THE escalating geopolitical tensions in the Middle East will have a direct effect on the Philippines, particularly in the banking sector and the larger economy, but the big demand for Filipino workers elsewhere could ease that impact, a senior bank official said on Wednesday.

In a roundtable with the BusinessMirror, Bank of the Philippine Islands (BPI) Executive Vice President and Corporate Banking Head Juan Carlos Syquia said the Philippine banking sector will likely feel the effect of the Middle East tensions largely through expectations of remittance declines, though the impact won’t be felt right away.

“Definitely their jobs will be compromised. At the best, compromised; at the worst lost. In the banking aspect I think it will be affected especially as this escalates. We will watch those closely on the effect not only on the banking sector but on the economy,” Syquia said.

In the same forum with the BusinessMirror, Syquia acknowledged that the OFWs’ financial engagements with banks have expanded, from simple deposit accounts or remittance transactions to bigger investments and loans, especially in real property and cars.

On Wednesday, President Duterte ordered the mandatory repatriation of Filipinos living and working in Iraq, as tensions between Iran and the US continued to grow during the day, dragging Iraq because it hosts US bases. It was also near Baghdad’s airport where a US air strike on January 3 killed top Iranian general Qassem Soleimani. On Wednesday, Tehran retaliated with a missile barrage on two US facilities in Iraq.

US forces in Iraq rely on thousands of skilled overseas Filipino workers to run their bases, and Duterte had sought guarantees for their safety. The OFW have largely shunned calls to skip Iraq as a workplace, because of the handsome compensation offered by their Western employers.

According to the Bangko Sentral ng Pilipinas (BSP) data, remittances from Iran only amounted to $409,000 in the first 10 months of 2019.

Remittances from Iraq were posted at a meager $259,000, but Central Bank officials had earlier noted that some remittances from that zone are being sent through informal channels or are coursed through a different country source, given the sensitivity of the OFW’s work for the Americans.

Meanwhile, the entire Middle East remittances, however, yielded a sizable $5 billion—roughly a fifth of the total around the world—in January to October 2019.

Remittances in the overseas Filipino workers (OFWs)-dense area have already declined 7.8 percent during that 10-month period.

Other labor markets

While Syquia said they are closely monitoring developments on the geopolitical front, he said the anxiety is tempered by the fact that Filipino migrant workers are known to be well in demand in “other pockets” of the world. He also noted a similar unrest in Hong Kong in 2019, saying while remittances to the Philippines declined, it was only short-lived.

Remittances from Hong Kong hit its lowest point in July 2019 to $56.69 million, but started climbing back up in the succeeding months. Latest BSP data show Hong Kong remittances at $59.62 million in October.

“Like the government, our first concern is the Filipinos’ welfare. We will help if needed,” the BPI senior economist said.