GSO expert evaluates remittance success

December 03, 2013 | 09:21

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In the latest forecast from the State Bank of Vietnam (SBV), remittances into the country are likely to hit $11 billion this year, rising healthily against $9.75 billion last year. This would bring total remittances for the last 20 years to $84 billion.

According to the World Bank, Vietnam is ninth in the list of top 10 countries receiving remittances. In the top three were India with $71 billion, China with $60 billion, and the Philippines with $26 billion.

Remittance growth in Vietnam was around 24 per cent a year from 1994-2012, with the exception of 1997 when they fell after regional economic turmoil and again in 2009 after the global recession.

There are four factors behind Vietnam’s remittance success.

Firstly, the vast network of overseas Vietnamese (Viet Kieu) living abroad, nearly four million, and particularly in the US, Australia, Canada, and France which generally represents nearly 80 per cent of the total.

Notably, nearly 1.2 million Viet Kieu return home to visit their families every year with average spending of $1,000 a person.

Besides, over 400,000 Vietnamese labourers work abroad and contribute remittances of around $2 billion a year.

A second factor is Vietnam’s open-door policy and economic integration, along with effective policies governing remittances.

Few countries allow remittances to be received in dollars, rather than being exchanged into the local currency for deposit or sale to banks.

A third is the interest rate for dong deposits is higher than that of dollars, helping to attract foreign currency flows.

One dollar in Vietnam has a purchase price equal that of 2.5 dollars in the US and company shares are regarded as relatively cheap. Vietnam also allows Viet Kieu who live in the country for a certain period of time to buy property.

Fourth is that remittance services are developed and reliable and the number of service providers is rising fast.

By By Minh Nhung, former expert at General Statistics Office

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