Remittances play key developmental role

Ho Chi Minh City lured in a significant amount of remittances last year, photo Le Toan

Incoming remittances to the city reached approximately $8.92 billion last year, up by 35 per cent over the previous year, according to the State Bank of Vietnam’s Ho Chi Minh City Branch. The figure is triple the foreign direct investment (FDI) influx to the city in 2023.

The remittances in the city are also expected to grow in 2024, with a projected increase of 20 per cent compared to this year. Ho Chi Minh City in 2022 was responsible for more than half of total remittances into Vietnam.

“Ho Chi Minh City is focusing power sources to consolidate the city’s position as a national financial centre towards 2025 and beyond, aiming to develop the city into a regional financial centre. From 2031 onwards, the goal is to develop the city into a global financial centre,” said Vice Chairman of Ho Chi Minh City People’s Committee Vo Van Hoan at the 32nd National Diplomatic Conference organised in Hanoi in late December.

“To realise these targets, the remittances will contribute a pivotal role, along with other factors such as foreign-invested capital, and international sponsors,” Hoan added.

To attract this crucial power source, Ho Chi Minh City’s government is actively working on the policies to attract and leverage remittance resources. The initiative focuses on specific objectives related to the growth rate of remittances and the implementation of social development projects in education, healthcare, the environment, and contributions to the local community by overseas Vietnamese.

The draft project set a target of achieving an annual remittance growth rate of at least 10 per cent during the 2023-2025 period, highlighting the significance of remittances in supporting the city’s development and addressing various social challenges.

The World Bank last August forecasted that remittances into Vietnam might reach $14 billion in 2023 and could hit $14.4 billion in 2024.

The crucial role of overseas Vietnamese in general and their remittance was proclaimed by Deputy Prime Minister Tran Luu Quang at a December conference in the northern port city of Haiphong, seeking ways to promote resources of overseas Vietnamese and connect localities and businesses.

“Amid complex developments of the world political and economic situations, Vietnam has reaped great achievements thanks to the contribution of the overseas Vietnamese, along with sound and prompt leadership and drastic engagement of authorities at all levels,” DPM Quang said.

In recent years, the flow of remittances pouring into Vietnam has continuously increased, making significant contributions to hunger eradication and poverty reduction, and raising the living standards of the people who receive remittances.

Remittances to Vietnam are estimated at $190 billion in the past 30 years, nearly the same as disbursed FDI in the same period. Last year, the figures rose 5 per cent to a record $19 billion, making Vietnam among the top 10 countries globally in remittances.

The statistics published by the State Committee for Overseas Vietnamese under the Ministry of Foreign Affairs show that there are around six million Vietnamese living overseas, and the number increases by 5 per cent annually. They live in 130 countries and territories, with 80 per cent of them in developed countries.

About 3,000 overseas Vietnamese enterprises are investing in 52 localities across the country, with a total contributed and registered capital of $4 billion. Enterprises are mainly from the United States, Canada, Australia, Russia, France, the Netherlands, Japan, Poland, and Switzerland, and concentrate on the production, and processing of export goods, trade, tourism, construction, real estate, aquaculture, seafood processing, and software technology.

Nguyen Phu Binh, chairman of the Association for Liaison with Overseas Vietnamese, said, “During meetings with the overseas Vietnamese community, I see that many talents and entrepreneurs have the intention to come back to the country to either work or implement investment activities. They expect to receive more information about the resources available for attraction, and domestic policies, processes, and procedures requiring refinement.”

But many overseas Vietnamese remain apprehensive, sceptical, and uncertain about long-term investments and employment opportunities in the country, Binh said.

“It is necessary to build a foundation so that they can be reassured of their investment in the country, including offering preferential credit loans to support them establishing businesses,” he added.

Inspiring inward remittances despite challenging 2022 Vietnam saw stable inward remittance flow until the end of last year despite the global economic recession and spiking inflation around the world.

Remittances to HCM City likely to hits 7 billion USD in 2023 Remittances to Ho Chi Minh City are expected to reach 7 billion USD in 2023, an annual increase of about 6-7 per cent.

Ho Chi Minh City records a 37 per cent increase in remittances Despite many countries facing economic slowdowns and high unemployment, remittances to Ho Chi Minh City experienced an upward trend in the first half of 2023.