AN ACT ESTABLISHING THE OVERSEAS WORKERS'' INVESTMENT FUND TO PROVIDE INCENTIVES TO OVERSEAS WORKERS

Case Overview and Summary

Title: Overseas Workers' Investment (OWI) Fund Act

Declaration 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)