DUBAI: Money sent home by overseas Filipino workers (OFWs) in the Middle East went down 15.3 percent to $6.62 billion in 2018 from $7.81 billion a year earlier, latest government data shows.
Lower crude prices, which affected most OFW host countries in the region, the job nationalization schemes of Gulf states and a deployment ban last year of household service workers to Kuwait were the primary reasons for the decline, a reversal from the 3.4 percent remittance growth recorded in 2017.
A government study has noted that Saudi Arabia was the leading country of destination for OFWs, with more than a quarter of Filipinos being deployed there at any given time, together with the United Arab Emirates (15.3 percent), Kuwait (6.7 percent) and Qatar (5.5 percent).
Cash remittances from OFWs in Saudi Arabia fell 11.1 percent last year to $2.23 billion from $2.51 billion a year before; down 19.9 percent to $2.03 billion in the UAE from $2.54 billion in 2017; 14.5 percent lower in Kuwait to $689.61 million from $806.48 million and 9.2 percent down in Qatar to $1 billion in 2018, from $1.1 billion a year earlier.
The Philippine government issued a deployment ban for Kuwait early last year, and lasted for five months, after a string of reported deaths and abuses on Filipino workers in the Gulf state.
OFW remittances from Oman, which implemented a job nationalization program like that of Saudi Arabia and the UAE, dove 33.8 percent to $228.74 million in 2018 from $345.41 million a year before. In Bahrain, cash sent by Filipinos rose 2.2 percent to $234.14 million last year from $229.02 million previously.
Meanwhile, overall OFW remittances grew 3 percent year-on-year to $32.2 billion, the highest annual level to date.
“The growth in personal remittances during the year was driven by remittance inflows from land-based OFs with work contracts of one year or more and remittances from both sea-based and land-based OFs with work contracts of less than one year,” the Philippine central monetary authority said.
Personal remittances are a major driver of domestic consumption and in 2018 accounted for 9.7 percent of the Philippines’ gross domestic product.
Filipino remittances from the Middle East down 15.3% in 2018
Filipino remittances from the Middle East down 15.3% in 2018
- Cash remittances from OFWs in Saudi Arabia fell 11.1 percent last year to $2.23 billion from $2.51 billion previously
- Personal remittances are a major driver of domestic consumption
Global brands shut Middle East stores as conflict causes chaos
- Luxury brands and retailers close stores in Middle East
- Conflict threatens the region that has been luxury’s fastest growing
- Mass-market retailers monitor situation, adjust operations in region
PARIS: In Dubai and other major Middle Eastern shopping hubs, many stores are closed or operating with a skeleton staff as the escalating conflict in the region causes chaos for businesses and travel.
The US-Israeli air war against Iran expanded on Monday with no end in sight, with Tehran firing missiles and drones at Gulf states as it retaliates for a weekend of bombing that killed Iran’s supreme leader and reportedly killed scores of Iranian civilians, including a strike on a girls’ primary school.
Chalhoub Group, which runs 900 stores for brands from Versace and Jimmy Choo to Sephora across the region, said its stores in Bahrain were closed, while other markets, including the UAE, Saudi Arabia, and Jordan remained open though staff attendance was “voluntary.”
“We operate with a lean team formed of members who volunteered and feel comfortable to come to the store,” Chalhoub’s Vice President of Communications Lynn al Khatib told Reuters, adding that the company’s leadership team personally visited Dubai Mall and Mall of the Emirates on Monday morning to check in with workers.
E-commerce giant Amazon closed its fulfillment center operations in Abu Dhabi, suspended deliveries across the region and instructed its employees in Saudi Arabia and Jordan to remain indoors, Business Insider reported on Monday, citing an internal memo.
Gucci-owner Kering said its stores were temporarily closed in the UAE, Kuwait, Bahrain and Qatar and it has suspended travel to the Middle East.
Luxury growth engine under threat
Shares in luxury groups LVMH, Hermes, and Cartier-owner Richemont were down 4 percent to 5.7 percent on Monday afternoon as investors digested the knock-on impacts of the conflict.
The Middle East still accounts for a small share of global spending on luxury — between 5 percent and 10 percent, according to RBC analyst Piral Dadhania. But the region was “luxury’s brightest performer” last year, according to consultancy Bain, while sales of expensive handbags have stalled in the rest of the world.
Now, shuttered airports have put an abrupt stop to tourism flows into the region and missile strikes — including one that damaged Dubai’s five-star Fairmont Palm hotel — are likely to dissuade travelers, particularly if the conflict drags on.
“If you assume that it’s a $5 billion to $6 billion (travel retail) market and let’s say it’s going to be shut down for a month, we are talking about hundreds of millions of dollars that are definitely at risk,” said Victor Dijon, senior partner at consultancy Kearney.
If Middle Eastern shoppers cannot travel to Paris or Milan, that could also hurt luxury sales in Europe, he added.
Luxury brands have been investing in lavish new stores and exclusive events across the region. Cartier unveiled a “high-jewelry” exhibition in Dubai’s Keturah Park just days before the conflict started.
Cartier and Richemont did not reply to requests for comment.
Luxury conglomerate LVMH has also bet big on the region. Last month, its flagship brand Louis Vuitton staged an exhibition at the Jumeirah Marsa Al Arab hotel, and beauty retailer Sephora launched its first Saudi beauty brand.
LVMH does not report specific figures for the region, but in January Chief Financial Officer Cecile Cabanis said the Middle East has been “displaying significant growth.” LVMH did not reply to a request for comment on how its business may be impacted by the conflict.
The Middle East has also attracted new investment from mass-market players. Budget fashion retailer Primark said in January that it plans to open three stores in Dubai in March, April and May, followed by stores in Bahrain and Qatar by the end of the year.
“Primark is set to open its first store in Dubai at the end of March but clearly this is a fast-moving situation which we are monitoring closely,” a spokesperson for Primark-owner Associated British Foods said.
Apple stores in Dubai will remain closed until Thursday morning, the company’s website showed, while Swedish fast-fashion retailer H&M said its stores in Bahrain and Israel are closed.
Consumer goods group Reckitt has told all employees in the Middle East to work from home, temporarily closed its Bahrain manufacturing site and suspended all business travel to the region until further notice.
