhP303,869.8). Most of these households who do not have entrepreneurial activities have members who are wageworker instead. In terms of savings, households with remittances received have greater savings than those who did not receive. This holds true even if the latter have greater expenditures than the former due to their wide income gap. Looking at the specific expenditure items of these households, a high proportion goes to food for both groups of households at approximately 40 percent. In particular, for households who received remittances, those households with entrepreneurial activity (41.2%) were spending more on food than those without (39.4%). The same goes for households who did not receive remittances. On the other hand, households without entrepreneurial activity who received remittances were found to spend more on health (2.7% vs. 2.5%), clothing (3.3% vs. 3.2%) and recreational activities (0.6% vs. 0.5%) than those households with entrepreneurial activity, although the difference is not as pronounced. Table 7. Income, savings, and expenditures of households with OFWs who did or did not receive remittances, with or without entrepreneurial activity, 2003 HHs who received remittances HHs who did not receive remittances HHs with Entrepreneurial Activity HHs without Entrepreneurial Activity ALL HHs HHs with Entrepreneurial Activity HHs without Entrepreneurial Activity ALL HHs Annual Income 261, , , , , ,486.3 Per Capita Income 57, , , , , ,967.8 Savings 63, , , , , ,832.5 Total Expenditures 197, , , , , ,653.8 Food Expenditure Share Education Expenditure Share Health Expenditure Share Clothing Loan Payment Expenditure Share Recreation Expenditure Share Dwelling Expenditure Share Source: FIES-SOF, 2003 Page 33 of 145

34 One-fifth of those households with OFWs who received remittances in 2003 are found in the highest income quintile while only a few are in the lowest income quintile (17.9%). Out of those OFW households found in the highest income quintile, 54.3 percent do not have any entrepreneurial activities. On the other hand, among all those OFW households who received remittances belonging to the lowest income quintile, 73.2 percent are engaged in entrepreneurship (Table 8). This partly explains the results earlier why OFW households, despite their added income from entrepreneurial activities, have lower PCI and savings despite having lower expenditures. Table 8. Households who received remittances, with or without entrepreneurial activity, by income quintile, 2003 Income Quintile Source: FIES-SOF, 2003 HHs with Entrepreneurial Activity HHs without Entrepreneurial Activity ALL HHs who received remittances No. % No. % No. % Given the trends above, there are some factors that appear to stand out as facilitating or inhibiting factors of entrepreneurship such as number of dependents, expenditure, sources of income, age, and employment that nearly resemble those in the literature (see Chapter 3). Using the merged 2003 SOF-FIES-LFS 6, some of these factors will be explored to ascertain to what extent that these factors altogether influence entrepreneurship. Using the variables, the following outcome equation will be estimated to describe the relationship of remittance from OFWs to entrepreneurial income. However, although the dataset has 77 percent OFWs who remitted support to their families and 61 percent have entrepreneurial activities; only about 47 percent have remittance and entrepreneurial activity. It can be seen in Figure that the relationship between entrepreneurial activity and OFW remittance seems unclear using the raw values (left of Figure 3). However, zeroing in, the relationship is much clearer among OFWs with remittance and with entrepreneurial income (right of Figure 3). Specifically, OFW remittance is positively correlated with entrepreneurial income. 6 About 2,500 data points were retained to describe the OFWs in terms of entrepreneurship Page 34 of 145

35 Figure 3. Scatterplot of OFW remittance and entrepreneurial income, SOF-FIES-LFS 2003 Entrepreneurial income (in 10K) Entrepreneurial income (log) OFW remittance (in 10K) OFW remittance (log) Thus, there is a need to model first the characteristics of those who have entrepreneurial activities and how this can be linked to their status as remittance-receiving households. This is because there may be information that can be missed out if the outcome equation due to selection. Hence, let which will be modelled as logistic regression as This model will show what are the characteristics of OFWs, and their families, in terms of engaging in entrepreneurial activity, with focus on remittance. Consequently, the main outcome model for lneainc will be conditioned on entrepind=1 and ofwremitind=1. Table 9 shows the two models described in a stepwise manner per group of variables. 7 Probabilistic model The probabilistic model with dependent variable entrepind shows that some OFWs or their households may still be risk averse. Those who sent remittance are less likely to engage in entrepreneurial activity compared to those who did not send remittance, which is consistent across the three models. Years of being an OFW is positively associated with propensity to engage in entrepreneurial activity when not taking into account employment characteristics of household members. On the other hand, the converse is true when controlling for employment characteristics. Older OFWs might well be engaged in 7 The problem resembles a selection issue. The structural nature is the one retained here although Heckman (1979) selection model has been implemented as well. The rho is however insignificant. See Table 1 in the Annex. Page 35 of 145

36 entrepreneurial activity in the long run across the three models. Given M3 for instance, the odds ratio in terms of difference in age can be expressed by, ( age d, age) = exp 0.077( age d) ( age d) age age 2 after that, the older OFW may have higher propensity to engage in entrepreneurial activity. Figure 4 shows that a 30-year old OFW can have more propensity of having their families engaged in entrepreneurial activities compared to an OFW older by at most 36 years. However, after that, the older OFW may have higher propensity to engage in entrepreneurial activity. 8 Figure 4. Odds ratio of 30-year old OFWs and different age difference, SOF-FIES-LFS 2003 Female OFWs are more than 50 percent more likely to be engaged in entrepreneurial activity compared to males. The odds in favor of females are consistent across the three models. In terms of education, OFWs who reached college are almost as likely to be engaged in entrepreneurial activity as those who finished at most high school. Those who are college graduates are less likely to invest in entrepreneurial activity. Other facilitating factors for engaging in entrepreneurial activity are the number of household members and savings. For instance, OFWs whose families have savings are times likely to be engaged in entrepreneurial activity. In terms of employment characteristics, number of members with job, presence of professionals, laborers, operators and traders in the household also facilitates entrepreneurial activity. 8 See Table 4 in the Annex for odds ratios of categorical variables. Page 36 of 145

37 Meanwhile, inhibiting factors include dependents, food expenditure, construction of new house, and income of wages and salaries. An OFW whose household has higher income from wages and salaries may not need to engage in entrepreneurial activity. In addition, OFWs whose families constructed a new house is less likely to invest in entrepreneurial activity,. Page 37 of 145

38 Table 9. Regression model of OFWs and entrepreneurship Variable M1 M2 M3 Dependent: entrepind Dependent: lneainc Dependent: entrepind Dependent: lneainc Dependent: entrepind Dependent: lneainc Coef. Std. Err. Coef. Std. Err. Coef. Std. Err. Coef. Std. Err. Coef. Std. Err. Coef. Std. Err. ofwremitind , , , lnofwremit 0.043, , , OFW Characteristics Household characteristics Employment ofw_age *** ** , , ofw_age *** * , ofw_sex *** , *** , *** ofw_yrs 0.003, , ofw_educ at most high school base base base graduate college level , college graduate * , continent Asia base base base Europe , , , North America , , , , Rest of the world , , , hsize *** *** depratio lnexpfood * , * debtind *** *** , wsave 0.122, * , newhouseind , , wagessr *** *** wprofessionals *** *** wlaborers *** woperators *** * wtrades 0.279, nwjob *** *** (intercept) *** *** *** , *** Signif. codes: *** ** 0.01 * , 1 Page 38 of 145

39 Outcome equation As shown earlier, remittance of OFWs may facilitate increase in entrepreneurial income. For instance, holding other regressors constant, the difference in remittance of OFW a and b may translate to an entrepreneurial income, Thus, if OFW a remits 10 times that of OFW b, there is a likely eight percent increase in entrepreneurial income of a relative to b. There is a similar trend in terms of age, sex and years of stay in abroad across the three models. OFW s education however, becomes different. Higher entrepreneurial income is gained by college level OFWs compared to high school level ones and even higher among college graduates and holds true for the three models. This may root from the type of business or enterprise being setup by the OFW household. Similar to the probabilistic model, facilitating factors still include number of members and those with job, and presence of professional and plant and machine operators. In terms of having savings, those with savings are more likely to have income from entrepreneurial activity., or five percent more There is a difference in terms of obstacles towards growth of entrepreneurial income. Those with professionals or plant and machine operators have significant edge in terms of entrepreneurial income compared to those who do not have professionals or operators. For instance, OFWs whose families have professionals are more likely to have 60 percent more entrepreneurial income compared to those who do not have professionals. Likewise, OFWs with technicians, plant and machine operators in the household may have 35 percent more income from entrepreneurial activity compared to those who do not have these kind of working members. The story is different when looking at OFW families with labourers/traders where their income may fall behind those who do not have these workers. This can be associated to the kind or quality of business being put-up by OFW families of a specific worker composition. Summary OFWs may be risk averse and there can be a number of obstacles for them to invest or engage in entrepreneurial activity. These factors may include number of dependents, food expenditure, level of wages and salaries received by the household and construction of shelter. There are also facilitating factors such as age, number of members with job, and specific occupation of household members. However, those who took the risks of engaging in entrepreneurial activities may realize that their remittance can in turn fund and facilitate growth of their entrepreneurial activity. However, the type of entrepreneurial activity maybe the primary factor in this case in which education and composition of workers comes into picture. Highly educated OFWs tend to Page 39 of 145

40 have higher entrepreneurial income compared to less educated ones. Furthermore, OFWs with members who are professionals or technicians are likely to have higher income from entrepreneurial activity. Facilitating and Inhibiting Factors on OFW Household s Decision to Engage in Entrepreneurial Activities: Evidence from the CBMS In the previous section, OFWs and their households may have a tendency to be risk averse in terms of engaging in entrepreneurial activity. However, once they finally engage in an entrepreneurial activity, remittances may actually be used to finance the growth or expansion of the business. There are however, elements in the picture of OFWs and entrepreneurship that still need to be explored. For instance, what factors are integral in enabling OFW households to invest in a specific type of business? How does the trend differ from one community to another? Propensity of OFWs to invest in business Several findings support the differences in the two communities in terms of investing their remittances in business. As an attempt to sum up the characteristics of households investing in business in the two communities, a descriptive model of propensity of OFWs to invest in business has been developed. This is also to find out what other factors can affect the decision to invest of households. The household characteristics including their respective community are expected to differentiate propensity to invest of OFWs. The variable carmona seeks to answer the difference between the two communities in terms of OFWs investing in business. Households member characteristics such as number of members attending school, dependency ratio, and dependency on wages seek to show whether these characteristics bridles investment. Household size, dependence on remittance, and whether the OFW household has members who got sick are also being considered if they could have hindered OFWs to invest. In addition, the practice of utilization of remittances is also being considered whether they are facilitating or hindering factors. Lastly, the skills are also explored and later will be dissected. For instance, does having business planning skills facilitate investment among OFWs? What types of business are likely to be set up by them? Page 40 of 145

41 Table 10. Logit model estimates ofw_invest Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Coef. Std. Err. Coef. Std. Err. Coef. Std. Err. Coef. Std. Err. Coef. Std. Err. Coef. Std. Err. carmona , , Household characteristics ofwincsqrt , , , , hsize illshock , , nmemschool depratio waginc 0.022, , ofw_age , ofw_age , ofw_sex , , ofw_yrs , , OFW characteristics ofw_educal at most high school base graduate college level college graduate continent Asia base Europe 0.569, , , , Rest of the world useremit_healthmaint , Usage of remittance Skill useremit_debt , useremit_assetbldg useremit_savebank , sales_mktg busplan 1.262, , carmona x waginc 0.080, , interaction useremit_debt x ofwincsqrt , useremit_assetbldg x ofwincsqrt useremit_savebank x 0.006, , ofwincsqrt (intercept) *** , , , Page 41 of 145

42 Due to expected association of skills with education, several separate models were derived. Looking at the estimates 9, some of the hindering factors in establishing business are size of the household, number of members in school, having member who has an illness, number of dependents, debt payment, and accumulation of assets. Some facilitating factors are education, age, skills, and years of having OFW. Based on the results in Table 10, the following are some findings: 1. OFW characteristics. There are many similar findings in CBMS and national model. For instance, the same direction of coefficients are found in terms of age (except when no control for interaction effects in Model 4). Under model 5, a 20-year old OFW may be unlikely to invest until he s 35 years old. Under the same model, an OFW who reached college level may invest 1.5 times that of a high school level OFW while a college graduate is 1.7 times likely to invest compared to a college level OFW. The only difference in this case as reference to national model is that males are more likely to invest compared to females. Length of sending OFWs. The duration that the household has been sending workers abroad increases the propensity to invest as shown by the different models. For instance, under model 5, the odds of an OFW whose household has been sending workers abroad for 35 years (OFW A) investing his/her earnings in business compared to an OFW with 30 (OFW B) is given by (35,30) = exp{5*0.06} = 1.4 which means that OFW A is 1.4 times likely to invest compared to OFW B. 2. Carmona. OFWs in Carmona are consistently more likely to invest remittance in business compared to OFWs in Mabini (see Box 1). In fact, Carmona OFWs are at least two (2.13) times likely to invest remittances in business compared to Mabini. Under model 5, the odds 10 of an OFW in Carmona investing in business is given by, ( carmona) = exp{ waginc} The odds becomes higher in favor of Carmona when there is more support from wages. For instance, among OFWs whose households have PhP20,000 income from salaries and wages, those in Carmona are at least 2.5 times likely to invest in business compared to those in Mabini. In a similar manner, a PhP10,000 more income from salaries and wages does not encourage more investment in business in Mabini, but will possibly facilitate business establishment in Carmona. ( wageinc 2, wageinc 1) = exp{ carmona} 9 Ignoring statistical significance. See Appendix for significant estimates. 10 The vectors are omitted for notation convenience. Page 42 of 145

43 Box 1: Machine shop revs to life Mr. Enrique Valenzuela, general manager of JVV Precision Machine Shop, was employed in 1979 as a skilled worker on masonry and carpentry in Saudi Arabia. After a three year stint in this country which, up to this date, remains to be one of the most preferred destinations of Overseas Filipino Workers (OFWs), he returned to the Philippines in 1982 and opened a palay trading business in Cagayan. Under pressure to support his growing family, he would however close shop after only a few months of operation and return to Saudi where he worked for another six years. Unable to resist the lure of a higher income in Guam in 1992, Mr. Valenzuela also worked there as a heavy equipment operator for seven years before his son, Joe, who previously worked at Rohm Electronics Philippines, Inc. was able to convince him to set up the JVV Precision Machine Shop in Brgy. Mabuhay, Carmona, Cavite. With less than half a million in starting capital which partly came from Mr. Valenzuela s wife who was working in Switzerland at that time, the father and son tandem started providing general machining, jigs and fixtures, design consultancy, fabrications and other related works in October 15, Only 10 years after opening, JVV Precision Machine Shop would grow from a small backyard shop with just two employees to a busy shop with more than 40 personnel who are mostly welders and machinists who took up TESDA courses in mechanical technology from Don Bosco. Their shop now boasts of top of the line machineries that include lathe machines, vertical milling machines and service grinding machines that they use to cater to the needs of their clientele from the food processing, appliance, tool and die making, electronics, and chemical processing sectors. Their customers include Fujitsu Ten Corporation, First Sumiden, Kessel Industries, Purefoods Hormel Co. Inc., Yamaha Motors and Magnolia Inc. Industry Profile Machine shops basically serve as intermediaries in industrial production according to First Research, a leading provider of market analysis tools based in the United States. They work on a job basis: generally, they receive unfinished parts or raw materials from a manufacturer, perform various operations, and return the parts to the manufacturer for further processing. They own and operate special machine tools that can perform a variety of operations, including drilling; boring (enlarging an existing hole); tapping (cutting threads inside a drilled hole); threading (cutting threads on a bolt); cutting; milling (removing material from a surface); and grinding (usually a finishing operation). A national survey conducted by the Metals Industry Research and Development Center in which covered 955 respondents or 71 percent of the 1,350 identified machine shops in the country revealed that majority of the machining companies offer repair services, and the rest are into industrial parts fabrication, machine rebuilding, and engine reconditioning services. It also found that most of the companies are operating in the National Capital Region and the rest are widely distributed in various regions of the country. Some 98 percent of the surveyed shops are Filipino-owned, with only two percent partly-owned by other nationals. Almost half of the shops surveyed have a capital that ranges between more than a hundred thousand pesos to a million pesos. Most of the shops were established since 1990 onwards with only a few of them known to have existed for over 50 years. Most of the production personnel involved in the machining industry are mostly males who work as engineers, designers, draftsmen, assembly die maintenance, inspection/quality control technicians, machine operators, laborers, R&D staff, and others. Other personnel in the industry are welders, fabricators, tool keepers, foremen, machine rebuilders, and molders. Page 43 of 145

44 Machine shop revs to life (cont.) A Family Enterprise Interestingly, the study revealed that micro shops are usually family enterprises in which the owner and some family members are hands-on in the business operation. In the case of JVV Precision Machine Shop, Mr. Valenzuela is practically running the business while his son Joe serves as the production manager. Meanwhile, his daughter who previously worked as a crew for a cruise liner, assists him in office management. All the three of them, according to Mr. Valenzuela, are on the payroll of their family business. Mr. Valenzuela initially planned to bring his family to Guam and settle there permanently. But according to him, life was also hard there. Thus, he did not need a lot of convincing when his son Joe called him up to discuss an exciting business proposition. Besides, his youngest child had already graduated from college. He returned to the country in April 2000 and started laying the groundwork for starting their small business. JVV Precision was registered with the DTI on October 07, 2002 and in early 2003, the company was able to attract its first major customers: Imasen Phil s. Corp., Nagano Seiko Phil., and Engtek Precision Phil. Inc. Mr. Valenzuela estimates the current asset value of JVV Precision Machine Shop at PhP10M. However, they are still financing the acquisition of some of their machines which they acquired partly from a loan from the Small Business Guarantee and Finance Corporation. He is optimistic that things will turn out even better for their family enterprise once they are able to finish settling their financial obligations. Page 44 of 145

45 3. Sickness. Illness shock generally is not a facilitating factor in investing in business. Households with members who got sick were barely half as likely to invest as those OFWs whose members never got sick in the last 12 months from the reference date. 4. Use of OFW remittance. When an OFW household allot the remittance to a specific obligation, generally, the result is bridled investment in business. For instance, those who used the remittance for health and maintenance expenses are very much unlikely to invest in business. However, there can be levels of OFW remittance wherein investment in business will be likely (See Box 2). In model 5 for instance, OFWs whose households have been allotting remittance to accumulate assets have odds of investing in business given by, ( assetbldg) = exp{ ofwincsqrt } This means that at an approximate remittance of PhP200,000, OFWs building assets might invest in business more than those who are not building assets. In the following figure, it can be seen that at some specific point or remittance amount, the odds of investment of OFWs become in favor of building assets, accumulating savings or debt servicing. For instance, if the household of the OFW is using the remittance for accumulating savings in bank, he/she can have more propensity to invest compared to those not saving in bank. Page 45 of 145

46 Figure 5. Odds of investing in business by obligations serviced through remittance 5. Skills. Under model 2, OFWs with members skilled in business planning and management are more than twice likely to invest compared to those OFWs whose households have no skill in business planning and management. Moreover, OFWs with household members skilled in marketing, sales and finance are six times more likely to invest than those without this kind of skills. 6. Dependents. Households of OFWs with high dependency ratios are less likely to invest in business as well as those with higher number of members in school. For instance, OFWs with dependent members as many as nondependent members are almost twice likely to invest compared to OFWs with dependent members twice as many as non-dependent members. Furthermore, OFWs with five members schooling is almost twice as likely to invest in business compared to OFWs with six members schooling. Skills and business type As discussed earlier, an essential angle is what skills or set of skills lead to a type of established business. For instance, beer brewing requires minute amount of skills as well as investment (Swaminathan, 2010). To describe what set of skills Page 46 of 145

47 Box 2. Family looks to foreign shores for a better life Rosendo Abe is just waiting for his family s application for migration to be approved by the Canadian authorities. He said that he and his wife visited their daughter who is working there as a pharmacist a couple of months earlier. They left convinced that they will have a better quality of life in this country which currently ranks third behind the United States of America and the Kingdom of Saudi Arabia in the preferred destinations of Filipinos abroad. Rosendo s daughter Jenia has been working in Canada for the past 4 years already. Married but still childless, Jenia still provides support for the education of her youngest sister Lea Ann who is currently a second year college student. In the past year alone, Jenia has provided financial support in the amount of P40,000. According to Rosendo, his family also used the remittances from Jenia during the previous years to invest in real property and to expand their grocery business. Two of Rosendo s children who are also working abroad far longer than Jenia, have also scaled down the amount of their remittances in recent years. In 2009, the main source of income of Rosendo s household was remittances from OFW members (i.e., 79% of the total household income). Meanwhile, about 13 percent and 7.9 percent of the total household income came from salaries of employed members and entrepreneurial activities, respectively. In 2013, remittances and entrepreneurial activities remain to be the main sources of income of the household. However, OFW remittances declined from P500,000 in 2009 to P40,000 in As a result, their annual per capita income decreased from P126,800 to P22,600. A businessman who previously dabbled in local politics for 15 years, Rosendo had his fair share of ups and downs in running a host of business ventures. He recalled having a lucrative rattan furniture-making business in the past which faltered in the face of stiff competition coming from cheap plastic imports from China. His family also ventured in manufacturing nata de coco a chewy, translucent, jelly-like food product produced by the fermentation of coconut water and commonly used for desserts. This too fell on the wayside when they lost a strategic business partner. These days, Rosendo keeps himself busy by tending to his small store located along the national highway in Barangay Gasang, Mabini, Batangas. The family s grocery store located a couple of meters away from their home is now managed by a hired staff. He also said that they don t have a recordkeeping system for their two stores and only rely on tiwalaan or trust. He estimates that his gross income from his grocery store was P108,000 during the past 12 months alone. However, records show that his profits from these two stores declined over the years from P50,000 in 2009 to P36,000 in Some of his enterprising neighbors who know about his family s plans to migrate have made initial overtures that they want to rent his grocery space. But Rosendo is not making any final plans yet. After all, it might take another two years before they are finally able to move to Canada. Page 47 of 145

48 are relevant to investing in a type of business, the logit model is extended to a multinomial logit. The main difference is that the response variable takes on more than two (e.g., success, failure) values and hence more than two probabilities instead of only p and q = 1 p. Suppose the success value of the previous variable can be decomposed into retail trade, finance, services, manufacturing, and agriculture. Then there can be a set of probabilities { 1 2 p3 p, p, } for each response level respectively such that p = 1. The equations in 3 i= 1 i Subsection 1.1 can be extended to accommodate three probabilities instead of just two and odds ratios can likewise be extended. Consider the result of multinomial logit estimation in Table 11 wherein the dependent variable is the type of business and the independent are skills. The base response is the retail trade business. It must be noted that this technique was not applied on the previous one for simplicity since the hypothesized relevant variable on the type of business are the skills not to mention the limited number of observations. Page 48 of 145

49 Table 11. Multinomial logit of business and skills Coefficient Relative risk ratio Type of OFW business Estimate Std. Err. Estimate Std. Err. Base: Retail trade Finance, services, manufacturing resp_skill_sales * resp_skill_plan , resp_skill_hrs resp_skill_opmgt resp_skill_it * * resp_skill_purch intercept Agriculture resp_skill_sales resp_skill_plan 1.584, , resp_skill_hrs resp_skill_opmgt resp_skill_it resp_skill_purch intercept 0.786, , Sig. codes: *** ** 0.01 * , 1 Based on the derived model, here are some of the results: 1. Sales. This skill is significant on finance, services and manufacturing and on agriculture, albeit weaker. OFWs with members skilled in sales are more likely to invest in retail trade business than in finance, services and manufacturing. In terms of agriculture and finance, services and manufacturing, OFWs tend to lean towards agriculture. 2. Business planning. This skill is only significant on finance, services and manufacturing which indicates that OFWs with members skilled in business planning likely invest in retail trade rather than in finance, services and manufacturing. 3. Human resource management. Similar to previous skills, this is only significant on finance, services and manufacturing but OFWs with members Page 49 of 145

50 who have this skill are likely invest in retail trade rather than in finance, services and manufacturing. 4. Operations Management. This is also only significant on finance, services and manufacturing. OFWs with members who have this skill tend to invest more on finance, services and manufacturing rather than in retail trade. 5. Information technology (IT). This is also similar to operations management where OFWs with members who have this skill tend to invest more on finance, services and manufacturing rather than in retail trade. 6. Purchasing. Intuitively, OFWs whose household members have this kind of skill have more propensity to invest in retail trade rather than in finance, services and manufacturing. Basically, OFWs with members skilled in sales, business planning, human resources management and purchasing tend to invest in retail trade business while those with members skilled in operations management and IT tend to invest in finance, services and manufacturing. Majority of the skills are not relevant in engaging in agricultural business save for sales wherein OFWs will tend to invest in favor of agri-business rather than finance, services and manufacturing. 11 How soon do OFW households invest in business? Decision to invest is one thing and another is when do they invest. In this section, the time until OFW households invest in business will be examined. Here, the decision will be extended in relation to timing. Hence, that response variable of interest is time until an OFW household invests in business. Figure 6 shows the probability of establishing a business over time using the Kaplan-Meier estimator. 11 The high standard errors are due to the low frequency of answers in these skill categories under agri-business. Page 50 of 145

51 Figure 6. Probability of establishing a business over time by site It can be seen in the figure that households in Carmona have higher probability of establishing a business compared to Mabini. It can be associated to the observation that households in Carmona tend to establish business at an earlier stage. Now, there are some characteristics that can be explored with regard to the decision of setting up a business by the OFW households. For instance, does alloting the OFW remittance for house/lot inhibit or impede establishing a business? Similar to the previous exploratory models, the objective is to describe what holds back or induce investment among households. Practices in allotting remittance are deemed to be either retarding or facilitating factors. Household characteristics are also explored as well as skills and OFW characteristics such as education, gender and age. Model selection Preliminary examination of coefficients reveal that using remittance for house and lot as well as for car purchase can hold back investment in business (see Tables 3 and 5 in the Annex). Households in Carmona significantly invest faster than those in Mabini. To examine the effects of the candidate covariates together, the initial Cox Proportional Hazards model is displayed in Table 19. Page 51 of 145

52 X j ˆ exp{ ˆ } j Table 12. Proposed model estimates Robust SE Z j P( Z > Z ) Sig. site remit_exp_food remit_exp_hlot remit_exp_car * remit_exp_bank ** hsize ofw_sex * ofw_coll ofw_sex x ofw_coll * site x remit_exp_car Signif. codes: `***' `**' 0.01 `*' 0.05 `.' 0.1 ` ' 1 Based on the estimates in Table 12, the proposed final model is h( t, X, β) = h0 ( t)exp{0.12site 0.178hsize (1) 0.979remit_exp_food 2.937remit_exp_car 1.097remit_exp_bank 0.537remit_exp_hlot 1.648ofw_sex 0.259ofw_coll 1.635ofw_sexxofw_coll 2.213sitexremit_exp_car} Results Interpretation of the model is straightforward. For instance, given a dichotomous covariate X, the hazard ratio of two events {X = 0} and {X = 1} is h( t, X, ˆ X h( t, X, ˆ X = exp{ ˆ} = 1) = = 0) h0 ( t) exp{ ˆ} h ( t) 0 (2) which is just, under main effects model, the exponentiation of the coefficient. For a continuous variable Z that is linear on the log-hazards, the hazard ratio of two events { Z = z c} and { Z = z} is h( t, Z, ˆ Z = z c) h0 ( t)exp{ ˆ} = h( t, Z, ˆ Z = z) h0 ( t) = exp{ c ˆ} (3) which is just the exponential of the coefficient multiplied by the difference between the two event values. Page 52 of 145

53 Based on the model in Equation (1), the following are some interpretations: 1. Site. Rate of establishing a business of OFW households in Carmona compared to Mabini is expressed by exp{ remit_exp_car} This means that those in Carmona have significantly higher establishment rate compared to Mabini, i.e., 1.1 times. Among those who invested remittance in vehicles, the establishment rate is even higher. 2. Household size. An OFW household with five members can establish a business e = 1.2 times a household with six members. 3. OFW sex and education. Investment rate of female OFWs compared to males is expressed by exp{ ofw_coll} which means that generally, female OFWs do not invest more compared to males but the difference is minimal among those who reached college. In terms of education, investment over time of those who reached college compared to those who did not is given by exp{ ofw_sex} The marginal effect (-0.259) is relatively weak. This means that college education almost does not matter unless among female OFWs. 4. Allocation of OFW remittance. The following are interpretations in terms of the usage of the remittance. - Food. OFW households who did not use their remittance for food can establish business more than twice (2.67) those who used their remittance for food. - Vehicle. Investment rate over time of OFW households who used use their remittance for purchasing cars or vehicles compared to those who did not is expressed by exp{ site} This means that in Mabini, those who had used their remittance in cars are far less likely to invest compared to those who did not use their remittance for vehicles. In Carmona, however, the opposite is true wherein even buying cars using remittance does not hinder investment. - House/lot. Investment rate of OFW households who did not use their remittance for acquiring house/lot can is almost 1.7 times those who used their remittance for acquiring house/lot. Page 53 of 145

54 - Banking. The investment rate OFW households who used their remittance for saving in banks is thrice those who did not use their remittance for savings in banks. Page 54 of 145

55 Chapter 5 Summary, Conclusion & Recommendations Summary The national outlook portrays that OFWs may be risk averse but can be rewarding afterwards. There can be a number of obstacles for them to invest or engage in entrepreneurial activity such as number of dependents, food expenditure, level of wages and salaries received by the family and construction of shelter. There are also facilitating factors such as age, number of members with job, and specific occupation of family members. To complete the picture, community-level trends are depicted specifically in the two communities surveyed. Notable differences include type of businesses engaged in, educational attainment, destination and occupation of OFWs, among others. In terms of the model, there are further factors that are associated with the odds and rate of investing in business as well as type of business being put up. Results show that there is a significant difference between the two communities in terms of investing in business as well as when these investments were made. OFWs in Carmona are generally more likely to invest in business and at an even quicker pace, compared to Mabini. Carmona OFWs are more than 2.3 times likely to invest their earnings in business and at least 0.1 times faster compared to Mabini. Other factors that facilitate or induce investment include length of having an OFW member, skill in business planning, marketing and sales, education (among females) and household savings and asset accumulation (given increased remittance). Factors that may hinder or slow down investment are sickness, extent of dependence on OFW remittance, number of dependents, and allotment of remittances on household needs and expenditures (house, vehicles, health, and utilities). In terms of type of business, OFWs with members skilled in sales, business planning, human resources management and purchasing tend to invest in retail trade business while those with members skilled in operations management and IT tend to invest in finance, services and manufacturing. Majority of the skills are not relevant in engaging in agriculture-related business except for sales. It can be seen that there are factors in 2003 national data that still remain in the recent community data. The number of dependents can still be hindrance in engaging and making business grow. Allotment on asset, especially shelter, can be also an obstacle. Having wages as well can foster complacency and might not encourage a family or household to engage in business. On the other hand, skills, education or professions can be a major factor in engaging in business. Below are tables summarizing the characteristics of OFWs in the two communities. Page 55 of 145

56 Table 13. Summary of characteristics of OFWs, by site Carmona Sex 68.4% males 55.6% males Mean age Relationship to the household head OFWs are mostly sons or the daughters of head of household (34.2%). Mabini OFWs are mostly sons or the daughters of head of household (45.8%). Educational attainment Destination of OFWs (most common) Occupation of OFW Majority of OFWs are at least college level (42.1%). Asia -26.4%; Saudi Arabia accounts for 26% Service workers and shop and market sales workers Majority of OFWs are high school graduates (41.7%). Europe- 72.2%; Italy accounts for 72% Laborers and unskilled workers Sector of employment Manufacturing Households as employers; undifferentiated goods-and-services Number of years working abroad Majority have been working for less than 10 years (59.4%). Majority have been working as OFWs for more than 10 years (61.6%). Note: Included in the sample are 68 households with OFWs. Eight households have no OFW members at the time of the survey Source: CBMS Survey, 2013 Page 56 of 145

57 Mean household Size Working members of the household Share of remittance to total income Table 14. Summary of characteristics of OFW households, by site Carmona More households with percent share of remittance to total income Mabini More households with less than25 percent share of remittance to total income, though some households have 90 to 100 percent share of remittance to total income, the stop of remittance flow can cause these households to slide into poverty. School Attendance High school attendance among 6-16 years old children (95.6%) High school attendance among 6-16 years old children (94.9%) Educational Attainment of household members aged 21 and above (excluding OFWs) More than half are at least college level More than half are at least high school graduates Source: CBMS Survey, 2013 Remittance-related businesses Table 15. Summary of households who used remittance for business, by site Carmona Mabini 68% of the households used remittance for current business 59% of the households used remittance for current business Business type Small retail stores (36.0%) Fishing and livestock-related businesses such as fishing boat, goat and pig raising (21.7%) Average employment size 7.2 employees, including owner 2.5 employees, including owner Total persons employed Average sales from business PhP PhP Profit from business Majority of the households have profit more than PhP 50,000 Majority of the households have profit less than PhP 100,000 Business-related skills of other members of the household Top three skills that at least 1 member of the households have-1)sales and service 2)management of operation 3)purchasing Top three skills that at least 1 member of the households have-1)sales and service 2) business planning, marketing, financial management and accounting Members of the households have least knowledge on human resource management Members of the households have least knowledge on information technology Source: CBMS Survey, 2013 Page 57 of 145

58 Table 16. Summary of impacts of remittance to local development Carmona Mabini As start-up capital Remittances provide start-up capital in 6 out of 10 businesses Remittances provide start-up capital in 7 out of 10 businesses As continued support for business Remittances provide continued financing for 7 out of 10 businesses Remittances provide continued financing for 7 out of 10 businesses Why use remittance for business Used as source of additional income Used as source of additional income Tax generation Less than half of the businesses with business permits, since More than half of the businesses have business permits majority of the businesses are small retail stores, majority have barangay permits instead of business permits Ease of getting business permit Easy Easy Use of remittances Improvement on the socioeconomic conditions Around 84 percent of households use remittance for food and other consumption items such as housing, purchase of land, or vehicles. But interestingly, some 32 percent of the households used a portion of the remittance as bank savings Conditions of the sample were generally improved compared to last CBMS survey year, however, the number of unemployed persons increased. Around 92 percent of households use remittance for food and other consumption items such as housing, purchase of land, or vehicles. About 41 percent of households also allot portion for business. Interestingly, around 31 percent of households allot for payment of debts incurred by the OFW Conditions of the sample were generally improved compared to last CBMS survey year, though there are still income poor households and the proportion of food poor households have slightly increased. Note: Out of the 76 households in the sample, 69 households have businesses and only 48 of these households used a portion of the remittance for their businesses. Source: CBMS Survey, 2013 Conclusion and Recommendations One finding in the econometric analysis section is the association of skills with types of businesses put up by OFWs. OFWs with or with members skilled in sales, business planning, human resources management and purchasing have the propensity to invest in retail trade business. On the other hand, OFWs with or with members skilled in operations management and IT tend to choose finance, services and manufacturing industry. It can be noted as well that almost none of the skills is relevant in engaging in agriculture-related business except for skills in sales. If the OFW or any member of the household has skills in sales, they tend to invest more in agri-business compared to finance, services and manufacturing. It is recommended that training on various aspects of business skills, not only financial literacy, be provided to facilitate channeling of remittances into entrepreneurial activities. Page 58 of 145

59 The OWWA hosts a reintegration program which aims to facilitate the return of OFWs into the Philippines. Features of the program include providing trainings on value formation, financial literacy, entrepreneurial development training (EDT), techno-skills and capacity building trainings (OWWA, n.d.), and an in-country reintegration program which includes job referrals [for local and overseas employment], business counselling, community organizing, financial literacy seminar, networking with support institutions, and social preparation programs (OWWA, n.d.). Further, the OWWA, in cooperation with the Land Bank of the Philippines and the Development Bank of the Philippines, offers a PhP2 Billion- Peso Reintegration Fund where an OFW or their legal dependent can avail of a loan ranging from PhP300, to PhP2 million (OWWA, n.d.). Another loan facility is the OWWA- NLDC Livelihood Development Program for OFWs where an OFW can avail of PhP 200, or PhP1 million pesos for group borrowers (OWWA, n.d.). Under the OFW Reintegration Program, eligible projects are projects that will generate a net monthly income of not less that PhP10, are eligible under OFW-RP. The National Reintegration Center for OFWs (NRCO) under the Department of Labor and Employment also facilitates reintegration programs for OFWs. The components of the National Reintegration Program include the following: Counseling a. Counseling on values formation, family support, and importance of preparing for their eventual return and realization of their family goals as an offshoot of overseas employment. b. Counseling on re-entry options such as wage employment, livelihood, entrepreneurship and business options. c. Counseling on savings, financial planning, money management and investment options. Training and capability a. Skills training, retooling and upgrading b. Financial Literacy/Money Management c. Entrepreneurship Training Wage employment a. Job search assistance for local or overseas employment Entrepreneurship/Micro-Enterprise Development a. Assistance for business capital (or starter kits) b. Assistance to obtain business loans and other credit facilities c. Assistance for technology and product development and marketing The NCRO also facilitates a reintegration program for distressed OFW returnees. Rescue and temporary shelter assistance Legal assistance Medical assistance Repatriation assistance a. Airport assistance b. Transfer assistance to residence Economic assistance Page 59 of 145

60 Based on the results from the survey in Carmona and Mabini, OFWs do engage in entrepreneurial activities. However, these businesses are usually small in terms of asset size and number of employees and the impact to the community in terms of local development is limited. The survey results seem to suggest that pooling of resources of OFWs to finance bigger entrepreneurial activities may be explored. All businesses covered were singleproprietorship and this may be one reason why businesses were relatively small. Further pooling of resources of OFWs can also be utilized to finance bigger projects for the development of the community. To illustrate, during the field survey, when households in Sitio Jolo in Mabini were visited, it was noticed that though it was very far from the Poblacion, roads were in very good condition. The guides informed the Team that the OFWs in Sitio Jolo donated to have the roads repaired for the Sitio to be accessible. Another finding of the study is that the average start-up capital is about Php127,000. This means that the OFW households have to save up over a period of time to come up with sufficient capital. This points to the importance of making available various financial instruments for OFWs and their families to promote savings. About 22 percent of households in both sites saved a portion of their remittances in banks. In Carmona, 30 percent placed part of their remittances received in banks, much higher than the 13 percent in Mabini. The relatively low percentage may also be because of the low yields. At present, savings deposited in banks earn only half a percent annually, even less than the inflation rate. Thus, there is a need to develop more attractive financial instruments to encourage households to save and invest here in the Philippines. The study also revealed the preference of many remittance-receiving households to build better and bigger houses rather than use the money as capital for businesses, particularly in Mabini. More information on business opportunities could encourage them to allocate a bigger proportion of remittances to putting up businesses. One of the respondents for the case studies prioritized sending the children to school and investing the remittances in businesses. Together with her OFW husband, she has since returned to the country after only 10 years working abroad and their businesses continue to sustain them. Page 60 of 145

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64 Annex Table 1. Heckman Selection Model, 2003 SOF-FIES-LFS Variable Coef. Std. Err. z P>z [95% Conf. Interval] dependent: lneainc lnofwremit hsize ofw_age ofw_age ofw_sex depratio nwjob ofw_yrs ofw_educ at most high school base graduate college level college graduate continent Asia base Europe North America Rest of the world lnexpfood debtind medicsr wsave newhouseind wagessr wprofessionals wlaborers woperators wtrades (intercept) selection: wremitentrep hsize ofw_age ofw_age ofw_sex Page 64 of 145

65 Variable Coef. Std. Err. z P>z [95% Conf. Interval] depratio nwjob ofw_yrs ofw_educ at most high school base graduate college level college graduate continent Asia base Europe North America Rest of the world lnexpfood debtind medicsr wsave newhouseind wagessr wprofessionals wlaborers woperators wtrades (intercept) mills lambda rho sigma Source of basic data : Merged 2003 SOF-FIES-LFS PUF Page 65 of 145

66 Table 2. Test of significance of Heckman rho using Bootstrap, 2003 SOF-FIES-LFS Observed Coef. Bootstrap Std. Err. z P>z Normal-based [95% Conf. Interval] rho Table 3. Model with Odds ratios, SOF-FIES 2003 Variable Dependent: entrepind Dependent: lneainc Coef. Std. Err. Odds Ratio Coef. Std. Err. OFW Characteristics Household characteristics Employment ofwremitind , lnofwremit 0.033, ofw_age , ofw_age ofw_sex *** ofw_yrs ofw_educ at most high school base graduate college level college graduate , continent Asia base Europe 0.133, , North America Rest of the world , hsize depratio lnexpfood , * debtind *** , wsave * , newhouseind , wagessr *** *** wprofessionals *** *** wlaborers *** woperators *** * wtrades 0.279, nwjob *** *** (intercept) 1.224, *** Page 66 of 145

67 Table 4. Model with Odds ratios, CBMS data ofw_invest Model 1 Model 2 Coef. Std. Err. Odds ratio* Coef. Std. Err. Odds ratio* sales_mktg 1.848, busplan ofw_educal at most high school base graduate college level college graduate 0.929, continent Asia base base Europe , Rest of the world ofw_age , ofw_age , ofw_sex , hsize ofw_yrs 0.060, waginc carmona 0.758, , carmona x waginc 0.080, , nmemschool illshock depratio useremit_healthmaint ofwincsqrt , , useremit_debt , useremit_debt x ofwincsqrt , useremit_assetbldg useremit_assetbldg x ofwincsqrt useremit_savebank , useremit_savebank x 0.006, , ofwincsqrt (intercept) , AIC: Deviance: 96.0 on 96 Df AIC: Deviance: 90.6 on 96 Df Signif. codes: *** ** 0.01 * , 1 Page 67 of 145

68 X j j Table 5. Univariable Cox Regressions Robust SE Z P( Z > Z ) Decision ˆ exp{ ˆ } j remit_exp_food INCLUDE remit_exp_ofwdebt INCLUDE remit_exp_odebt CAN BE DROPPED remit_exp_hlot INCLUDE remit_exp_car INCLUDE remit_exp_educ CAN BE DROPPED remit_exp_appl CAN BE DROPPED remit_exp_bank INCLUDE remit_exp_other CAN BE DROPPED site INCLUDE hsize INCLUDE nofw INCLUDE resp_skill_sales CAN BE DROPPED resp_skill_plan INCLUDE resp_skill_mktg INCLUDE resp_skill_finmgt CAN BE DROPPED resp_skill_hrs CAN BE DROPPED resp_skill_opmgt CAN BE DROPPED resp_skill_it CAN BE DROPPED resp_skill_purch CAN BE DROPPED resp_skill_o INCLUDE ofw_age INCLUDE ofw_age INCLUDE ofw_coll INCLUDE ofw_sex CAN BE DROPPED X j j Table 6. Initial model estimates Robust SE Z P( Z > Z ) Sig. ˆ exp{ ˆ } j site hsize * ofw_age ofw_age remit_exp_food remit_exp_ofwdebt ofw_sex remit_exp_hlot remit_exp_car * remit_exp_bank * resp_skill_plan resp_skill_mktg ofw_coll Signif. codes: `***' `**' 0.01 `*' 0.05 `.' 0.1 ` ' 1 Page 68 of 145

69 Case Studies A total of 30 case studies are presented in this section which aims to provide empirical as well as anecdotal evidence at the household level on the relationship between overseas remittances and entrepreneurship development. To provide the reader with a richer context of the issue being investigated, profiles of OFW members and their households at the national (based on the Family Income and Expenditure Survey, Labor Force Survey, and Survey of the Overseas Filipinos conducted in 2003) and local level (based on the CBMS surveys in Carmona, Cavite and Mabini, Batangas conducted in 2013) are presented first. Profile of OFWs National Surveys The Survey of Overseas Filipinos (SOF) in 2003 covered a total of 2,791 individuals who were abroad. By reason, as depicted in Figure 1, majority of the overseas Filipinos were out of the country because they were contract workers (86.3%). There were also some Filipinos who were overseas as tourists (4.4%) or as immigrants (4.1%), among others. It is to be noted, that although some of the surveyed households with Overseas Filipinos answered that their household members were abroad as tourists or students, some of them were working and thus were included in the study sample. Also, based from the SOF in 2003, 33 out of the 2,410 contract workers who were overseas were not working at the time of the survey. This study, therefore, considered those Filipinos who were working, regardless of their reason being abroad. Furthermore, 78 out of the 2,591 overseas Filipinos with work, were immigrants and were not included in the study sample. Thus, the total number of Overseas Filipinos Workers in the final study sample was 2,513. Figure 1. Overseas Filipinos, by reason of being abroad Source: SOF 2003 As shown in Table 1, Female OFWs (51.6%) outnumber their male counterparts (48.4%) and mostly were in the age range of 31 to 40 years old (36.6%). On the average, OFWs were 35.3 years old. In terms of their relationship to their respective household heads, around 40 percent are sons or Page 69 of 145

70 daughters while spouses closely follow at 35.3 percent. Furthermore, majority or 35.1 percent of these surveyed OFWs are college graduates while around 25.4 percent are high school graduates. Table 1. Characteristics of Overseas Filipinos Workers, 2003 Characteristics No. % Sex 2, Male 1, Female 1, Age Range 2, years old years old years old years old years old above 65 years old Average Age Relationship to HH Head 2, Head Wife/Spouse Son/Daughter 1, Son-in-law/Daughter-in-law Grandson/Granddaughter Other Relative Non-Relative Educational Attainment No Grade Completed 1 0 Elementary Undergraduate 24 1 Elementary Graduate High school Undergraduate High school Graduate Post-Secondary College Undergraduate College Graduate Source: SOF 2003 Figure 2. Deployment of Overseas Filipino Workers by Continent, 2003 The continent of deployment of the OFWs is presented in Figure 2. Majority of the OFWs in 2003 were working in Asia (78.8%). Only a few of them were deployed in Europe (9.1%) and North America (8.7%). Meanwhile, the occupations of those who were identified as Overseas Filipino Workers Page 70 of 145

71 (OFWs) are presented in Table 2. Two out of five of the OFWs were in the Special Occupations while only 3.0 percent were Technicians & Associate Professionals. Furthermore, majority of the OFWs have been working abroad for more than four to five years already (Table 3). But on the average, these surveyed OFWs were working for 30 months or 2 and a half years. Table 2. Occupation of the Overseas Filipino Workers, 2003 Occupation of the OFW No. % Special Occupation /a 1, Trades & Related Workers Laborers & Unskilled Workers Service Workers and Shop and Market Sales Workers Professionals Plant & Machine Operators and Assemblers Clerks Officials of the Government and Special Interest Org., Corporate Executives, Managers, Managing Proprietors and Supervisors Farmers, Forestry Workers and Fishermen Technicians & Associate Professionals Total 2, Source: SOF, 2003 a/ Special Occupations include jobs in the armed forces, new workers seeking employment, workers reporting occupations which cannot be identified, workers reporting occupations not sufficiently described to permit classification in one of the preceding major groups and workers not reporting any occupation (Labor Force Survey) Table 3. Years that the OFWs are working abroad, 2003 Years No. % 0-1 year >1 year to 2 years >2 years to 3 years >3 years to 4 years >4 years to 5 years more than 5 years Total 2, Source: SOF, 2003 During the past six months of the interview date, around 80 percent of the households with OFWs received remittances while around 77 percent of OFWs sent remittances. On the average, these households received remittances of PhP47,944. They usually send their money via bank remittance (74.0%) while some preferred door-to-door remittance (21.4 %). It can be seen in Table 4 that around 55.6 percent of those households who reported to have received remittances from their OFW members are mostly receiving less than PhP50, 000 during the reference period. On the average, the remittances that the households received constitute about 22.3 percent of their total income during the past six months. Page 71 of 145

72 Table 4. Range of remittances received by the HHs with OFWs, 2003 Range of remittances received during the reference period (in PhP) No. % >0-50,000 1, , , , , , , > 200, Total HHs with OFWs who received remittances 1, Source: SOF 2003 Profile of OFWs CBMS Surveys This study covered a purposive sample of households with OFWs who have businesses in Carmona, Cavite and Mabini, Batangas identified using the CBMS Census. Figure 3 below shows the distribution of the sample overseas Filipinos who were surveyed in Mabini (65%) and Carmona (35%). It must be noted that out of the 76 households with overseas Filipinos covered, eight households have OFWs who have already returned during the time of the survey. Figure 3. Distribution of Overseas Filipinos, by site (%) Source: CBMS Survey, 2013 Demographic Characteristics The demographic characteristics of the overseas Filipinos in the two communities are presented in Table 5. As can be seen from the table, there are characteristics that are generally the same, regardless Page 72 of 145

73 of the geographic location. There is however, a factor that standout in differentiating the two which is their educational attainment. The OFWs in both sites are primarily composed of males and are in the age range of years old. In addition, both sites have most of their sons or the daughters of their households who were working as OFWs. The only difference in terms of the demographic characteristics is the educational attainment of the OFWs in these two communities. In Carmona, most of the OFWs were able to reach at least college level (42.1%). However, in Mabini, majority of the OFWs managed to finish at least up to high school level only (41.7%). It can also be observed that those who were able to finish college are higher in Carmona (39.5%) than in Mabini (31.9%). Characteristics Table 5. Demographic characteristics of Overseas Filipinos, by site Carmona Mabini ALL SITES Magnitude Proportion Magnitude Proportion Magnitude Proportion ALL OFWs Sex Age Male Female below 15 years old years old years old years old Average 37.8 t statistic Relationship to the HH Head Head Wife/Spouse Son/Daughter Son-in-law/Daugther-inlaw Grandson/Granddaughter Other Relative Non-Relative Educational Attainment At most High School Graduate College Level College Graduate Source: CBMS Survey, 2013 Overseas Filipino Workers Among all of the covered overseas Filipinos, it must be noted that around 88 percent were reported to be working. Figure 4 presents the distribution of the occupation of these OFWs in Carmona and Mabini. Majority of the employed OFWs in the two sites worked as laborers and unskilled workers (28%) while those working as sales and service shop workers follow closely at 20 percent. The difference in the occupation of these OFWs can be seen when disaggregated by site. In Mabini, almost half of the OFWs Page 73 of 145

74 were laborers and unskilled workers (42.9%). The specific job of these OFWs was reported to be domestic helpers or cleaners. On the other hand, majority of the OFWs in Carmona were sales and shop workers (21.6%). Those who were working as technicians and associate professionals came in next at 18.9 percent. Figure 4. Distribution of employed OFW members, by occupation, by site (%) Source: CBMS Survey, 2013 In terms of the industry where these OFWs work, majority are in the activities of households as employer sector at 35.5 percent. Other OFWs were working in the transportation and storage industry (17.2%) and in the manufacturing sector (12.9%). Likewise, differences in where these OFWs were employed can be seen when disaggregated by site. It can be seen from Figure 5 below that more than half of the OFWs in Mabini were working in the activities of households as employer sector. This follows the earlier trend that most of them are domestic helpers or cleaners working in private households. On the contrary, a quarter of the OFWs in Carmona are employed in the manufacturing sector. Page 74 of 145

75 Figure 5. Distribution of employed OFW members, by sector of employment, by site (%) Source: CBMS Survey, 2013 Half of the OFWs in the sample are based in Italy (Figure 6). This can be attributed to the finding that there are more OFWs in Mabini compared to Carmona and more than 70 percent of OFWs covered in Mabini are working in Italy. On the other hand, Saudi Arabia was the preferred destination of about 26.3 percent of OFWs from Carmona. Page 75 of 145

76 Figure 6. Distribution of OFW members, by country of employment, all sites (%) Source: CBMS Survey, 2013 Majority of the households have members that have been OFWs for more than 10 years (Table 6). For both sites, mean number of years of member being an OFW is 12.9 years. However, OFWs in Mabini have worked abroad (14.5 years) longer than the OFWs in Carmona (11.2 years). In fact, the difference in the average number of years being an OFW between the two sites is statistically significant at 10 percent level of significance. In terms of distribution, about 60 percent of the OFWs in Carmona have been working abroad for less than 10 years while the same proportion of OFWs in Mabini have been working abroad for more than 10 years. It can be noted that among the households that used remittance for their business, more members have been OFWs for 16 to 20 years (29.2%) than among OFWs from households that did not use remittance for their business. This is also mirrored in the cases of Carmona and Mabini. Majority of households in Carmona that used remittance for the business have members that were either OFWs for almost 20 years or OFWs for less than five years. In Mabini, majority of households which used remittance for the business have members who have been OFWs for over 10 years (73.9%). Page 76 of 145

77 Table 6. Distribution of households by number of years of member being an OFW, by site Carmona Mabini All sites Magnitude Proportion Magnitude Proportion Magnitude Proportion Total years years years years years years years Average t statistic ** **Statistically significant at 10% significance level Source: CBMS Survey, 2013 Characteristics of OFW Households Household size The 76 covered households consist of 472 individuals including 110 OFWs. The average household size including OFWs for all sites is 6.2 with a maximum of 16 members in a household while about 5 excluding OFWs (Table 7). Average household size for Mabini is 6.5, slightly higher than the average household size of 5.9 individuals for Carmona. However, when OFWs are excluded, Mabini s household size is slightly lower. Table 7. Average household size, by site Sites Mean Std. Dev. Min Max Including OFWs Carmona Mabini All sites Excluding OFWs Carmona Mabini All sites Source: CBMS Survey, 2013 Employment rate There are a total of 255 individuals in the labor force, representing almost 54 percent of the population (Table 8). Of the members of the labor force, 91 percent are employed. Higher employment rate is recorded in Mabini (92.6%) than in Carmona (89.1%). Page 77 of 145

78 Table 8. Employment rate, by site Carmona Mabini All sites Magnitude Proportion Magnitude Proportion Magnitude Proportion Labor force Working members Source: CBMS Survey, 2013 Share of remittance to total household income A total of 66 households have received remittance from OFWs or about 87 percent of the total households (Table 9). In Mabini, at least 9 in every 10 sampled households have received remittance while at least 8 in every 10 households have received remittance in Carmona in the past 12 months. For the 20 households (30.3%) who received remittance in both sites, less than one fourth of their total household income comes from remittance. For the 43 percent of households in Carmona, remittance accounts for more than half of their total household income. In the case of Mabini, remittance is less than 25 percent of the total income for most households (38.9%). However, more than 20 percent of the households greatly depend on remittance, in which remittance accounts for more than 75 percent of the total income. Table 9. Share of remittance to total household income, by site Carmona Mabini All sites Magnitude Proportion Magnitude Proportion Magnitude Proportion Total households Households who received remittance in the past 12 months Range of share of remittance to total income 0% - <25% % - <50% % - <75% % - <=100% Average t statistic Source: CBMS Survey, 2013 School attendance A total of 49 households have children 6-16 years old, which account for 84 children (Table 10). Forty five children are from Carmona and 39 children are from Mabini. Forty five households have children 6-16 years old who are all attending school. This translates to 80 children or 95.2 percent. Higher school attendance among 6-16 years old children is recorded in Carmona (95.6%) than in Mabini (94.9%). However, there are 2 households from each site with at least 1 child 6-16 years old not attending school. This translates to about 5 percent of total children in age group Page 78 of 145

79 Table 10. School attendance of children aged 6-16 years old, by site Carmona Mabini All sites Magnitude Proportion Magnitude Proportion Magnitude Proportion Children 6-16 years old Children attending school Not attending school Source: CBMS Survey, 2013 Educational attainment of other members of the household aged 21 and above Excluding OFWs, there are 210 individuals aged 21 and above. Of these, about 30 percent are college graduates and about 22 percent are high school graduates (Table 11). Comparing the 2 sites, more individuals in Carmona aged 21 years old are at least high school graduates (87.9%) than in Mabini (63.0%). Table 11. Educational attainment of other members of household aged 21 and above, by site Carmona Mabini All sites Educational attainment Magnitude Proportion Magnitude Proportion Magnitude Proportion Total No grade Elementary level Elementary graduate High school level High school graduate Post secondary level College level College graduate Source: CBMS Survey, 2013 Households who used remittance for business Of the sampled households in Carmona and Mabini, 54 households reported using a certain proportion of remittance either as part of start-up capital or as support to finance the continued operation of business. Moreover, of the 55 households that used a portion of their remittance for their business, 48 households or 89 percent of the total number of households covered have existing businesses while 6 households (11%) no longer have businesses at the time of the survey. Of the 48 households that currently have business and used remittance for the business, 25 households are from Carmona and 23 are from Mabini. Table 12. Households who used remittance for business, by site Carmona Mabini All sites Magnitude Proportion Magnitude Proportion Magnitude Proportion Total households who used remittance Currently has business Has no current business Source: CBMS Survey, 2013 Page 79 of 145

80 Type of business Looking at both sites by type of businesses invested in, 24 out of 48 households with businesses who used remittances are classified under retail trade in particular sari-sari stores (Table 13). Services came in next at 27.1 percent. As Mabini is more rural than Carmona, it is expected that businesses related to agriculture, fishery and livestock can be found in this community more. In fact, around 21.7 percent of the households who used their remittances in business were found to invest more in agriculture, fishery and livestock in Mabini as compared to 10.4 percent in Carmona. To be specific, some of them are involved in fishing and livestock since most of the covered barangays in Mabini are coastal barangays while those who are in the livestock business mostly owned a piggery farm. On the other hand, more households in Carmona used the remittances that they received to put up businesses related to retail (52%) and services (36%). Table 13. Households who used remittances for putting up a business, by type and by site Type of Business Carmona Mabini ALL SITES Magnitude Proportion Magnitude Proportion Magnitude Proportion Retail Services Financial Manufacturing Agri/Fishery/Livestock Total Source: CBMS Survey 2013 Number of employees In terms of employment generation, businesses in Carmona that used remittance seemed to have employed more persons than businesses that used remittances in Mabini, which can be because of the type of businesses present in Carmona. A total of 90 persons were employed in Carmona while only 56 persons got employed by the businesses in Mabini (Table 14). It can be recalled that there are manufacturing businesses in Carmona, which have generated the most number of employees. For instance, one business in Carmona employed a total of 90 employees, which is the highest employment generated by a single business in all the covered households. Though in general, in both sites, most businesses employ only one person (which is usually the business manager or the owner and in most cases act as unpaid family workers). Majority of the businesses have at least one female employee, however comparing the total number of male and female employees, there are more households which employed male employees. All the 48 businesses included in the sample employed a total of 146 employees, around 55 percent of which are male employees and 45 percent are females. Page 80 of 145

81 Table 14. Number of employees of the businesses of households who used remittances, by site No. of Employees Carmona Mabini ALL SITES Magnitude Proportion Magnitude Proportion Magnitude Proportion Average t statistic Sales from business Average sales from business in all sites amounted to approximately PhP2.8 million (Table 15). Average sales from businesses in Carmona are about 18 times higher than the average sales of businesses in Mabini. Majority of the businesses that used remittance had total sales of not more than PhP1 million (81.3%). However, 2 businesses had reported zero sales - 1 in Carmona and 1 in Mabini. More than one third of businesses have total sales more than PhP100,000 but less than PhP300,000. More businesses have reported the said total sales in Carmona (44.0%) than in Mabini (30.4%). Also, there are more businesses which have total sales of more than PhP1 million in Carmona (20%) than in Mabini (8.7%). In fact, the biggest reported sales amounted to PhP120 million from a manufacturing business in Carmona. Table 15. Sales from business, by site Carmona Mabini All sites Magnitude Proportion Magnitude Proportion Magnitude Proportion Total households who used remittance for business No sales , , , , , , , , , ,001-1,000, ,000,0001-3,000, ,000, ,000, Page 81 of 145

82 Average 5,196, , ,838,594.0 t statistic Source: CBMS Survey, 2013 Manufacturing, retail and services-related businesses were both present in the two sites. However, table above shows that businesses in Carmona have generally higher average sales than in Mabini. Evident difference in average sales is noted in the manufacturing business. It can also be noted that Agri/Fishery/Livestock businesses are only present in Mabini while financial-related businesses are only present in Carmona (Table 16). Table 16. Average sales from business, by type of business and site Carmona Mabini All sites Agri/Fishery/Livestock - 42,840 42,840 Financial 24,000-24,000 Manufacturing 60,000, ,400 24,000,000 Retail 510, , ,325 Services 359, , ,255 Source: CBMS Survey, 2013 Profit from business In terms of profit from business, one household reported a deficit, and 4 households have not made a profit or loss (Table 17). Majority, however, reported profit amounting to not more than PhP300,000 (81.3%). Around 8 percent reported profits amounting to more than PhP1 million but not more than PhP112 million. In Carmona, 28 percent of businesses have profit ranging from PhP100,001 to PhP300,000. While in Mabini, 30.1 percent have profit more than PhP10,000 but less than PhP50,000. Table 17. Profit from business, by site Carmona Mabini All sites Magnitude Proportion Magnitude Proportion Magnitude Proportion Total households who used remittance for business Negative No profit , , , , , , , , , ,001-1,000, ,000,0001-3,000, ,000, , 000, Average 4,552,012 74, ,406,725.0 Page 82 of 145

83 t statistic Source: CBMS Survey, 2013 Skills of household members At least 8 in every 10 households in the two sites have at least one member with knowledge on sales and service while less than half of the households have knowledge on information and technology (Table 1824). Looking at the two sites, sales and services is the skill that most households have (84% in Carmona and 78.3% in Mabini). Other top business-related skills that households in Carmona have are management of operations and purchasing, where 76 percent of the households have at least 1 member with knowledge on both skills. On the other hand, households in Carmona have the least knowledge on human resource management (36.0%). In the case of Mabini, most households (73.9%) have at least one member with knowledge on business planning, marketing/financial management and accounting. However, more than 60 percent of the households have limited knowledge on information technology. Table 18. Distribution of households with at least 1 member with knowledge or skill, by business aspect and site Carmona Mabini All sites Magnitude Proportion Magnitude Proportion Magnitude Proportion Total households who used remittance for business Sales and service Business planning Marketing Financial management and accounting Human resource management Management of operations Information technology Purchasing Source: CBMS Survey, 2013 Case Studies A total of 30 case studies were drawn from the 76 households surveyed under the project Remittances, Entrepreneurship and Local Development in the Philippines: A Tale of Two Communities. These case studies provide a rich array of stories and lessons on how overseas remittances are fostering improvements in development conditions not only at the household but at the community level as well. Facilitating Factors for Entrepreneurship The case studies suggest that age, educational attainment, and skills of OFW members as well as length of sending OFWs are facilitating factors in a household s decision to engage in an entrepreneurial activity. In terms of age, for instance, the mean age of OFWs in the case study households was 42.7 which is higher than the average age of 37.8 among OFWs in the sample households. Page 83 of 145

84 Table 19. Mean age of OFWs in case study households Mabini Carmona All OFWs Age The same is true for educational attainment: 52.3 percent of the OFW members in the case study households are college graduates while only 34.5 percent of OFWs in the sample households were college graduates. Table 20. Educational attainment of OFWs in case study households Mabini Carmona All OFWs non-college graduate college graduate Meanwhile, in terms of length of time that OFWs have been working abroad, the case study households posted an average of 14 years while it was only about 13 years for the sample households. Table 21. Number of years that case study households have been sending OFWs Length of sending OFW Mabini Carmona All OFWs Mean Nine in every 10 households with OFW members have skills or knowledge on sales. Other tops skills or knowledge acquired of OFWs are marketing, business planning and purchasing. Table 22. Skill of OFWs in case study households Mabini Carmona All OFWs Sales Business planing Marketing Financial Marketing Human Resource Operations Management Information Technology Purchasing Remittances On the average, case study households in both sites have been receiving remittances for 12.5 years. About 30 percent have been receiving remittances from the past 1-5 years; 20 percent from the past 6-10 and years, respectively; and 13.3 percent from the past and years, respectively. Page 84 of 145

85 Meanwhile, about 36.7 percent of the respondents said that decisions on what portion of the remittances should be saved or invested are arrived at by the OFW and his/her spouse while only 13.3 percent said that savings/investment decisions depend entirely on the OFW member. Another 13.3 percent said these decisions are arrived at by the family, while the rest said that these decisions depend on the other members of the household. Business Development Majority of OFW households in both sites have the following characteristics: (i) had existing businesses before at least one member went abroad to look for work (36.7%); (ii) had previously invested in business ventures that did not take off/become profitable (53.3%); (iii) did not get any form of assistance from any agency of the government (86.7%) or NGO (93.3%) at any stage in the business development lifecycle; and (iv) did not prepare business plans (e.g., market analysis, sales forecast, income projections) before they invested in their chosen ventures (86.7%). Business Operations Moreover, a vast majority of OFW households in both sites who are engaged in business are operating home-based enterprises; typically have household members who work without pay (90%); and do not have a recordkeeping system suited to their business that clearly shows income and expenses (56.7%). About 26.7 percent said that their biggest obstacle in making their business profitable is stiff competition and lack of access to financial and physical capital (23.3%). Investment/Spending/Saving Patterns OFW households in both sites typically use OFW remittances for consumption goods (e.g., food and other daily necessities) and education of children, regardless of the number of years that the OFW members have been working abroad and whether they have other sources of income. Remittance spending for housing purposes tends to be prioritized over savings and investment on business. In fact, only 20 percent of the households have allocated a portion of the remittances they received for savings. Outlook Majority of the survey respondents indicated that their OFW members do not have plans to permanently settle in their host countries (70%). Moreover, they said that their OFW members will probably have to stay abroad until our kids are able to finish schooling (36.7%) while 13.3 percent said they will probably stay there until retirement age. Furthermore, majority would probably spend their money in investment goods (new business, education, housing, retirement plan) in the event of an increase in household income in the next 12 months (76.7%). Page 85 of 145

86 Machine shop revs to life Mr. Enrique Valenzuela, general manager of JVV Precision Machine Shop, was employed in 1979 as a skilled worker on masonry and carpentry in Saudi Arabia. After a three year stint in this country which, up to this date, remains to be one of the most preferred destinations of Overseas Filipino Workers (OFWs), he returned to the Philippines in 1982 and opened a palay trading business in Cagayan. Under pressure to support his growing family, he would however close shop after only a few months of operation and return to Saudi where he worked for another six years. Unable to resist the lure of a higher income in Guam in 1992, Mr. Valenzuela also worked there as a heavy equipment operator for seven years before his son, Joe, who previously worked at Rohm Electronics Philippines, Inc. was able to convince him to set up the JVV Precision Machine Shop in Brgy. Mabuhay, Carmona, Cavite. With less than half a million in starting capital which partly came from Mr. Valenzuela s wife who was working in Switzerland at that time, the father and son tandem started providing general machining, jigs and fixtures, design consultancy, fabrications and other related works in October 15, Only 10 years after opening, JVV Precision Machine Shop would grow from a small backyard shop with just two employees to a busy shop with more than 40 personnel who are mostly welders and machinists who took up TESDA courses in mechanical technology from Don Bosco. Their shop now boasts of top of the line machineries that include lathe machines, vertical milling machines and service grinding machines that they use to cater to the needs of their clientele from the food processing, appliance, tool and die making, electronics, and chemical processing sectors. Their customers include Fujitsu Ten Corporation, First Sumiden, Kessel Industries, Purefoods Hormel Co. Inc., Yamaha Motors and Magnolia Inc. Page 86 of 145

87 Industry Profile Machine shops basically serve as intermediaries in industrial production according to First Research, a leading provider of market analysis tools based in the United States. They work on a job basis: generally, they receive unfinished parts or raw materials from a manufacturer, perform various operations, and return the parts to the manufacturer for further processing. They own and operate special machine tools that can perform a variety of operations, including drilling; boring (enlarging an existing hole); tapping (cutting threads inside a drilled hole); threading (cutting threads on a bolt); cutting; milling (removing material from a surface); and grinding (usually a finishing operation). Overseas Filipino Worker (OFW) Name of OFWs Number of years that the household has an OFW member Primary country of work Frequency of remittance Business Ventures of OFW Household Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Enrique Valenzuela & Teresita Valenzuela 16 & 20 years, respectively Saudi Arabia and Guam; Hongkong and Switzerland Once a month 300, A national survey conducted by the Metals Industry Research and Development Center in which covered 955 respondents or 71 percent of the 1,350 identified machine shops in the country revealed that majority of the machining companies offer repair services, and the rest are into industrial parts fabrication, machine rebuilding, and engine reconditioning services. It also found that most of the companies are operating in the National Capital Region and the rest are widely distributed in various regions of the country. Some 98 percent of the surveyed shops are Filipino-owned, with only two percent partly-owned by other nationals. Almost Asset value of all business (in pesos) 10.0M Primary Business Line of business Machine Shop Address Barangay Mabuhay, Carmona, Cavite Date Established October 2002 Gross income during the past 12 months (in pesos) 120M Current Asset Value 10.0M Number of Employees 47 half of the shops surveyed have a capital that ranges between more than a hundred thousand pesos to a million pesos. Most of the shops were established since 1990 onwards with only a few of them known to have existed for over 50 years. Most of the production personnel involved in the machining industry are mostly males who work as engineers, designers, draftsmen, assembly die maintenance, inspection/quality control technicians, machine operators, laborers, R&D staff, and others. Other personnel in the industry are welders, fabricators, tool keepers, foremen, machine rebuilders, and molders. Page 87 of 145

88 A Family Enterprise Interestingly, the study revealed that micro shops are usually family enterprises in which the owner and some family members are hands-on in the business operation. In the case of JVV Precision Machine Shop, Mr. Valenzuela is practically running the business while his son Joe serves as the production manager. Meanwhile, his daughter who previously worked as a crew for a cruise liner, assists him in office management. All the three of them, according to Mr. Valenzuela, are on the payroll of their family business. Mr. Valenzuela initially planned to bring his family to Guam and settle there permanently. But according to him, life was also hard there. Thus, he did not need a lot of convincing when his son Joe called him up to discuss an exciting business proposition. Besides, his youngest child had already graduated from college. He returned to the country in April 2000 and started laying the groundwork for starting their small business. JVV Precision was registered with the DTI on October 07, 2002 and in early 2003, the company was able to attract its first major customers: Imasen Phil s. Corp., Nagano Seiko Phil., and Engtek Precision Phil. Inc. Mr. Valenzuela estimates the current asset value of JVV Precision Machine Shop at PhP10M. However, they are still financing the acquisition of some of their machines which they acquired partly from a loan from the Small Business Guarantee and Finance Corporation. He is optimistic that things will turn out even better for their family enterprise once they are able to finish settling their financial obligations. Page 88 of 145

89 From messenger to barkeeper Overseas Filipino Worker (OFW) Name of OFW Number of years that the household has an OFW member Primary country of work Frequency of remittance Business Ventures of OFW Household Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Nick Tumamac 15 Sea-based Once a month 30, Asset value of all business (in pesos) 50,000 Primary Business Line of business Sari-sari store Address Carmona Townhomes, Carmona, Cavite Date established February 2011 Gross income during the past 12 months (in pesos) 204,000 By all accounts, Nick Tumamac has turned his life around since his days as a lowly messenger in Binondo. He and his wife have already invested in a house and lot which they acquired in 2000 and they have seen two of their five children through college since he started working as a barkeeper in a cruise liner 15 years ago. Their daughters Liezl and Lenny finished Information Technology courses and have started carving their own careers in Makati City, the country s financial center. At age 49, Nick said that he has no plans yet to retire and put his cocktail shakers aside. Three of his children are still schooling with two of them attending private schools. He said that his youngest daughter is just in Grade 6 and he would like to see her through college as well. He said that he is just on vacation and would probably resume his post next year. According to Nick, 80 percent of his monthly salary is automatically remitted to his family. During the past 12 months alone, his remittance to his household amounted to P240,000. He said that the bulk of this money is spent on daily household needs, education of his children and paying off debts. Current asset value (in pesos) Number of employees 50,000 2 Even then, this was not enough to support his wife Analiza and their five children. To make both ends meet, Analiza took on odd jobs including being an Avon lady. However, she stopped selling Avon products altogether when she opened the family s sari-sari store three years ago. The couple said that finding the startup capital for their business was difficult since his remittance was barely enough to support his family. The starting capital for their sari-sari store was P30,000 and only 10 percent of this came from Nick s remittances while the rest came from Analiza s earnings. The couple estimates their income from this entrepreneurial activity to be about P120,000 or about 16 percent of their total household income during the past year. The couple admits that they really did not plan things out thoroughly when they decided to invest in this venture. They said they don t even have a recordkeeping system which can help them monitor their cash flow. They also describe the process of registering their business and obtaining permits as easy. In fact, Analiza said that they were able to renew their permit in just one hour this year. Page 89 of 145

90 However, while store sales seemed pretty good during the couple of months of their operation, these days they face stiff competition from neighbors who have also put up their own sari-sari stores. But the couple is optimistic that they can get by. They said that the current asset value of their business remains the same when they started out about 2 years ago which was at P50,000. Nick keeps himself busy these days by helping out his wife with the household chores and tending to their store. The store is open seven hours a day, seven days a week. Their children help out in manning the store during weekends. Nick said that in the event of an increase in household income in the next 12 months, they would probably invest in a bakeshop. He said that he tried his hands at baking aboard the cruise liner and enjoyed the experience. He said that after attending to his duties as a barkeeper, he would normally join his Filipino colleagues who worked as bakers and in the process, learned a lot from them. Nick however said that he won t likely acquire a loan just to open a bakeshop. Nick also discounted the possibility of his family migrating to another country. A resident of Carmona Townhomes since 1997, he said that he plans to help his wife in managing their business once he retires. Page 90 of 145

91 Low income tax rate attracts family man to work in Malaysia Velina Francia said that her husband resigned from his post in an electronics manufacturing firm after realizing that they could barely make both ends meet. She said that one of the primary considerations cited by his husband was the high income tax rates in the country. Frustrated by the situation, it is no wonder that her husband Luis, an electrical engineer, is now working in Malaysia, one of the countries in Southeast Asia with the lowest personal income tax rates. Velina however clarified that they have no plans in migrating to that country no matter how attractive that prospect might seem. There is no place like home, she says, and her husband will probably stay in Malaysia until they are able to put all their three children through college. Their eldest is currently a second year high school student while the youngest is in Grade 4. The mother of three estimates her husband s remittances for the past 12 months to be P360,000. She said that a big portion of this is allotted for food and other household needs as well as for the education of their children. She also makes sure that she saves at least 10 percent of what her husband sends monthly. Before leaving for Malaysia four years ago, Luis made sure that their family has an alternative source of livelihood. They invested in an internet café and started with just four units of computers. They invested in two more units a couple of months after. They originally planned to expand the regular services being provided by their shop such as internet, online games, scanning and printing. Overseas Filipino Worker (OFW) Name of OFW Number of years that the household has an OFW member Primary country of work Frequency of remittance Business Ventures of OFW Household Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Luis G. Francia 4 Malaysia Once a month 50, ,000 Primary Business Line of business Computer shop / Internet Cafe Address Carmona Townhomes, Carmona, Cavite Date established December 2007 Gross income during the past 12 months (in pesos) 37,500 Current asset value (in pesos) 20,000 Number of employees 1 However, computer rental rates have gone down drastically during the past few years. Velina said that most households in their neighborhood have internet in their homes already. Maintaining the upkeep of their shop has been a big challenge since then. She confided that the cost of maintaining the shop is sometimes bigger than the income it generates. During the past 12 months alone, she estimates her total sales to be at P37,500 and pegged her expenses at P19,500. This means that she only profited P18,000 for the whole year which can hardly support her family. Page 91 of 145

92 To cope with the situation, she keeps her shop open for four hours a day only (5pm- 9pm) and tries to convince herself that her business is not bleeding her family dry. She said that her children use their internet shop for their school assignments anyway. Velina said that she also invested in an icecream machine which cost P100,000 but she had to stop altogether when she got sick. She attributed her frail health to stress and over-fatigue. She said that it s very difficult to find people these days with whom she can entrust her business. But she is not giving up hope just yet. She plans to invest in a shop selling RTW items once she has the money. Page 92 of 145

93 Stay-at-home mom turns to home-based money lending business Louiecar Nuestro is a young mother of two boys who previously worked as a supervisor at the SM Children s Department. She had to give up her job in order to focus on the care of her children, Eldrix Cian and Eralf Clyn. She said that she is grateful to her mother Carina who moved in with them and regularly pitches in to care for her youngest child who is still an infant. Her husband Erwin has been working in Singapore for six years now as an engineer. However, they have no plans to settle there due to the high cost of living in that country. The young couple has plans to migrate to Canada or Australia in the future but Louiecar said that they are not pursuing it actively just yet since they still have growing children. Louiecar estimates her husband s remittances during the past 12 months to be P240,000. A big portion of the monthly remittances sent by Erwin is spent on food and other daily household needs. According to Louiecar, during the first two years of her husband s stay abroad, they were able to save a part of his earnings in the bank. They stopped this practice on his 3 rd year since they invested their money in constructing their house. Overseas Filipino Worker (OFW) Name of OFW Number of years that the household has an OFW member +Primary country of work Frequency of remittance Business Ventures of OFW Household Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Erwin M. Nuestro 6 Singapore Once a month 20, ,000 Lending Address Barangay Mabuhay, Carmona, Cavite Date established September 2012 A closer scrutiny of the household s sources of income reveal that in 2011, the main sources of income of the Nuestro household were OFW remittance and salaries/wages earned by Louiecar. In terms of share, remittances and salaries accounted for 67.2 percent and 12.6 Gross income during the past 12 months (in pesos) 24,000 Current asset value (in pesos) 24,000 Number of employees 1 percent, respectively of the total household income. In 2013, the percent share of OFW remittances increased to 74.7 percent probably owing to the fact that Louiecar resigned from her job to take care of her infant child. Notable however is the fact that the imputed rent for for their dwelling unit increased from P72,000 to P84,000 in just two years. To help her husband stretch their budget, Louiecar explored a few moneymaking ventures. She initially explored the option of owning a stall at the Carmona Public Market but eventually decided to settle for Page 93 of 145

94 a home-based lending business since she cannot afford to be away from her children for long periods at a time. Louiecar said that she basically lends out money at a low interest to friends and relatives who are in need of short-term loans. She only started this entrepreneurial activity in September 2012 with a capital of P20,000. After just five months, she said that she was able to earn a profit of P4,000. However, she insisted that she is still testing how things will pan out. In fact, in the event of an increase in household income in the next 12 months, Louiecar said that she and her husband might save the money than invest it since it is safer. The couple is a bit reluctant to invest more in Louiecar s money-lending business because they have heard stories from their friends on how risky this business venture can be. Louiecar said that she does not have a business permit since she treats the business as an informal one only. She also said that she did not prepare a business plan before she invested in the business venture. She claims that while she and Erwin discuss money matters (e.g., how much to save or invest), in the end, it is her husband who has the final say. Page 94 of 145

95 Two seafarers in the family There are two seafarers in Rovelin Cea s household her husband Alexis and their eldest son Wilgard. She distinctly recalls that Wilgard was just six years old when her husband left to work abroad as a seaman. She said that she did not foresee that her son would also join the same profession as his father but that is just what exactly happened after about 15 years. Now 49 years old, Alexis would probably carry on with his profession for eight more years before retiring, his wife said. The couple still has two children that they need to put through college: Alvin Kaiser, 14, and Christian Andrei, 13. Both are attending private schools in Carmona, Cavite. Overseas Filipino Worker (OFW) Name of OFW Length of stay abroad (in years) Primary country of work Frequency of remittance Business Ventures of OFW Household Number of business ventures 2 Starting capital for all business (in pesos) Alexis C. Cea & Wilgard P. Cea 16 years and one year, respectively Sea-based Once a month 1.0M After working for 16 years, Alexis and Rovelin were able to invest in a 2-door apartment which they rent out for P4,000 a month. Rovelin said that this was their very first income-generating venture. She said that they invested about P500,000 in the construction of the apartment and estimates the current value of her property at P800,000. Prior to this, the couple first invested their money on a house and lot in She said that the location of the apartments was very convenient: it is just a stone s throw away from the public elementary school in the area. And it proved to be very strategic too, which they found out when they opened a school supplies store. The family also invested in a service vehicle just last year. Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Rovelin claims that obtaining the business permit for her store was easy and could in fact be Number of employees 1 completed in just one day. However, she has still to renew her business permit this year. She also said that she did not prepare a business plan before she opened her store. She said that trying their hands at business was a coping mechanism. She reminded us that while she automatically receives 80 percent of her husband s salaries, their family does not have income when Alexis is on vacation and between shipboard assignments. Rovelin estimates her husband s remittances during the past 12 months to be P300,000 which is about 70 percent of their total income for the year. Her son also pitches in and provides financial support occasionally ,000 Apartment rentals Address Barangay Milagrosa, Carmona, Cavite Date established January 2008 Gross income during the past 12 months (in pesos) 48,000 Current asset value (in pesos) 800,000 Page 95 of 145

96 Rovelin however claims that she is experiencing difficulties in collecting rentals from her tenants. She said that her store is not earning as much these days too. She pointed out to a row of stores just in front of her apartments which she claims sprouted out recently and depleted much of her expected earnings. When asked if she maintains a recordkeeping system that will show her income and expenses from the household s business ventures, Rovelin said that she doesn t have one. In the event of an increase in household income during the next 12 months, the couple would probably open a softdrinks dealership business to ensure that they have a steady flow of income. Rovelin thinks this venture would be far more profitable than her current ventures. Page 96 of 145

97 Past failures not deterring housewife from exploring other business opportunities Raquel Restrivera, mother to 11-year-old Kate Arielle and 9-year-old Reneil Brent, was busy tending to her sari-sari store when we invited her for an Overseas Filipino Worker (OFW) interview. She would occasionally excuse Name of OFW Bobby F. Ferancullo herself during the interview to tend to her customers. Length of stay abroad (in years) 5 She said that she opened her store 6 years ago with the help of his husband Bobby who has been working as a machine operator in Seoul, South Korea for five years now. She said that the total amount of P10,000 which she used as a starting capital was given to her by her husband. According to Raquel, her husband regularly sends P15,000 to his household. Their children go to public schools so they don t spend much for their education. She also makes sure that she saves a portion of her husban s remittances in the bank. They were able to renovate their house when Bobby marked his fourth year stay in Korea. She said that business has been slow these days since a number of her neighbors have put up their sari-sari stores too. During the past 12 months, her store had a total sales of P187,200 and expenses of P62,400. This translates to a profit of P124,800. Owing to the stiff competition, Raquel said that she would rather open a gift or an RTW shop in the future. The couple would also want to invest in an apartment which they could then rent out to employees of factories located in Carmona, Cavite. Primary country of work Frequency of remittance Business Ventures of OFW Household Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business South Korea Once a month 10, ,000 Sari-sari store Address Barangay Mabuhay, Carmona, Cavite Date established January 2007 Gross income during the past 12 months (in pesos) 187,200 Current asset value (in pesos) 20,000 Number of employees 1 Before opening her sari-sari store, Racquel said that she and her husband invested in a tricycle but they were forced to sell this because they encountered a lot of difficulties in acquiring a franchise. She also recalled dabbling in a home-based lending venture but she decided to drop this when she experienced problems in collecting payments from her clients. She found out that the practice of using ATM cards as collateral was not foolproof since some of her clients would withdraw their salaries before she could deduct what her clients owed her. Page 97 of 145

98 In 2011, about 60 percent of their household income came from the remittances of Bobby. Income from Raquel s store on the other hand accounted for about 17 percent while retirement pension received by her mother who lives with them contributed about 9.5 percent to the total household income. This year, Bobby s remittances increased by more than 50 percent but its share to household income decreased to 49 percent. This is due to the fact that the household also received income from aprtment rentals whic accounted for about 3.2 percent of the total income. Combined with her income from her sari-sari store operations, total income from entrepreneurial activities thus increased to 36 percent percent in Also noteworthy is the fact that the imputed rent for their dwelling unit increased by 20 percent in just two years. The household also owns several durable assets such as home appliances, cellphone and telephone. Raquel also recently acquired a computer with internet connection. Racquel said that she would be very interested to learn about other business opportunities that she and her husband could invest in. Ideally, she said that these should be home-based because she cannot afford to be away for long periods at a time because of her children. She expects that her husband would continue to work in Seoul for a number of years more. She said that her youngest child is only in Grade 4 and they would want to put him through college before her husband retires and return to the country. Page 98 of 145

99 Mel s Food Stand Mrs. Imelda Brimbuela, 39 years old and a mother of 2 is wife to an OFW working in Saudi Arabia since Like her husband, Imelda only finished high school education. Imelda s love for cooking pushed her to get into food business. With an initial capital of P 500, she started vending puto and lugaw in their neighborhood in The business was established without assistance from the government or any non-government organization. Imelda recalled how difficult it was for her to sell her goodies every day commuting from one area to another carrying her basket of goodies on one hand and a foldable table on her other hand. Hardwork was deemed necessary to meet the daily basic needs of her family. By 2008, she started selling packed food (for breakfast, lunch and merienda) for workers/employees in Golden Miles Maduya. The business is managed and largely ran by Mrs. Brimbuela with assistance from 3 helpers. She s on top of day to day operations from menu planning, purchase of food ingredients and supplies, cooking, packing, and selling of the goods. The helpers just assist in the preparation of ingredients for cooking and in packing the cooked food. Her food business operates daily except Sundays. Work starts in the evening till the wee hours of the morning to make sure that food is ready for selling starting 5:00 am until 7:00 am. Overseas Filipino Worker (OFW) Name of OFW/s Length of stay abroad (in years) 3 Primary country of work Frequency of remittance Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) 0 Asset value of all business (in pesos) Primary Business Line of business Address Rogelio Brimbuela Jr. Saudi Arabia Monthly P 500 Food Carmona, Cavite Date Established May 2005 Gross income during the past 12 months (in pesos) P 234,000 Current Asset Value P 5000 Number of Employees 4 Since 2010, 50 percent of the capital for sustaining their food business comes from the remittance received by the family from Imelda s husband while the rest comes from the earnings of the business. The rest of the remittance received by the household is used to finance the family s food, house rent and utilities, and for their children s education expenses. Her husband Rogelio is working as a fabricator in a steel welding company in Saudi Arabia. Her husband plans to work abroad until their children, now aged 15 and 6 years old, respectively, finish schooling. Moreover, her husband also plans to work overseas until they are able to build their own house. Among the biggest obstacles in making their food business more profitable, according to Imelda is not having a permanent/fixed space for her food business and financial capital. Limited financial resource Page 99 of 145

100 for the business is further constrained with the need to help relatives who often ask for help for financial and food assistance. Imelda dreams of owning a food house someday. Meanwhile, in case of an increase in income in the next 12 months, the family wants to invest in a house that they can call their own. Aiming for a secure future for their family particularly their children, given the opportunity, Imelda also plans to work as an OFW in Hongkong. Page 100 of 145

101 Egay s Party Needs Overseas Filipino Worker (OFW) Name of OFW/s Length of stay abroad (in years) 2 Primary country of work Frequency of remittance Number of business ventures Edgardo Purificacion Singapore Monthly Starting capital for all business (in pesos) P 50,000 Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Address 0 Party Needs Carmona, Cavite Date Established March 2008 Gross income during the past 12 months (in pesos) P 50,000 Current Asset Value P 200,000 Number of Employees 1 The Purificacion Family owns a party needs business particularly supplying videoke, tables and chairs, balloons, and supplies/prizes/loot bag items for children s games. Their motivation to invest in this business drew from the experience of the family s patriarch, Edgardo Purificacion, 41 years old, who used to work in the same line of business when he was still in the Philippines. Edgardo is currently working as a Machinist in a company based in Singapore. Established in 2008, the business is home-based with Edgardo s wife, Analyn, managing the day to day operations of the business from 8:00 am to 8:00 pm from Monday to Sunday. Analyn attends to the business while taking care of their 4 children aged 11, 8, 3 and an infant, respectively. Analyn is a highschool graduate while Edgardo reached 1 st year college. On their first venture into business, they started with chairs and table rentals and party supplies. The business solely depends to referrals of existing clients. About 27 percent of the monthly remittance received by the household since 2010 goes into the business operations. For Analyn, having an OFW family member helped them a lot in expanding the services provided by their business. They were able to procure 2 videoke machines from the remittance of her husband. Among the biggest challenges in making the business more profitable according to Analyn are their store location, competition with growing number of suppliers in the area, and their lack of business permit thus limiting their capacity to advertise their business. Edgardo will continue to work abroad until the family is able to save up for the full payment of their house. Page 101 of 145

102 The Purificacion household is classified as non-poor in 2011 and Its annual per capita income has increased from P82,800 from P69, 000. The household s main sources of income are receipts from overseas remittance and earnings from its business. More than half (58%) of the income of the household is derived from receipts from overseas remittance. About 35 percent comes from income from entrepreneurial activity. Over a period of 2 years, the household was able to acquire additional durable assets such as mobile phone and washing machine. Page 102 of 145

103 Afmin Variety Store The variety store is owned by Jacob Family of Carmona, Cavite. Prior to having a variety store, the family thought of having a gasoline station but lacked the necessary financial capital. They initially engaged in selling of artificial plants for a year but the latter had not been profitable thus they did not continue the business after a year of operation. Overseas Filipino Worker (OFW) Name of OFWs Length of stay abroad (in years) 14.5 Primary country of work Frequency of remittance Nimfa Jacob Taiwan, China The store is being managed by Mr. Jimmy Jacob, a former OFW. His wife is currently working in Taiwan in a semi conductor/molding company. Jimmy, an engineer, also used to work in Saudi for about 5 years. His wife is also a college graduate with a degree in electrical engineering. They have a child who is currently in Grade 1. The family s current business venture was one of the fruits of Mr. and Mrs. Jacob s hardwork for more than 14 years of working abroad. Aside from the variety store, they were able to invest in real estate and to finance the construction of their house. Meanwhile, in the first year of receiving overseas remittance, 70 percent have been allotted by the family for purchase of their house and the rest went to payment of basic Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) P 70, house expenses (food and utilities). In the succeeding years, 70 percent have been budgeted for basic house expenses while 30 Number of Employees 1 percent goes to their business. In the last 6-7 years, about 40 percent of the remittance goes to education (tuition of child), 40 percent is earmarked for the business, and the rest is spent for basic house expenses. Given the opportunity and enough capital, the family plans to put up a pharmacy or engage in trading business of any product in the future. Jimmy still aspires to be an OFW and is hoping that he gets an opportunity for an overseas employment where he can bring his family with him. The Jacob household is classified as non-poor based on the 2011 and 2013 CBMS data. Its household size has increased overtime from 3 to 4 members. The reported annual per capita income of the household has slightly increased from P 104,000 in 2011 to P 108, 300 in The main sources of income of the household are receipts from overseas remittance and income from its entrepreneurial activity. About 77 percents of the household income is derived from remittance Page 103 of Asset value of all business (in pesos) P 100,000 Primary Business Line of business Address Retail Carmona, Cavite Date Established August 2005 Gross income during the past 12 months (in pesos) P 144,000 Current Asset Value P 100, 000

104 abroad. The annual remittance and income derived from the household entrepreneurial activity has remained the same for the past 2 years. In 2013, the household was able to derive income from salaries of an employed household member which constituted about 25 percent of the total household income. Page 104 of 145

105 Mayo Family: Row House Rental & Variety Store Overseas Filipino Worker (OFW) Name of OFW/s Length of stay abroad (in years) 20 Primary country of work Frequency of remittance Number of business ventures 2 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Address Romeo Mayo Saudi Arabia Monthly P 800, P 1.2 Million Row House Rental Carmona, Cavite Date Established October 27, 2001 Gross income during the past 12 months (in pesos) P 132,000 Current Asset Value P 1,200,000 Number of Employees 1 The Mayo Family owns a sari-sari store and row house rental for business. These business ventures were primarily financed by savings from earnings of Romeo Mayo, who has been working as a crane operator in Saudi Arabia for almost 20 years. Romeo works as a crane operator in a company in Saudi Arabia. Both Romeo and Lorna completed post secondary education. According to Mrs. Lorna Mayo, her husband plans to work abroad until their youngest child whose now in Grade 5 completes schooling. Romeo and Lorna have 3 children. For 20 years, aside from the two business ventures, the family was able to invest in payment for house and lot, and education of the children in the household. One of the 3 children in the Mayo family has already completed college and currently working as a sales coordinator. The other 2 children are still in 1 st year college and grade 5 respectively. The family was able to purchase their house and lot on the 2 nd year of receiving overseas remittance and was able to finance their sari-sari store the year after. In 2001, the family was able to invest in a row house rental for business. Prior to having their current business ventures, they also considered venturing into rice retail. They, however, did not pursue this since they find it more expensive to start, and more difficult to earn profit compared to the row house rental and the variety store. The day to day operations of their house rental and variety store business are managed by Lorna. Occasionally (when not in school), their middle child assists in attending to their variety store. The household did not receive any form of assistance from the government or any non-government organization in any stage of their businesses. No business plan was prepared before they ventured to any of their businesses. Prior to having these businesses, the family also engaged in jeepney operation from but closed operations due to low profit and big maintenance cost. They considered venturing into their apartment rental business due to the lower maintenance cost it entails compare to other businesses. Page 105 of 145

106 In case of an increase in income in the next 12 months, the family plans to invest the additional income in business. Among the biggest obstacles for making the business more profitable, according to Lorna, is their capacity to infuse additional capital. When asked what would convince her husband too return to the Philippines, she said that he will likely decide to return to the Philippines for good if he finds a job that will sustain their family s needs. Page 106 of 145

107 Riego Family: Xenon Water Enterprise-Agua Vida Franchise Overseas Filipino Worker (OFW) Name of OFW/s Length of stay abroad (in years) 2.9 Primary country of work Frequency of remittance Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Jackelyn Riego Japan (2 years), China (2 months), India (1 month), Taiwan (6 months) P 200,000 Asset value of all business (in pesos) P 280,000 Primary Business Line of business Address 0 Water Las Piñas City Date Established October 6, 2010 Gross income during the past 12 months (in pesos) P 240,000 Current Asset Value P 280,000 The Riego Family co-owns a water refilling station since 2010 (Agua Vida Franchise located in Las Piñas City). Said business is being managed by Mr. Mauro Riego, father of a former OFW. Income from the business currently supports the expenses for the daily needs of the family of Mauro. Prior to having a water refilling station as business the family engaged in canteen concession from and in entertainment promotion (training of dancers for endorsement to recruitment agencies) from , and. The household did not receive any form of assistance from the government or any non-government organizations in any stage of development of their businesses. They likewise did not prepare any business plan for any of their ventures. Among their business ventures, it was noted that they earned the most from their promotion business. Mauro s daughter, Jackelyn, worked as an entertainer abroad for more than 2 years. Jackelyn, who was able to complete 3 rd year college, mostly worked in Japan and had short term work contract in China, India and more recently in Taiwan. She returned from Taiwan after her working visa expired. Number of Employees 3 Jackelyne, the elder of the two daughters of Mr. Riego and a solo parent, has been an OFW since She has worked in Japan from During the said period, about 20 percent of her salary automatically goes to her father as commission of the promotion business back in Manila while the rest goes to supporting the needs of her child. The commission that goes to her father, on the other hand, partially subsidizes the operations of the family s promotions business. Jackelyne, has been unemployed from but was able to survive due to savings she had while working abroad and the support of her parents where she and her daughter are currently residing. In , she resumed working as dancer in Taiwan, India and China. Bulk of her earnings from working abroad during the period had been earmarked for supporting food and education expenses of her child. She has also been paying for a loan she incurred due to her recent hospitalization expense. Page 107 of 145

108 The biggest obstacle faced in making their current business more profitable, according to Mauro, is vices. On the other hand, in case of an increase in income in the next 12 months, the family will earmark the additional income to pay for loan for hospitalization expenses incurred by Jackelyne. Page 108 of 145

109 Gadingan Family: Right Gas Retailer The Gadingan Family is a retailer of RIGHT Gas since The business is home-based and is managed by Mrs. Fe Gadingan, mother of an OFW. Mrs. Gadingan is a college graduate with a degree in civil engineering. The household did not receive any assistance from the government or any non government organization in any stage of their business development cycle. They did not prepare a business plan prior to having the business. The business keeps a record keeping system to monitor sales and expenses. In 2010, the eldest of the children of Fe went to Brunei to work as a real estate agent with the goal of helping out in finances of the family particularly to add capital to their existing business and help in sending her younger siblings to school. In the first and 2 nd year of receiving remittance, about ¼ is allocated to partially support the family s gas retail business and ¾ goes to supporting the education expenses of the younger siblings. In 2012, on the other hand, Fe s daughter became pregnant and had to support her child on her own thus 100 percent of her earnings is earmarked to supporting her baby s needs. Fe s daughter eventually returned to Manila to take care of her baby with support from Fe and her husband. Overseas Filipino Worker (OFW) Name of OFW/s Length of stay abroad (in years) 2 Primary country of work Frequency of remittance Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Brunei P 25,000 Asset value of all business (in pesos) P 107,000 Primary Business Line of business Address 0 Retail Carmona, Cavite Date Established March 2004 Gross income during the past 12 months (in pesos) P 1.1 Million Current Asset Value P 107,000 Number of Employees 2 In case of an increase in income in the next 12 months, the family plans to invest in the money for the education of their children. Among the biggest obstacles identified by the household in making the business more profitable are competition in the area ( the number of suppliers have increased overtime) and financial constraints of the family (due to depleted savings). The Gadingan household is classified as non-poor based on the CBMS data in 2011 and The household size has decreased from 5 to 4 members. Its annual per capita income has decreased from P 201, 000 to P 94,667. In 2011, the main sources of income of the household are overseas remittance and earnings from their entrepreneurial activities relating to wholesale/retail trade and food services. Remittance comprises about 30 percent of the total household income while income from entrepreneurial activity is marked Page 109 of 145

110 at 22.4 percent. Meanwhile, the household currently relies mainly on the earnings of their gas retail business following the return of their OFW household member. The financial status of the household seems to indicate a decline in condition. The reported annual imputed rent has decline from P 84,000 to P 36,000. In addition the number of durable assets of the household has decreased in the last 2 years. The household lost some of its durable assets such as computers, cellphone, car and motorcycle. Page 110 of 145

111 ITM Diecast and Metalworks The business is a family enterprise that involves training of manpower providing service on metal and rubber debarring, finishing and inspection. They decided to venture into the business following the influence of a trusted family driver who used to work for an employer in the same line of business. Owned by the Manarin Family and based in Carmona, Cavite, the business venture is managed by Mr. Renato Manarin, who worked in the US for almost 25 years. About 60 percent of their manpower is sourced from Carmona, Cavite. The business was able to generate employment for out of school youth. The business was mainly financed from built up savings from the earnings of Mr. Manarin from working abroad for almost 25 years. The enterprise transacts with a middleman that links them to a Japanese company that avail of their services. Prior to establishment of their business, the family prioritized allocating the remittance received from Mr. Manarin in the education of children, household daily consumption expenses, and in building up their savings. The children of Mr. Manarin who have now graduated from college are helping him manage the day to day operations of the family business. Overseas Filipino Worker (OFW) Name of OFW/s Length of stay abroad (in years) 25 Primary country of work Frequency of remittance Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Address Renato Manarin USA 100 Manpower Service Carmona, Cavite Date Established February 28, 2004 Gross income during the past 12 months (in pesos) Current Asset Value P 800,000 Number of Employees 90 The Manarin Family has engaged in other businesses in the past primarily driven by the entrepreneurial inclination and skills of the household matriarch. Among the businesses they have engaged in the past include import and export of fresh plants & flowers and buy and sell of shoes sourced from Marikina. Given enough resources and the opportunity, the family plans to expand the business to include rubber recapping. The Manarin household is classified as a non-poor household based on the 2011 and 2013 CBMS data. Its major sources of income for the past 2 years come from salaries and wages of the household and earnings from business activity. Its household size has decreased from 8 to 6 members Its reported annual per capita income has declined from P 176,000 in 2011 to P 78,000 in Moreover, the Page 111 of 145

112 annual salary received by household has also decreased over the years so as the percent share of salary to total income from 83 percent to almost 62 percent. Meanwhile, the reported annual imputed rent for its house and lot has increased from P 180,000 to P 240,000. The relatively well off condition of the household is marked with its ownership of several durable assets such as home appliances, cellphone, and car. Page 112 of 145

113 De Salit Pillowmaking In 1997, the de Salit Family started making pillows using manual sewing machines. The business was managed by the Family s matriarch, Mrs. Celecrian De Salit, while the rest of the elder members of the household rendered free service in the different stages of pillow production from procurement of raw materials (foam, fiber, textile and others). The family did not receive any form of assistance from the government or non-government organization in any stage of the development of their business. Overseas Filipino Worker (OFW) Name of OFWs Length of stay abroad (in years) 6 Primary country of work Frequency of remittance Number of business ventures Starting capital for all business (in pesos) Rochelle Desalit P 10,000 The de Salit family is not a greenhorn in managing a business. Prior to establishing their home-based pillow-making and retail business, the family had ventured in the business of buy and sell of scrap items, particularly paper, plastics and cartons. The latter, managed by the Family s patriarch, was earning so well initially but eventually failed due to financial mismanagement. This, however, did not discourage the family to venture to its current business. Mrs. De Saliit ventured initially in buy and sell of pillows. Her experience gained from the latter, eventually led her to decide to produce and manufacture pillows. Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) P 20,000 Primary Business Line of business Address Manufacturing/Retail Carmona, Cavite Date Established January 1997 Gross income during the past 12 months (in pesos) P 180,000 Current Asset Value P 20,000 Number of Employees 4 The pillow making and retail business operates 6 days in a week. The family members working for the business do not receive regular compensation but instead are given occasional allowances. Products were mainly sold in the town market. The business also accept made to order transactions which are either picked up by the client from their residence or are personally delivered by designated family members. Meanwhile, with the goal of helping finance the education of her siblings and also contribute in their pillow-making business, one of the daughters of Mrs. De Saliit, Rochelle, worked abroad for 6 years. While the income from the family business had been able to support daily household expenses, remittance received by the family from Rochelle had been devoted to education expenses of household members in school, and from time to time partially infuse additional fund to finance the daily operations of the pillow-business. Page 113 of 145

114 In the event of increase in household income in the next 12 months, the household plans to save and build up sufficient fund for the construction of their house. The de Salit household is classified as a non-poor household based on CBMS data for 2011 and Its annual per capital income has increased from P 40,500 to P 41,030 over a period of 2 years. The household has multiple sources of income. The latter includes salaries/wages by employed members of household, receipts from overseas remittance, and income from their retail business. Looking at selected income indicators, there seems to be a decline in the financial condition of the household. In 2011, the share of income from salaries and wages is about 17.3 percent. The share to total household income of receipts from overseas remittance, on the other hand, is marked at 24.7 percent. Meanwhile, the share of earnings from their retail business is almost 25 percent. By 2013, the share of salaries and wages to total income has increased to 57.3 percent. On the other hand, there was a noted decline in the share of income from overseas remittance and earnings from business at 19.5 percent and 14.6 percent respectively. Remittance from abroad was reported to have declined from P 120,000 to P 80,000. Meanwhile, the household also reported a decline in estimated annual imputed rent for its house and lot from P 42,000 to P 36,000 over the last 2 years. Page 114 of 145

115 Tan Family: Jef Ironworks Overseas Filipino Worker (OFW) Name of OFWs Length of stay abroad (in years) 7 Primary country of work Frequency of remittance Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Address Ma. Fe Tan Taiwan, China P 13,900 None Manufacturing Carmona, Cavite Date Established January 1, 2001 Gross income during the past 12 months (in pesos) P 300,000 Current Asset Value P 28,300 With the goal of having enough money for her children s education, Mrs. Fe Tan, 40 years old and a high school graduate, pursued work as caregiver in Taiwan since Fe has 3 children aged 16, 12 and 10 respectively. Before Fe worked abroad, their family mainly depended on the earnings of their iron works/welding business for their household expenses. Their iron works business, which is home-based, established and managed by Fe s husband-jerson, 43 years old and a high school graduate. Their venture started in January Given the scale of their business, it is solely being managed and ran by Fe s husband who used to work as welder in a company in Manila. The income earned from the shop is just enough to cover basic household (food and utilities) expenses for the family (including relatives living with the family) which sometimes barely leaving budget to cover expenses for children s schooling. Income from the business has been very limited given that project opportunities is seasonal and the numerous competitors in the same line of business in their area of operations. Number of Employees 5 With additional household income from the earnings of Mrs. Tan, aside from securing fund for children s education, the family was able to make an initial payment for a house and lot investment from Mrs. Tan s first year of remittance to the family. On the second year of working abroad, the family was able to save enough to start the renovation of their house. According to Mr. Tan, it was an intentional decision on his part to devote the earnings of her wife towards building their family s own house as a reward for her sacrifice for working abroad. While their house renovation is still on-going, the Family also continues to save from the remittance they receive for the education of the children. Given the opportunity, the Tan family plans to put up a computer shop in the future. For the meantime, priority is given towards securing enough funds for the children to finish college education and for the completion of the renovation of their house. Page 115 of 145

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117 Lopez Eatery Overseas Filipino Worker (OFW) Name of OFW/s Length of stay abroad (in years) Ricardo Lopez 6 years Mr. Ricardo Lopez worked as a supervisor in a coffee shop in Saudi Arabia from 2004 until Since he got too home sick, he went back home to be with his family. Primary country of work Frequency of remittance Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) recipes. Saudi Arabia P 20,000 Asset value of all business (in pesos) P 20,000 Primary Business Line of business 0 Food Address Carmona, Cavite Date Established June 2010 Gross income during the past 12 months (in pesos) P 912,000 Current Asset Value P 20,000 Number of Employees 2 In 2010, Ricardo together with his wife Mensie, both 32 years old, decided to put up a food business. Mensie reach 1 st year post secondary education while Ricardo reached first yearcollege. Though, Ricardo worked abroad for 6 years, their family did not have savings to finance their planned business venture. All of his earnings have been earmarked for their family s basic expenses for food, house utilities and education of their children. Ricardo and Mensie have 2 children aged 14 and 11, respectively. With an initial capital of P 20,000, loaned from a friend, the Lopez family started their eatery business. They did not receive any assistance from the government or any non-government organization in any stage of their business. Aside from their eatery business, which they operate from Monday to Saturday, Ricardo and Mensie also ventured in retail of raw pork and chicken on Sundays. Among the biggest obstacles for their business to earn more profit, according to Mensie, is competition. Their eatery has an open kitchen where clients see how they cook their famous Ricardo is planning to leave for work abroad again to secure funds for the education of their children. He plans to work abroad until their children complete their education. In the event of an increase in income in the next 12 months, the family aims to save whatever money that they will have. The Lopez household is classified as non-poor based on the 2011 and 2013 CBMS data. Its household size has increased overtime. The annual per capita income of the household has increased from P 60,000 in 2011 to P 77,400 in In 2011, its main source of income is receipt from overseas remittance. By 2013, about 97 percent of the reported income of the household is derived from its entrepreneurial activities. Page 117 of 145

118 Supermom The sprightly lady who warmly greeted and ushered us to her office appeared more like your motherly next-door neighbor than a local politician who is serving her second term as the chairwoman of Barangay San Francisco, Mabini, Batangas. Cristeta Maylas, whose dynamism belies her age of 71, has an uplifting Overseas Filipino Worker (OFW) story to tell that s unlike anyone else she and her husband decided to leave the country for foreign shores at an advanced age (she at age 44 and her husband Lazaro at age 47). Statistics from the National Statistical Coordination Board (NSCB) for the period indicate that the 40 and above age group comprises a little over than one fourth of Filipinos working abroad. A public school teacher for 27 years, she and her husband left the country in 1989 to work as members of the household staff of the former president of Banco de Roma in Italy. Recalling her 10 year stay in that foreign land, she said that life was difficult and she had to swallow her pride whenever she was reprimanded by her superior who she said was not a woman to mince her words. But the couple persevered for the sake of their three children who were then studying in college, with two of them taking up medical courses. They would be forced to return to the country due to their failing health but not before they were able to put their children through college, invest in a prime agricultural land and save enough for their graying years. Unlike other OFW families in this municipality who invested in beautiful, palatial homes in a gated community popularly known as the Italian Village, Cristeta and her husband preferred to invest their hard-earned money in a couple of business ventures that will sustain them during their retirement years. According to Cristeta, their house today looked the same way it was before they left for abroad to find work. Fourteen years after returning to the country, Cristeta now rents out a 6-door apartment and operates a thriving fast-food restaurant and mini-grocery located in Bauan, Batangas and managed by her son. She juggles these and her official duties with ease while tending to her store in her own backyard. Her husband now manages their farmland whose earnings have more than doubled since they took direct supervision. Cristeta recalls that they were able to acquire the property through a loan from their employers. Meanwhile, their two daughters have also since built financially-rewarding careers in Dermatology and Obstetrics and Gynecology. Page 118 of 145

119 Overseas Filipino Worker (OFW) Name of OFWs Number of years that the household has an OFW member Primary country of work Frequency of remittance Business Ventures of OFW Household Number of business ventures 4 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Cristeta Maylas & Lazaro Maylas 10 Italy Once a month 1.8M 100 Asset value of all business (in pesos) 3.1M Primary Business Line of business Address Fastfood restaurant and mini-grocery Barangay Manghinaw, Bauan, Batangas Date Established April 2006 Gross income during the past 12 months (in pesos) 2.0M Current Asset Value 1.0M Number of Employees 5 Their story has inspired many and earned them plaudits the most recent of which was their recognition as a finalist in the 2011 Search for Model OFW Family organized by the Department of Labor and Employment (DOLE) and Overseas Workers Welfare Administration (OWWA) Calabarzon regional offices. The region-wide search weighted 50 percent for the selection criteria on wholesome family activities that included family communication, support and sharing and the psycho-social development of the OFW children. Families were also adjudged 20 percent for socio-civic involvement and advocacy for community projects. The other 20 percent covered success of the family s education including the children s educational attainment and 10 percent for success in managing the family business and finances. For sure, some of their reentry plans after working abroad for a decade did not turn out as expected. They initially put up a piggery and poultry business but were forced to stop operations after their neighbors complained about the foul odor. Also, their investment in a farmland did not become truly rewarding until his husband decided to directly manage it. But with pure grit and hard labor, they have always managed to turn the tide in their favor. Cristeta estimates the current asset value of all their business ventures at more than P3.2M from an initial capital of P1.8M. Bent on keeping an active life even in her retirement, Cristeta dreams of investing in a beauty parlor business one day. I might also venture into selling beauty products, she said with a laugh that seemed to say that being a super mom isn't easy, but it is super rewarding. Page 119 of 145

120 Wanted: Business Opportunity Renato Dolor was tending to his wife s sarisari/convenience store when we invited him for an interview. A seaman by profession, he has been on an extended vacation for a couple of months already and was just waiting for a berth aboard a ship. He said that the call from his employer may come anytime during that week. Aware of the limited time left before he goes on yet another assignment, he makes up for it by helping his wife in manning their store and taking care of their grandchild. Renato has been sending remittances to his household for the past 20 years already. He said that the bulk of his monthly remittance is spent for the education of his children as well as food and other daily needs. Since he is currently inbetween-jobs, the share of his remittances to total household income decreased to 29 percent this year. In fact, his annual remittance decreased from P178,000 in 2009 to P40,000 in Renato and his wife Carmelita were able to invest in a house and lot during the first 10 years of Renato s career as a seafarer. An examination of their income in 2009 and 2013 in fact reveals that the share of imputed rent of owner-occupied dwelling to houseshold total income increased by 35 percent. The household also has durable assets such as a car and household appliances as well as real estate property. Aged 51, Renato said that he is not getting any younger and he and his wife need to plan for his eventual retirement. He sees himself working for another five years before retiring in Mabini, Batangas, home to Anilao which is considered as the birthplace of scuba diving in the Philippines. The couple has dabbled in a couple of business ventures in the past that ultimately failed: a shop selling ready-to-wear (RTW) items, a direct selling venture, and a small restaurant. This perhaps explains why the share of income from entrepreneurial activities to total household income declined from 33 percent in 2009 to 28 percent in If there s one thing that the couple has learned from these businesses which failed to take off and become profitable, it is that they should have placed more premium on the location of their businesses. Page 120 of 145

121 Overseas Filipino Worker (OFW) Name of OFW Renato B. Dolor Renato said that their latest venture, a sari-sari store located along the national highway in Barangay Solo, Mabini, Batangas, is yet another experiment at trying their hands on business. According to his wife Carmelita, operating a sarisari store seemed to be the right choice noting that people in their neighborhood depend on them to get access to basic commodities at low costs. They set up shop only last September 2012 with a starting capital of P22,000. In that span of time, they have earned a profit of P1,000 only. According to a paper published on the website of the Pacific Economic Cooperation Council, sarisari or convenience stores dominate the retail market in the country as they account for about 70 percent of the total. Sari-sari store is defined as small grocery or convenience store that serves the basic food and grocery essentials of the households. Sari-sari stores are usually constructed as an extension of the owners house. Their dominance, especially in rural areas, is due to geographical convenience, intimate customer service and payment flexibility. 12 Number of years that the household has an OFW member Primary country of work Frequency of remittance Renato seems committed to make their business succeed this time. He spends about 8 hours per day tending to the store while his wife puts in Number of employees 2 half of that amount of time daily. Meanwhile, two of their three kids take turns manning the store during weekends. The couple however admits that they do not have a recordkeeping system that clearly shows their income and expenses. They also haven t received any form of assistance from any agency of the government or non-government organizations to help them grow their business. Just the same, Renato expressed willingness to attend any livelihood training or orientation on any promising business opportunity that these organizations may provide. 20 Business Ventures of OFW Household Number of business ventures 2 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Sea-based Once a month 22, ,000 Sari-sari store Address Barangay Solo, Mabini, Batangas Date established September 2012 Gross income during the past 12 months (in pesos) 9,000 Current asset value (in pesos) 50, Catelo, Salvador. The Regions Changing Retail Food Sector: The Case of the Philippines. (March 18, 2013) Page 121 of 145

122 Passion for food gets home-based catering business going Guein Masangcay and his brother Albert the home-based catering business started by mother when she died a couple of years ago. inherited their They did not have trouble getting into the swing of things since both have passion for food and cooking and have already been exposed to the ins and outs of the business before they eventually took over. Albert also has innate venue preparation skills that appeal to their target market who mostly acquire their services for events such as weddings, birthdays and baptismals. According to Guien, their catering business started with a capital base of P90,000, about forty percent of which was provided by their elder sister Wima Overseas Filipino Worker (OFW) Name of OFW Wilma N. Cuerdo who is working in Italy as a domestic helper. She said that her mother invested the amount in acquiring the basic supplies needed for the Number of years that the household 12 business such as dishes, silverware, has an OFW member Primary country of work Frequency of remittance Italy Once a month glassware and linen. Whatever profits they obtained were used to acquire additional supplies. In the 12 years that they have been running the business, they already have a pool of talents and suppliers which they tap whenever they have an event. Business Ventures of OFW Household Number of business ventures 2 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) 90, However, Guien said that business has been decidedly slow in recent years which they attribute to a faltering economy. However, when we asked her for more details, she divulged that their income for the past 12 months alone amounted to P280,000. Asset value of all business (in pesos) 90,000 Primary Business Line of business Catering Address Barangay Solo, Mabini, Batangas Date established December 2001 Guien has since allowed her brother to take over the business. She said that Albert faces an uphill battle since he lacks other skills that will help him grow the business. For instance, marketing has been largely neglected. They instead just rely on word-of-mouth which does not fetch customers regularly. Gross income during the past 12 months (in pesos) 288,000 Current asset value (in pesos) 25,000 Number of employees 10 (per project basis) She also said that when she was still involved in running the business, she kept an income flow record. But this was also neglected when Albert took over the helm of their homebased catering business. Page 122 of 145

123 Despite these challenges, their annual per capita income almost doubled from P92,000 in 2009 to P164,000 in In 2009, more than half of the total household income came from their catering business (29%) and transportation service (21.7%). This increased further in 2013, where 68.3 percent of the total household income came from earnings from the catering (58.5%) and transportation service (9.8%). The estimated annual imputed rent for their house and lot also increased from P36,000 in 2009 to P60,000 in Page 123 of 145

124 Family looks to foreign shores for a better life Rosendo Abe is just waiting for his family s application for migration to be approved by the Canadian authorities. He said that he and his wife visited their daughter who is working there as a pharmacist a couple of months earlier. They left convinced that they will have a better quality of life in this country which currently ranks third behind the United States of America and the Kingdom of Saudi Arabia in the preferred destinations of Filipinos abroad. Rosendo s daughter Jenia has been working in Canada for the past 4 years already. Married but still childless, Jenia still provides support for the education of her youngest sister Lea Ann who is currently a second year college student. In the past year alone, Jenia has provided financial support in the amount of P40,000. According to Rosendo, his family also used the remittances from Jenia during the previous years to invest in real property and to expand their grocery business. Two of Rosendo s children who are also working abroad far longer than Jenia, have also scaled down the amount of their remittances in recent years. Overseas Filipino Worker (OFW) Name of OFW Number of years that the household has an OFW member Primary country of work Frequency of remittance Business Ventures of OFW Household Number of business ventures 2 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Jenia Abe-Magsino 4 Canada 4 times a year 5, ,000 Primary Business Line of business Grocery Address Barangay Gasang, Mabini, Batangas Date established January 1993 In 2009, the main source of income of Rosendo s household was remittances from OFW members (i.e., 79% of the total household income). Meanwhile, about 13 percent and 7.9 percent of the total household income came from salaries of employed members and Gross income during the past 12 months (in pesos) 144,000 Current asset value (in pesos) 100,000 Number of employees 2 entrepreneurial activities, respectively. In 2013, remittances and entrepreneurial activities remain to be the main sources of income of the household. However, OFW remittances declined from P500,000 in 2009 to P40,000 in As a result, their annual per capita income decreased from P126,800 to P22,600. A businessman who previously dabbled in local politics for 15 years, Rosendo had his fair share of ups and downs in running a host of business ventures. He recalled having a lucrative rattan furnituremaking business in the past which faltered in the face of stiff competition coming from cheap plastic imports from China. His family also ventured in manufacturing nata de coco, a chewy, translucent, jelly- Page 124 of 145

125 like food product produced by the fermentation of coconut water and commonly used for desserts. This too fell on the wayside when they lost a strategic business partner. These days, Rosendo keeps himself busy by tending to his small store located along the national highway in Barangay Gasang, Mabini, Batangas. The family s grocery store located a couple of meters away from their home is now managed by a hired staff. He also said that they don t have a recordkeeping system for their two stores and only rely on tiwalaan or trust. He estimates that his gross income from his grocery store was P108,000 during the past 12 months alone. However, records show that his profits from these two stores declined over the years from P50,000 in 2009 to P36,000 in Some of his enterprising neighbors who know about his family s plans to migrate have made initial overtures that they want to rent his grocery space. But Rosendo is not making any final plans yet. After all, it might take another two years before they are finally able to move to Canada. While waiting for their application to be processed, Rosendo might invest in a Bigasan or a rice retail outlet. Page 125 of 145

126 Household feels the pinch of dwindling fish catch Marcela Abarintos was an ambulant fish vendor before her health started to fail her. Her doctor eventually advised her to stop from engaging in strenuous, back-breaking work. Her husband Alejandro, a fisherman, is suffering from stomach ulcers. The couple gets by with the help of their son Joel who has been working in Qatar as a pipe-fitter for two years now. Joel s wife Jean and son Ajhay live with his parents. The family owns a fishing boat which they acquired even before Joel left for abroad. However, they said that the catch has been dwindling over the past couple of years and that they are beginning to feel the pinch already. Sometimes, Alejandro s catch is not even enough to defray all of the cost in operating the fishing boat (e.g., gasoline). To illustrate, the couple said that they only had a total sales of P13,000 during the past 12 months while they were able to rack up P24,000 in expenses for the operation of their fishing boat. Thus, instead of profit, they had a net loss of P11,000. The couple attributes this problem to the large fishing vessels operating in their area. Hardly any fish is left for small fishermen like themselves, Marcela said. In order to cope, Alejandro ventures out to sea once a week only. They initially planned to put up a livestock raising project but were eventually dissuaded since they would have to acquire land first. Overseas Filipino Worker (OFW) Name of OFW Length of stay abroad (in years) 2 Primary country of work Frequency of remittance Joel O. Abarintos Qatar Business Ventures of OFW Household Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Once a month 45, ,000 Fishing Address Barangay Solo, Mabini, Batangas Date established January 2006 Gross income during the past 12 months (in pesos) 13,000 Current asset value (in pesos) 20,000 Number of employees 1 The couple depends on the monthly remittance of their son for their daily needs. In fact, Joel s remittances account for about 81 percent of their total income. However, they still are finding it very hard to make both ends meet. Marcela said that her son recently spent most of his earnings on life events such as their grandson s birth and baptism. Page 126 of 145

127 Despite these difficulties, some slight improvements have been observed in the household s overall condition. For instance, their annual per capita income increased from P37,400 in 2009 to P40,750 in A major source of the household income is OFW remittance. The household also showed improvement in terms of construction materials used on the walls and roofs of their house. Walls and roof are now made of predominantly strong materials rather than light materials. Improvement in terms of housing is also evident in the increase of estimated annual imputed rent from P4,200 to P18,000 pesos. In 2009, about 86 percent of the total income comes from OFW remittance. This slightly decreased in 2013 but the amount of OFW remittance increased by almost 40 percent. On the other hand, the share of earnings from fishing activities decreased over the years from 10.7 in 2009 to 8 percent in Page 127 of 145

128 From veterinary assistant to tricycle driver Robin Peralta worked as a veterinary assistant in the United Arab Emirates for seven years before he decided to return to the country in He said that at that time, he was earning a measly sum of P10,000 per month and the distance between him and his family was taking a toll on him emotionally. Besides, he had already invested in a tricycle which he hoped would bring in steady income for his family of six. Thus, he needed no more convincing when his wife and children asked him to come home and earn a living in their village. Robin and his wife Rosemarie initially wanted to put up a rice retail store but Robin s savings from working abroad was not enough so they opted to buy a tricycle instead. Rosemarie supplements his earnings by working as an ambulant fish vendor. The couple uses their tricycle to sell fish in their neighborhood every morning. In the afternoons, Robin would use it to ferry passengers from their village to the town proper. He said that he gained a profit in the amount of P86,400 from operating his tricyle during the past 12 months. Overseas Filipino Worker (OFW) Name of OFW Length of stay abroad (in years) 7 Primary country of work Frequency of remittance Business Ventures of OFW Household Number of business ventures 2 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Robin M. Peralta United Arab Emirates Once a month 72, ,000 Transportation services (Tricycle) Address Barangay Solo, Mabini, Batangas Date established March 2010 Gross income during the past 12 months (in pesos) 115,200 The Peralta household had seen their Current asset value (in pesos) 50,000 condition improve since then. In 2009, while Robin was still working abroad, his household was classified as income poor with Number of employees 1 an annual per capita income of P16,200. In 2013, their annual per capita income almost trippled to P44,270. This can be attributed to the significant surge in the household s income from entreprenuerial activities which increased to 85 percent in 2013, way higher than its 19 percent share in In fact, the share of earnings from wholesale/retail trade and transportation service constitute 45.6 percent and 39 percent of the total income in 2013, respectively. The household also showed improvement in terms of construction materials used on the walls and roofs of their house. The housing structure is now made of strong materials (concrete, galvalized iron) Page 128 of 145

129 rather than light materials (bamboo). Improvement in terms of housing is also evident in the increase of imputed rent of owner-occupied dwelling unit from P6000 to P24,000. Robin said that the biggest obstacle in making his business more profitable would be a weak local economy. He said that if people from his village will not have enough earnings, that would also translate to less amount of passengers and therefore less earnings for him. Today, Robin also serves as a caretaker of the house of his relatives who are working in Italy as household helpers. He said that he does not receive a salary for the amount of work he puts in but his children would receive gifts from them during special occasions such as birthdays. He estimates the value of these gifts to be P10,000 in the last year alone. His relatives have been prodding him to allow his wife to work in Italy but he would hear none of it. He said that he would rather have his family together because he knows from experience how hard it is to be away from his loved ones. When asked what type of assistance can be provided to them by their local government unit, Robin said that the LGU can provide support by helping organize a credit cooperative for the Tricycle Operators and Drivers Association. He said that this will spell a lot of difference for their livelihood. Page 129 of 145

130 Behind the success of a man is a woman Behind the success of a man is a woman. This saying is particularly apt for the Alolod household in Barangay Gasang, Mabini, Batangas. Gina Alolod single-handedly manages their family-owned gasoline station and welding and machine shop while at the same time taking care of her three children. And she seems to juggle her responsibilities and tasks with panache she managed to grow their welding and machine shop from an initial asset value of P50,000 to P800,000 in just two years. She attributes the steep jump in the current asset value of their primary business to their acquisition of machines and equipment for their shop. Their total sales for the past year alone amounted to P180,000. However, they were able to turn in a profit of just P48,000. Gina s husband Cesar has been working as a seafarer for 20 years now. In that span of time, the couple was able to invest in the construction of their house, send their children to private schools, and more recently, set aside some funds for Cesar s pension plan. According to her, her husband s monthly remittance during the past 12 months alone amounted to P75,000. Overseas Filipino Worker (OFW) Name of OFW Length of stay abroad (in years) 20 Primary country of work Frequency of remittance Business Ventures of OFW Household Number of business ventures 3 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Caesar Alolod Sea-based (Maersk, Denmark) 4 times a year 650, ,000 Welding and machine shop Address Barangay Gasang, Mabini, Batangas Date established February 2011 Gross income during the past 12 months (in pesos) 180,000 A closer examination of the sources of income of the household reveal that the share of income from entrepreneurial activities to total household income increased to 28 Current asset value (in pesos) Number of employees 800,000 3 percent in 2013 from 25 percent in Meanwhile, the share of OFW remittances decreased to 21 percent in 2013 from 60 percent in In fact, the total amount of remittances from Cesar decreased from P300,000 in 2009 to P75,000 in This suggests that the household no longer rely as much on remittances. Meanwhile, the the imputed rent for their dwelling unit has doubled during the past four years. The number of acquired durable assets also increased over the years with the addition of microwave and computer with internet. Page 130 of 145

131 Gina said that there are 6-7 welding and machine shops in the municipality of Mabini, Batangas. She said that they can t just lower the price of their services even though this will make them more competitive since she doesn t want to gain the ire of her competitors. renewed. She describes the process of obtaining business permits in her municipality as easy. That is, if the head of office of the agency issuing the business permits is not absent. Otherwise, she would have to wait a day or two before her permits can be Meanwhile, her hands-on parenting style bore fruit and her eldest daughter is now studying in a private university under a scholarship. She said that as an incentive, she opened a bank account under her daughter s name where they keep the money that they would have spent for her education had she not been able to secure the scholarship. Gina said that it was her husband who decided to invest their money in business ventures. She said that he helps out in managing their businesses whenever he is on vacation and between shipboard assignments. At just 43 years of age, Cesar plans to retire five years from now and help her wife in running their businesses. In the event of an increase in household income in the next 12 months, Gina said that they would probably plow back most of it to their businesses. Page 131 of 145

132 Farming household thrives with support from OFW members Cornelio Garcia s family lives in a mountainous area a couple of kilometers away from the center of Brgy. Solo, Mabini, Batangas. Many of his neighbors have members who are working abroad and we were told that their families have pooled their resources a couple of years back to finance the construction and concreting of roads leading to their area. Cornelio s wife and daughter, Carol and Korina, are working in Italy as domestic helpers for about nine years now. A barangay official, Cornelio was supervising the construction of his nephew s house within the family compound when we invited him for an interview. He told us that he would be on duty at the barangay police outpost that night. As a barangay councilor, he receives a monthly salary of P4,350. On top of his official duties, Cornelio still finds time to tend to his cattle raising and coconut farming businesses. He told us that his family initially invested in hog-raising but decided to stop when the prices of feeds began to shoot up. His family also operates a jeepney rental and a tilapia fishpond not far from their home. He claimed that all of these ventures have been financed through the remittances of his wife and daughter. Overseas Filipino Worker (OFW) Name of OFW Length of stay abroad (in years) 9 Primary country of work Frequency of remittance Carol and Korina Garcia Italy Business Ventures of OFW Household Number of business ventures 4 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Monthly 100 Cattle raising Address Barangay Solo, Mabini, Batangas Date established 2008 Gross income during the past 12 months (in pesos) Current asset value (in pesos) Number of employees 3 Cornelio estimates that he earned about P9,000 this year from crop farming. Meanwhile he was also able to turn in an income of P24,000 from cattle raising during the same period. Cornelio s household receives P15,000 per month from his wife and daughter. He said that approximately 60 percent of this amount is spent for their daily needs. Carol and Korina would however send separate amounts for other needs such as when Cornelio acquired a second-hand 4x4 sports utility vehicle (SUV). Page 132 of 145

133 However, the total amount of remittances from Carol and Korina had significantly gone down this year. The share of remittances to total household income was 65.4 percent in 2009 but this had considerably gone down to just 43.4 percent in Cornelio said that the biggest obstacle in making his business profitable and in engaging in other types of business would be his age. He said that due to his advanced age, he now largely depends on his nephews in operating his businesses. Page 133 of 145

134 Obiedo Family: Photo-Q Photo Booth and Video Service Overseas Filipino Worker (OFW) Name of OFWs Length of stay abroad (in years) 15 Primary country of work Frequency of remittance Number of business ventures Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Obiedo Pio, Jr. Australia Monthly P 100, The Photo-Q Photo Booth and Video Service is owned and solely managed by Mrs. Eleonor Obiedo, wife of an OFW who have been working as a seaman for almost 15 years. Aside from managing the business, Eleonor takes care of her children aged 15, 10 and 3 years old respectively. She is a college graduate with a degree in Hotel and Restaurant Management. The family business just started in January 2013 with a starting capital of P 100,000 which was primarily funded from earnings of Eleonor s husband from working abroad. No business plan was prepared prior to the implementation of the business. Asset value of all business (in pesos) P 120,000 Primary Business Line of business Address Photo and Video Service Mabini, Batangas Date Established January 2013 Gross income during the past 12 months (in pesos) Current Asset Value P 120,000 Number of Employees 1 Aside from the fact, that Eleonor has the inclination for photography, one of the main factors she considered in pursuing photo and video service is that she wants a business without much manpower requirement (if not something that she can manage on her own) given their very limited financial resources. Moreover, she took the opportunity of establishing the business since there s no other supplier of the service in the area yet. As of the moment, marketing of the business is primarily done through social networking and referrals. It took sometime before the family was able to allocate sufficient fund for establishing their business venture given other priorities. For instance, in the first 7 years almost 70 percent was devoted for basic consumption (food and health expenses), 25 percent was allotted for assistance to relatives (where the family has been staying), and the rest goes to finance their small variety store. In the past, Eleonor also ventured in networking business particularly selling forever living products. Her venture, however, failed due to problems encountered with the members of the network she has established largely attributed from her being too lenient as a manager. Furthermore, she said that the family has practically been consuming, for personal use, most of the products she intended to sell thus they did not gain much profit. Page 134 of 145

135 In the event of an increase in income in the next 12 months, the household would decide to invest in mutual fund or stock market due to expected returns. Meanwhile, aside from managing the business, Eleonor serves the community as President of the Organization of OFW Families in the municipality of Mabini which implements a number of development projects supported by OFWs such as feeding programs, and advocacy on financial literacy among families. The Obiedo household is classified as poor in 2009 with annual per capita income of P 13,600. On the other hand, there has been a noted improvement in the condition of the household with its annual per capita income noted at P 73,500 which is five times its per capita income 4 years ago. Receipt from overseas remittance is the main source of income of the household. The estimated annual imputed rent for the household s house and lot also increased by almost 130 percent. Page 135 of 145

136 Sosyalera Estetica (Salon) Overseas Filipino Worker (OFW) Name of OFWs Length of stay abroad (in years) 27 Primary country of work Frequency of remittance Number of business ventures 4 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Address Rosendo Arago Teofila Francisco Italy Monthly P 5 Million 75 percent P 9.2 Million San Juan St., Bauan, Batangas Date Established June 19, 2012 Gross income during the past 12 months (in pesos) P288,000 Current Asset Value P 250,000 Number of Employees 2 The business is owned by the Arago Family, and one of the few investments established by the family as a result of almost 27 years of hardwork in Rome of Mr. Rosendo Arago and wife Teofila Francisco. The business is being managed by one of their son, Marlon Arago. Rosendo is a college graduate while Teofila has completed post secondary education. All of their three children were able to complete college education as a result of their hardwork abroad. Aside from the salon which is one of the business ventures financed from the earnings of Rosendo and Teofila, the family also owns a jeepney and van rental service, and house rental business. According to Marlon, given their family s love for vehicles, they would have wanted to venture in a gasoline station business. On the other hand, capital requirement is so big that they did not pursue the planned venture. Meanwhile, about 60 percent of the remittance regularly received by the household for almost 20 years had been set aside by his parents for savings in the bank. The remaining portion is used for food and education needs. Starting on the 11 th year until the 20 th year, they started to use portion of their savings to invest in buying a lot (which they later used to build the house which is currently being rented for P40K a month), and vehicles (both for personal and business use). By year 21, portion of the remittance allotted for savings have also been used for the construction of the house intended for rental. According to Marlon, his parents were able to build up their savings since they had good employers which offered them free accommodations throughout their years of working in Italy. In the last 4 years, on the other hand, a portion of the remittance received by the Arago household is paid for loans incurred by Marlon due to his gambling. According to Marlon, his parents had to secure a loan in Italy in order to pay for the loans he has incurred. His parents plan to work in Italy until they qualify for retirement program. Since 2009, the Arago household s per capita income has increased by almost 4 times in a period of 4 years. From a per capita income of P 86,800, the household s per capita income is now pegged at P 331, Page 136 of 145

137 500. Four years ago, the household s main source of income is its receipts from overseas remittance which comprises about 92.2 percent of the household s total income. Based on the household s latest socioeconomic profile, its annual receipt from overseas remittance has remained the same at P 240,000 over the years. On the other hand, there was a noted decline in the share of overseas remittance to total income and greater share of income from the other entrepreneurial/business activities of the household. Profit from business activities, which include wholesale/retail trade, transportation services and house rental comprises about 47 percent of the current total household income. About 40 percent of the household income is derived from its house rental business. Meanwhile, the estimated annual imputed rent of the household s house and lot increased by 17 times over a period of 4 years from P 20,400 to P 360,000. Meanwhile, improvement in the development condition of the household is likewise manifested in other non-income indicators such as ownership of assets. Aside from having home appliances, mobile phones, computer and car, the household had procured a motorcycle over a period of four years. Page 137 of 145

138 Aqua Best Refilling Station The business franchise is owned and managed by Mrs. Beatrice Anis, wife of an OFW. Beatrice is a college graduate and a full time housewife while managing their business. Her husband, Bartolome, now 60 years old, is also a college graduate and an overseas worker in UAE. The family ventured in the water business in January 2011 upon the prodding of their children to have a family business. Prior to engaging in the water business franchise, the family also considered putting up a variety store and a computer servicerelated type of business. On the other hand, there were already a number of similar businesses in the area thus their decision to choose getting a franchise of Aqua Best. The family had no previous experience in having a business. They did not receive nor tapped any assistance from the government or any non-government organization in any stage of their business development. No formal business plan was prepared as well. For 30 years, Beatrice and her family depended on the overseas remittance of her husband for their family s daily needs. Remittance received was used primarily for basic food consumption, house construction (done gradually over the years), education of children (who were sent to private schools), health care of sick member of the household (with congenital heart ailment; said member of the household died in January 2013). Aside from the regular monthly remittance received by the family devoted for household basic expenses for food and utilities, additional remittance is sent for other expenses such us emergency medical expense of their daughter, and additional fund needed for the operations of their business. Page 138 of 145

139 Overseas Filipino Worker (OFW) Name of OFW/s Length of stay abroad (in years) 30 Primary country of work Frequency of remittance Business Ventures of OFW Household Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Address Bartolome Anis United Arab Emirates Monthly P 1.3 Million 100 Water Mabini, Batangas Date Established January 1, 2011 The initial capital for the establishment of the family business was solely financed from savings from earnings of Mr. Anis while working abroad. At the start of their business venture, Beatrice recognized that there are a number of competitors in their area. As such, they invested in a delivery service vehicle to offer free delivery of water ordered from their station. Aside from investing a signage of their water refilling station, she intentionally did not implement more aggressive marketing strategies since she did not want to offend other store owners whom she knows. Among the biggest obstacles considered by Beatrice in making their business more profitable is having enough money to respond to the needs of the business. In the event of an increase in income in the next 12 months, the family plans to further invest in business. According to Beatrice, her husband will likely return to the Philippines as soon as they have secured enough savings. Gross income during the past 12 P 378,000 There have been signs of improvements in the months (in pesos) general development condition of the Anis household. Its annual per capita income has Current Asset Value P 4 Million more than doubled since 2009 from P 43,200 Number of Employees 4 to P 97,920. Over a period of 4 years, the overseas remittance receipt of the household increased by four times. In terms of assets, the household has increased its durable assets by acquiring internet for computer, sewing machine and motorcycle (which was used for its water business). The household s access to safe drinking water also changed from artesian well to bottled water. Page 139 of 145

140 RFM Internet Gaming and Printing Cafe Overseas Filipino Worker (OFW) Name of OFW/s Length of stay abroad (in years) 30 Primary country of work Frequency of remittance Number of business ventures 2 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Address expenses. Bibiano Rocena Maximino Balita Kristine Balita- Adaya Narcisa Balita Italy Monthly P1.8 million 100% P2 million Internet Gaming and Printing Service Mabini, Batangas Date Established March 2009 Gross income during the past 12 months (in pesos) P480,000 Current Asset Value P300,000 Number of Employees 2 The RFM Internet Gaming and Printing Café, o wned by the Balita Family, was established in March The business was financed from savings of family members working abroad. The household did not receive any assistance from the government or any non-government organization in any stage of their business development. No business plan was prepared in prior to the establishment of the business. At the start of the business, profit from the business had been good given that it is the only internet gaming and printing shop in the area. Since its establishment, income from the business had been sufficient to finance its daily operations and maintenance. The business only has two employees, among which is a family member who is managing the day to day operations of the business. Meanwhile, in addition to the internet shop, the family was also able to invest in a 2 unit apartment-rental business. Prior to investing in business, the family prioritized spending of remittance received to cover household basic expenses e.g. food and utilities, and schooling of children. In addition, a part of the remittance received was also used to finance travel expenses of members of the household who eventually went abroad to work. It took sometime before the family was able to invest in business given the number of household members that need to complete schooling. Financing the education expenses of the younger generation of the family has always been a top priority over other Due to the growth in the number of competitors in the same line of business in the area, their internet café business closed shop in January Page 140 of 145

141 One of the younger members of the household who has already graduated from college and tasked to manage the family business also plans to go abroad soon to work and save up for his own business in the future. On the other hand, in the event of an increase in income (from remittance received) in the next 12 months, the family will devote the resources for the construction/renovation of their house. While the OFW members of the household have plans to settle in Italy, the family still plans to devote a portion of any expected increase in income to retirement insurance of OFW members of the household. For almost 30 years, the Balita household has been dependent on remittance of OFW members of the household who are working in Italy as domestic helpers. Based on the latest CBMS data, the annual per capita income of the household decreased by about half from P 65,571 to about P 37,437 compared to its reported income in The decrease in per capita income is attributed to the more than 50 percent decline in overseas remittance receipt by the household as well as in the increase in the number of the members of the household. Though the household relies heavily on remittance receipt from abroad, it also has other sources of income to support its needs. The latter include income receipts from salaries/wages derived from other entrepreneurial activities crop farming, poultry, fishing, and transportation/storage services. From 2009 to present, though there has been a noted decline in the per capita income, the household showed signs of improvement in non-income development indicators. In particular, there has been a noted improvement in terms of access to safe drinking water and acquisition of durable assets. In 2009, the main source of drinking water of the household is surface water while at present, the household reported dug/shallow well as its source of drinking water. On the other hand, in terms of assets, the household has acquired car, motorcycle and home appliances. Page 141 of 145

142 Anis Bamboo Products Overseas Filipino Worker (OFW) Name of OFW/s Length of stay abroad (in years) 20 Primary country of work Frequency of remittance Number of business ventures 1 Starting capital for all business (in pesos) Starting capital which came from OFW remittances (in percent) Asset value of all business (in pesos) Primary Business Line of business Maximino Anis P 50, Forestry/Retail The business is owned by Mr. Maximino Anis, 65 years old, a college graduate and a former OFW. The initial capital for the business amounting to P 50,000 including the purchase of the land where the bamboo products/materials e.g. used for building houses/cottages and native products for retail are currently being stored, has been sourced fully from the savings of Maximino from working as an OFW. Products are being sold to clients located in Cavite area. Since its establishment, income from the business was able to support its daily operations. The family did not receive any assistance from the government or any nongovernment organization in any stage of their business development cycle. To date it has 8 employees. Aside from Maximino, one of his children also assists in managing the day to day operations of the business. Address Mabini, Batangas Date Established February 1984 Gross income during the past 12 months (in pesos) P 1.1M Current Asset Value P 100, Number of Employees 8 The Anis household is a recipient of remittance from abroad for almost 20 years. One of the children of Mr. Anis is currently an OFW. Initially for the first 5 years, about 50 percent of the remittance is earmarked to support medical expenses of Mr. Anis, who has diabetes and the remaining half is to partially finance operating expenses of the business, and contribute to basic food consumption of the household. On the other hand, for almost 15 years now, 100 percent of the remittance goes to medical/health maintenance of Mr. Anis. In the event of an increase in income in the next 12 months, the family plans to devote this to build up their savings fund. The Anis household is classified as income poor in 2009 with an annual per capita income of P 16,850. It is largely dependent on receipts from overseas remittance which constitutes 89 percent of its household income. Aside from remittance, the household also generates income from fishing. Page 142 of 145

143 From 2009 to present, there have been signs of improvement in the development condition of the household based on selected indicators. For instance, the household is now classified as a non-poor household with an income per capita of P 67,314. The household s annual per capita income had increased by 4 times over a period of 4 years. share of income from salary/wages. Receipts by the household from overseas remittance have increased by four times in a period of 4 years. The percentage share of income from remittance has however declined by 42 percent given the noted bigger Meanwhile, improvement in the development condition of the household is also manifested in the acquisition of additional durable assets such as car, motorcycle, and home appliances such as microwave and washing machine. The annual estimated imputed rent for their house and lot increased by 16 times compared to 2009 estimate. Page 143 of 145

144 Anis Eatery The Anis Eatery established in 1999 is owned by Mr. Juan Anis, who is a former OFW. Starting capital for the business is around P 350,000 which was sourced from savings of Mr. Anis from working as an OFW prior to his retirement. The business operates from 6:00 am to 2:00 pm. Its day to day operations is being managed by Lara, the wife of Juan. Lara is 43 years old and has completed 3 rd year high school while Juan is a post secondary graduate and is now 73 years old. The eatery business offers all types of viands for breakfast and lunch. The Anis food business is one of the pioneers in the eatery business in Barangay Talaga. The eatery was established without any assistance from the government or any non-government organization. The family reported a slight difficulty in securing business permit from their municipality. No business plan was prepared before the family ventured in this business. Before deciding to invest in the food business, the household ventured in van rental business in the year 1990 due to a large demand for vehicle transport service in their town. While managing a van rental business, they decided to establish their eatery business in The van rental business thrived for more than a decade, but the family had to give up the business due to its growing number of competitors. Meanwhile, the household relied on the earnings of their eatery in supporting household basic expenses. There have been signs of improvement in the household condition since 2009 based on selected indicators poverty. The household was classified as income poor in 2009 with annual per capita income of P On the other hand, the annual per capita income of the household has increased by more than 5 times from P 6300 to P Overseas remittance constitutes 30.8 percent of the total household income while almost 70 percent comes from the earnings of their retail business. The earnings from the household retail business had increased by more than 3 times over a period of 4 years. On the other hand, it was noted that the percentage share to total income of earnings from the business has declined to 46 percent. The household of Juan is a recipient of remittance for almost 22 years. His two elder sons, both college graduates, have been working abroad. His eldest is an OFW since From , about 30 percent of the remittance received by the household has been devoted to their van rental business, the rest are spent for education expenses of Page 144 of 145