Thread: Mexicans in other countries send $25 billion home

More cash flows home
Remittances from Mexicans working abroad reach $25 billion

By MARION LLOYD
Copyright 2007 Houston Chronicle

MEXICO CITY — Mexicans working abroad sent home a record $25 billion last year, most of it from the United States, according to a study released Friday.

The estimated figure represents a 25 percent increase over 2005 and a nearly 80 percent surge since 2003, the Inter-American Development Bank, or IDB, said in its report.

Remittances have surpassed tourism as Mexico's second-largest source of foreign revenue, helping support more than 4 million Mexican families, said the Washington-based bank, which lends to 26 member countries in Latin America and the Caribbean. Oil is Mexico's largest foreign revenue producer.

The country's reliance on remittances from abroad is not necessarily a good thing, the bank said.

"No one should celebrate that Mexico is the largest remittances market in the world," it said. "It means the domestic economy is simply not generating enough jobs."

Indeed, more than half of the Mexican emigrants surveyed in another recent study by the bank said they were unemployed before leaving for the U.S. Those who held jobs in Mexico earned an average of about $150 a month.

By contrast, more than half found jobs within a month of arriving in the U.S., where they earned an average monthly salary of $900.

The bank made no distinction between Mexicans who were in the U.S. legally or illegally.

In another report on remittances, issued on Wednesday, Mexico's Central Bank arrived at a slightly lower estimate of last year's amount: $23 billion. That figure was a 13 percent increase over the $20.4 billion the Mexican central bank estimated in 2005.

Some industry experts said the increases cited in both reports may be deceptive, instead reflecting better accounting procedures.

Since 2000, the Mexican government has worked closely with the financial sector in the U.S. and Mexico to increase the amount of money sent through official channels. Before then, most remittances were carried back home or sent by money order. Now, about 90 percent of the money is wired directly between banks, said Moises Jaimes, the president of the Houston-based Bancomer Transfer Service, which handles millions of dollars in migrant remittances each year.

"Now all the banks have a better way to measure what's going on," he said. "That's why the Central Bank is more accurate."

Jaimes predicted that the increases would level off over the next few years now that most of the tracking systems are in place.

Wiring costs decrease
Another factor fueling remittances is the lower cost of wiring money.

Before 2000, money transfer operators charged 10 percent or more for each transaction and another 5 percent in foreign exchange mark-ups, according to Friday's report by the Inter-American Development Bank.

Today, thanks largely to increasing industry competition, fees have fallen as low as 5 percent from Houston and other so-called hub cities.

"Now, millions of Mexicans are enjoying the results of a great program," said Jaimes, noting that the money is vital to Mexico's economy.

Other methods
Immigrants are not only sending more money home but also spending more of their cash on products and services that will be used by relatives back in Mexico.

For example, Construmex, a service offered by Mexican cement giant Cemex, allows immigrants to pay for building materials in Houston and other U.S. cities for construction of homes in Mexico.

Last year, 36,000 rooms were built through the program, a 31 percent increase from 2005, according to a Cemex spokeswoman.

In its recent study, the bank surveyed 2,415 adult Mexicans to learn what percent receive remittances, how much they get, and how they spend the money. The responses were compared with an IDB study from 2003.

The results were encouraging, showing the number who put most of the money into savings accounts nearly doubled, from 8 percent to 14 percent. And investment in education jumped from 7 percent to 13 percent, it said.

The number of adults with bank accounts in 2006 was also higher among those who received remittances — 48 percent, compared with 33 percent of the general adult population.

"Our challenge is to use the tremendously powerful tool of remittances to bring these hard-working people into the mainstream," the study said, "give them a voice and make them count."

http://www.chron.com/disp/story.mpl/front/4523307.html

I wonder just how much of that is smuggling debts to coyotes??

This money should be entering American economy but because of boosh it's going to support others country economy, nad we were left with their bills to pay