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Compilation Methodology for Workers’ Remittances in Japan

Compilation Methodology for Workers’ Remittances in Japan. February 1, 2005 Eika Yamaguchi Balance of Payments Statistics Section Bank of Japan. Definition of Residency. Residency is the essential factor in the framework of BOP

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Compilation Methodology for Workers’ Remittances in Japan

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  1. Compilation Methodology for Workers’ Remittances in Japan February 1, 2005 Eika Yamaguchi Balance of Payments Statistics Section Bank of Japan

  2. Definition of Residency • Residency is the essentialfactor in the framework of BOP • Temporary workers’ income can be recorded on Workers’ Remittances (WR) or Compensation of Employees (CE) • Discrepancy derives from each country’s practice in determining residency of natural persons • e.g. WR in Japan’s BOP ≒ CE in the Philippine BOP

  3. Japan’s Definition of Residency • Foreign Exchange and Foreign Trade Lawtakes into consideration not only the length of stay but also employment contract within host country, namely... • From the moment a foreign worker enters the territory of Japan to work for an office, he/she is deemed resident. • Japanese leaving for the purpose of working in an office located in a foreign country is considered nonresident from the departure date.

  4. Residency of natural persons • Temporary workers (not including border workers) can be assumed to have center of predominant economic interests in the host country. • issues to be discussed; • (1/3) Will one-year rule for residency remain absolute in the era of globalization? • If employment contract within dwelling places is used as a measure to judge workers’ residency, discrepancy between statistics would be reduced.

  5. Compilation methodology for WR in Japan • Based on ITRS (International Transactions Reporting System) in principle • Due to the high exemption threshold (currently 30 million JY), 35 major commercial banks are required to submit the partial reporting on transactions from 2 million up to 30 million JY on monthly aggregated basis. • Those partial reporting is used to supplement ITRS

  6. Compilation methodology for regional WR in Japan • Debit side: The methodology for the regional breakdown of WR was improved in the first half of 2004. • The data source shifted from embarkation/disembarkation data to “statistics on the foreigners registered in Japan” • Credit side: The data source is “Annual Report of Statistics on Japanese Nationals Overseas”

  7. Interview to remittance companies • Remittance companies are not required to report data in Japan • According to the each agent bank of Western Union (WU) and Money Gram (MG) in Japan, estimated remittances from Japan via WU and MG are about 6 billion and 0.15 billion Yen respectively • Since corresponding to only 4 % and 0.1 % of Japan’s WR payment in 2003, such volume is negligible in Japan

  8. Interview to remittance companies • According to the agent bank of WU, the scale of their payments is approximately 60 times as large as that of their receipts • According to the WU’s office in Tokyo, estimated annual market of remittance from Japan is 7.5 billion $, only 3 billion $ of which are assumed to be sent legally

  9. Remitter in Japan’s WR • Since the Alien Registration Law requires authorized status for foreigners to work in Japan, low-skilled labor is not the main remitter in Japan • The common transactions in Japan’s WR are attributed to intra-company transferees • Though assigned to posts abroad, most transferees working at multinational corporations are expected to go back to their original economy in several years.

  10. Data Collection based on ITRS • Though both are to be recorded under Current Transfer, distinction between WR and donated transfer is difficult. • issues to be discussed; • (2/3) Are there user needs to distinguish WR and donated transfer? • Despite implementation of BPM5, it is almost impossible to perfectly distinguish these two flows from our experiences.

  11. Data Collection based on ITRS • Distinction between WR and Migrants transfer is difficult. • issues to be discussed; • (3/3) Are there user needs to distinguish WR and Migrants transfer? • If the initial remittance is recorded as direct investment (purchasing real estate) or other investment (deposits abroad), is it feasible to recognize Migrants transfer?

  12. Conclusion • Current definition of Workers’ remittances in BPM5 is desired to be clarified in the process of manual revision. • For the purpose of the revision, both needs of politics and feasibility of data collection are to be fully examined. • One-year rule for residency is also to be reviewed in line with the revision of BPM5.

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