Seafarers turn to cooperatives for borrowings

by LEO J. SANTIAGO
www.ofwjournalism.net


MANILA–AMPARO Munariz and her seafarer husband have been members of a cooperative for nearly two decades now and they wouldn’t have it any other way.

Savings and investment groups like the Magsaysay Employees, Crew and Alottees Developmental Cooperative (Mecadec) that Munariz belong to have given seafarers an alternative to banks for borrowing and growing their money.

The Munariz couple, for one, has relied on from their cooperative to send their children to school, put up a sari-sari store, and pay the down payment for their house and lot in Better Living Subdivision, Parañaque. The 46-year-old Amparo herself was able to graduate from a correspondence school through borrowing from Mecadec.

With P20,000 share capital each, they are able to borrow twice every year by alternating as loan borrower.

Another member, Lauro Cabanilla, said he always turned to the cooperative for loans to fund his examinations and licenses since the 1980s.

It’s better than borrowing from usurers, Cabanilla said.

Members Noel Abejar, 44, and wife also tapped the cooperative’s credit line to build their new house in Cavite.

As Abejar puts down boxes on the floor, he said they are thinking of borrowing again to opening a market stall near the house they are moving in.

What’s buzzing up these borrowings and financial activities?

Mecadec said it’s the benefits their members get from the money they put into the cooperative.

Cabanilla agrees. For one, aside from access to instant cash, they receive a minimum P6,000 as patronage refund every year.

That is money called dividends that members get as windfall from the savings, borrowing, and interest operations of the cooperative.

Mecadec said one of their investment strategy is investing members’ money in mutual funds.

“Members are deducted 10 per cent of their salaries, which are placed in the care of a multinational investment company,” Mecadec chair Marlon Rono explained.

Their money earned at least eight percent, which is higher than the existing banking rates, Rono added.

The cooperative is able to accumulate a lot of money after 10, 15 and 20 years depending on the choice of the member, he said.

Mecadec’s mutual fund investment today has hit P180 million after only five years.


Attractions

RONO, who is also Magsaysay Maritime Corp. vice president, said the cooperative now has P56.4 million in total funds. Last year’s figures placed its loan portfolio at P100 million.

Just recently, the cooperative declared a P2,500 patronage refund or dividends for every active borrower member. Since the cooperative has total 12,700 members, this meant Mecadec shelled P31.75 million, or giving away nearly half of its total funds.

The cooperative has been providing multi-purpose loan, education, Christmas, training and license loans, housing, car loan and micro-business loan.

Rono said that the facility tapped more by seafarers is their educational loan of between P5,000 (one-time) and P10,000 every semester.

The loan bears no interest charges but exacts a P400 service fee from the borrower.

Rono said more than half of their members tap such loan during the months of May-June and September-October.

General manager Jong Pablo told the OFW Journalism Consortium that Mecadec also lends P10,000 to P200,000 to seafarers building micro-enterprises.

Members can choose to pay within six months or two years. Amortization is spread throughout the loan cycle plus the share capital of 25 percent is waived.

Other cooperatives providing loans to seafarers include the five-year-old Multipurpose Cooperative for UPL Manning Agency’s Employees and Crew that claims a thousand members and the Maritime Multi-Purpose Cooperative with 262 members.

The UPL coop has total funds of at least P12 million from which it dips to provide emergency, educational, and business loans to members.

Recently, it has started savings in time deposits. Members earned dividends of at least 5 to 8 percent yearly.

The Maritime MPC, on the other hand, started just last year and also allows members to borrow from P20,000 up to P200,000 payable in six months to one year.

According to consultant Eugene Gonzales, Maritime MPC’s systems and rates for savings products are overshadowed by the focus on borrowing.

It has to develop efficient systems and competitive rates for savings products, Gonzales said.

He explained that while membership in the coop is not mandatory for employees of manning agency Associated Ship Management Inc., one has to be at least an associate member to be able to borrow from the coop.

A member has to pay P2,500 (equivalent to 25 shares at P100 per share) to get regular membership.

Members get a mandatory share of the coop income and get salary loans.

This becomes the reason for many to seek membership, Gonzales said.


Big plans

COMPARED to land-based OFWs, seafarers have the competitive edge to save a lot of money.

Take for example an able-bodied seaman, who is also a member of the International Transport Workers Federation, with a monthly salary of US$1,300 and fixed overtime and other shipboard benefits worth US$300. That seaman could remit 80 percent of his income and save the rest in a cooperative or a bank.

That 20 percent is what Gonzales and the other cooperatives are trying to catch.

He wants the Maritime MPC to encourage more members to save, conduct business trainings, and engage in health and medical benefits.

“The ASM cooperative may not be the best thing that happened to them, but it continues to help them economically. At the very least, they can also build business skills through training in due time,” Gonzales said.

Rono said that Mecadec would open new products to increase its membership.

He said the cooperative would open a housing loan window and encourage time deposits.

There’s also a plan to install a computer system where members could access information on their savings and the status of their loans.

Rono said the system would be very expensive and, hence, has still been on the drawing board ever since.

The challenge facing these cooperatives is the status of employment of many seafarers who are on six-month or ten-month contracts.

There’s a need to be creative in the process of recruiting seafarers into cooperatives, Mecadec’s Rono said noting that almost half of Magsaysay Maritime Corp.’s total 20,000 seafarers are not yet members.

Still, Gonzales believes the contractual employment status of seafarers all the more give reasons for them to save, especially in cooperatives that offer lending for startup business.

“It is about time that our seafarers learn the value of saving money for their retirement and specially business ventures. They are not always healthy. What would happen to them after they are no longer able to board ships?” Rono said.

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OFW Journalism Consortium Inc. in partnership with the Ateneo de Manila University-Economic Policy Reform and Advocacy (EPRA) consortium