LABOUR-JAPAN: Foreign Remittances Become Lifesavers Back Home

By Suvendrini Kakuchi Reprint | | Print |

Suvendrini Kakuchi

TOKYO, Sep 8 2004 (IPS) - Remittances sent home by tens of thousands of foreign workers, both undocumented and those holding working visas, has made Japan a leading source of foreign exchange for developing countries – surpassing Tokyo’s foreign aid budget.

”Foreign workers from poor countries earn much more in Japan than in other countries that have migrant labour. As a result, remittances from these workers are becoming very important for those governments,” Takashi Kadokura, senior economist at the Dai-Ichi-Life Insurance, a think-tank affiliated with Dai-Ichi Mutual Life Insurance, told IPS.

According to official and private analysts estimates, foreign workers send home an average of more than 900 billion yen or around 825.3 million U.S. dollars annually.

The remittances of these foreign workers are most of the time lifesavers for their poor families back home that often see little in government aid.

Kadokura, who is investigating Japan’s underground economy, says at the top of the remittance list are Chinese, Filipino, Thai and South Koreans – who form the largest number of migrants in the country.

Last year, Japanese authorities estimated there were 250,000 illegal workers in the country that also includes high numbers of Bangladeshis, Pakistani, Burmese and Sri Lankans.

While actual figures are hard to come by given that most workers are undocumented, Kadokura says Chinese, Koreans and Filipinos sent home 608.2 billion yen (5.50 billion dollars) annually.

In a report released last October, Kadokura found that Filipino workers in Japan sent home 413 million dollars in 2003 and were the third-largest source of remittances after Filipino workers in the United States and Saudi Arabia.

”Remittances from overseas workers hover at the top of the list of foreign earnings that support the Philippine economy. Thus, remittances from here have raised the profile of sending workers to Japan,” he explains.

According to Kadokawa, Chinese workers – Japan’s largest migrant population – send home around 600 billion yen (5.47 billion dollars) annually. Much of that money is undeclared for taxation purposes and sent back to China through illegal means because the workers do not have legal visas.

Chinese and other nationals operating small businesses in Japan, such as shops, also offer services to illegal workers who need to send money home, says Kadokawa.

Latin Americans and Caribbean nationals, who are legally accepted in Japan if they are descendants from Japanese who migrated to the region in the 1930s, are also a major source of foreign income for those countries.

Brazil received 2.5 billion dollars last year from remittances of its citizens in Japan.

Interestingly, aid officials have come to view remittances as an important development tool.

Japan is the world’s second-largest foreign-aid donor, after the United States. In the fiscal year that ended on Mar 31, it dispensed 857.8 billion yen (7.82 billion dollars) in official development aid or ODA.

By some estimates, foreign workers in Japan annually remit more than that to their home countries.

”This is money that goes directly into the pockets of poor people,” Enrique Iglesias, president of the Inter-American Development Bank, said on a recent visit to Tokyo.

Meanwhile Japan’s most influential business lobby is urging the government to conclude with its Asian neighbours bilateral trade agreements that recognise the country’s need to open its doors to skilled foreign workers.

The Keidanren has been pressing Japan to conclude economic partnership agreements with the Philippines, Malaysia and Thailand – all Association of Southeast Asian Nations (ASEAN) members – as well as South Korea.

”There needs to be a common foundation for free economic activity without restrictions and regulations,” said Kiyoaki Shimagami, head of a Keidanren taskforce at a symposium recently on economic partnership agreements.

While illegal immigrants are attracted to the underground banks because they cannot usually open legitimate bank accounts, legal foreign workers in Japan – especially those from Peru – are able to use the services of Convenio Kyodai Japon, one of the country’s few banks that operates officially to send remittances to Latin America.

Japan has 52,000 registered Peruvian workers, the fifth largest community of migrant workers.

Yukiko Horiuchi, a spokesperson, says the bank has 40,000 Peruvian clients who send back on average between 30 to 40 percent of their salaries.

”Our services are well sought after by Peruvians because our commission (for sending money abroad) is half that charged by other Japanese banks,” Horiuchi tells IPS.

”We also speak the same language,” she adds.

Kyodai, which means ”relatives” in Japanese, started out as a shop selling Peruvian groceries and expanded as migrants grew.

With Japan enforcing stricter rules on foreign workers, Kyodai can only cater to Peruvians working officially in Japan.

”The Japanese government should make foreign workers work legally and use their remittances as an important way of promoting better economic and friendly relations with their countries,” says Kadokura.