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Thursday, September 13, 2012

On Over-encouraging Return Migrants to Be Entrepreneurs

From the latest report by the Secretary of Labor and Employment. For some time now, DOLE has been touting their P2 billion peso reintegration fund for migrants to encourage them to be entrepreneurs.
The DOLE had set up a P2 Billion Reintegration Fund to provide OFWs and their legal dependents a loan facility for enterprise development , in cooperation with the Land Bank of the Philippines, where a member can avail of a P300,000.00 to P2 million business loan.
This strikes me as such an odd use of resources. Usually, you would offer loan assistance to those who are credit constrained. But migrants, who have just finished their migration episode from abroad, are the exact opposite. They had just earned enough money. By all means, they're the ones who should be lending to start-ups. Offering lower rates to these people will encourage them to over-invest when they probably shouldn't be.

Not everyone is an entrepreneur. Perhaps in the Philippines, more people should be. But it is a very very risky business. This is my reaction to the latest craze that might leave one to think that everyone should be. By revealed preference, most people who have enough credit would actually prefer stable wage-earning jobs.

I'm not sure the 2billion peso reintegration fund is the best way to use that money. I had rather prefer them to use that to help return migrants find local employment here.

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