AN ACT ESTABLISHING THE OVERSEAS WORKERS'' INVESTMENT FUND TO PROVIDE INCENTIVES TO OVERSEAS WORKERS
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AN ACT ESTABLISHING THE OVERSEAS WORKERS'' INVESTMENT FUND TO PROVIDE INCENTIVES TO OVERSEAS WORKERS
Republic Act No. 7111
August 22, 1991
Case Overview and Summary
Title: Overseas Workers' Investment (OWI) Fund ActDeclaration of Policy (Section 2):
- Protect and promote welfare of Filipino overseas workers
- Provide incentives and uplift living standards of workers' families
- Reduce foreign debt burden through tapping remittances
Scope and Coverage (Section 3):
- Applies to Filipino citizens overseas who are workers registered with POEA and/or CFO, and their beneficiaries in the Philippines
- Additional benefits do not apply to Filipinos overseas who have acquired immigrant status in host countries
- Participation of Filipinos overseas in remittance programs limited to first 2 years
- Participation shall not exceed total salaries/earnings for the period
Overseas Workers' Investment (OWI) Fund Board (Section 4):
- Created with corporate powers to encourage remittances and oversee participation in debt-reduction efforts
- Composition: Secretaries of DOLE and DOF, Governor of BSP, POEA Administrator, and 1 overseas worker representative
- DOLE Secretary as Chairman
- Promulgate rules and regulations, adopt bylaws, establish organizational support
- Report progress to the President and Congress semi-annually
Powers and Functions of OWI Fund Board (Section 5):
- Encourage greater participation of overseas workers in remittance schemes through various measures (Sections 5(1)(a-e))
- Accredit domestic and foreign financial institutions, money couriers, etc. as remittance centers/agents (Section 5(2))
- Issue special receipts as evidence of guarantee for remittances (Section 5(3))
- Pool remittances for debt-for-note arrangements, purchase debt papers, and participate in secondary financial markets (Section 5(4))
- Forward purchased debt papers to original borrowers in exchange for backing/underwriting PDRCs, share discounts up to 40% (Section 5(5))
- Establish peso loan and investment fund for lending/investing, especially for overseas workers and families (Section 5(6))
- Issue PDRCs to beneficiaries through accredited institutions/couriers (Section 5(7))
- Accept and administer trust funds guaranteed by the Republic (Section 5(8))
- Ensure workers remit only up to average earnings of their occupational group (Section 5(9))
- Adopt measures to ensure integrity of remittance system and funds (Section 5(10))
- Conduct periodic surveys on workers and remittances (Section 5(11))
- Ensure debt conversions abide by BSP guidelines (Section 5(12))
- Administer funds with prudence and diligence (Section 5(13))
- Exercise general corporate powers (Section 5(14))
Debt Purchase Guidelines (Section 6):
- Priority for debt papers where loan proceeds benefited Filipinos (Section 6(1))
- Exclude immoral, odious, and/or illegal loans (Section 6(2))
- Exclude debt subject to pending litigation or repudiation (Section 6(3))
- Consider only debt papers with minimum 35% discount rate (Section 6(4))
- Use only remittances from non-financial entities and money couriers for debt conversion (Section 6(5))
Investment Instrument: Participatory Debt Reduction Certificate (PDRC) (Section 7):
- Negotiable government security guaranteed by the Republic
- Denominations: US$100, $200, $300, $400, $500, $1,000, $2,000
- Redeemable in Philippine pesos at BSP buying rate 1 day prior
- Interest rate based on quarterly average LIBOR + 1%, payable semi-annually
- Maturity of 5 years from issuance
- Incorporates tax-free premium of 1/2 of discount on purchased debt papers
- Premium paid in cash 1/5 annually for 5 years
- Can be exchanged for cash, used as collateral, sold, or kept to earn interest
Additional Incentives (Section 8):
- 4-year scholarship grant for worker or family member if $10,000 PDRC remitted continuously for 2 years (Section 8(1))
- Housing program for overseas workers (Section 8(2))
- Credit facility up to 25% of remitted amount at concessional rates for business/livelihood (Section 8(3))
- Health/hospitalization insurance for family while holding at least $2,000 PDRC (Section 8(4))
- Raffles of airline tickets, appliances, etc. for remitters (Section 8(5))
- Other programs benefiting workers (Section 8(6))
- Funded by gains from debt conversion and investments
Coordinating Agencies (Section 9):
- BSP to formulate debt-for-note conversion guidelines (Section 9(1))
- PNB and other banks as remittance and PDRC redemption conduits (Section 9(2))
- DOLE, POEA to provide list of registered overseas workers and beneficiaries (Section 9(3))
- OWWA, CFO, POEA to conduct marketing and information campaigns (Section 9(4))
Contingency Measures (Section 10):
- Set aside 5% of debt paper discounts as reserve/contingency fund (Section 10(1))
- Draw from Office of the President's Contingent Fund (Section 10(2))
- Congress may set aside additional contingency incentives fund (Section 10(3))
Initial Funding (Section 11):
- PNB, OWWA, other government financial institutions to place minimum $2 million each in trust or as short-term loan earning interest rate of 90-day T-bills
- Accredited institutions to deposit 20% of projected quarterly remittances in trust earning interest rate of 90-day T-bills
Program Period (Section 12):
- Operate for not more than 5 years from publication of implementing rules
- May be extended by the President for up to 3 years upon recommendation of OWI Fund Board
- Wind up affairs within 3 years after termination
Separability Clause (Section 13)
Repealing Clause (Section 14)
Effectivity (Section 15)
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Law
AN ACT ESTABLISHING THE OVERSEAS WORKERS'' INVESTMENT FUND TO PROVIDE INCENTIVES TO OVERSEAS WORKERS
Republic Act No. 7111
•August 22, 1991
Republic of the Philippines
Congress of the Philippines
Metro Manila
Eighth Congress
Republic Act No. 7111             August 22, 1991
AN ACT ESTABLISHING THE OVERSEAS WORKERS' INVESTMENT FUND TO PROVIDE INCENTIVES TO OVERSEAS WORKERS, REDUCE THE FOREIGN DEBT BURDEN, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::
Section 1. Short Title. – This Act shall be known as the "Overseas Workers' Investment (OWI) Fund Act."
Section 2. Declaration of Policy. – It is the policy of the State to protect and promote the welfare of Filipino overseas workers; to pioneer and develop innovative means to provide incentives; and to uplift the workers' families' living standards. It is likewise the policy of the State to reduce the foreign debt burden in order to better achieve sustained economic growth by way of tapping the unofficial and informal remittances of said workers.
Section 3. Scope. – This Act shall apply to all Filipino citizens overseas, who are workers duly registered with...
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