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The changing role of overseas remittances in Vietnam's economy

Originally a main form of aid for family, these cash flows have increasingly found their way into businesses, reflecting economic shifts.

Ngày đăng: 13 tháng 9, 2021
Cập nhật: 14 tháng 1, 2023
Lượt xem: 307746565
Nguồn: vnexpress

Remittances from overseas Vietnamese have always been a key source of funds for Vietnam, equivalent to about 8 to 10 percent of gross domestic product.

According to the Central Institute for Economic Management, Vietnam received a total of around $120 billion in overseas remittances during the 16-year period of 1999-2015.

But new data suggest that overseas remittances are playing a much more different and potentially more important role now: they help foster local businesses and the manufacturing sector.

Between 2010 and 2013, only 27-30 percent of remittances ended up in businesses, according the central bank's data. Last year, 70.6 percent of what Vietnamese sent home from overseas was for setting up and expanding businesses in Vietnam.

Ho Chi Minh City, Vietnam’s economic hub, has received $4.4 billion in overseas remittances so far this year, said Nguyen Hoang Minh, deputy head of the State Bank of Vietnam's city branch.

Minh said 72 percent of the amount went to businesses while 22 percent was invested in real estate. Only 6 percent was meant as financial support for families and friends, which used to be the key purpose of remittances around two or three decades ago.

The city is expected to receive about $5.8 billion in overseas remittances this year, equivalent to 45-55 percent of the country’s total.

A Vietnamese-American, who immigrated to the U.S. 10 years ago, told Thanh Nien newspaper that she has sent her savings back home to invest in family-run businesses.

“My sisters in Vietnam have their own companies," she said. "I'm sending money home to help them expand their businesses without having to borrow from banks at high interest rates."

More than half of Vietnam's remittances come from the U.S.

Vietnam recorded $12.25 billion in overseas remittances last year, slightly up from $12 billion in 2014, according to data from the central bank.

Remittances are viewed as more vital considering that Vietnam has been increasingly burdened with mounting public debt, which nearly doubled to $116 billion over the past five years, and with rapidly falling loans from international partners.

But some experts have warned that, with Federal Reserve officials in the U.S. tipped to raise interest rates and the presumed demise of the U.S.-led Trans-Pacific Partnership, Vietnamese overeases in the U.S. may have fewer incentives to send money home for investment in the coming time.

Related news:

Trump's vow to upend global trade may hurt Vietnamese exports

Vietnam legislature confirms delay on TPP decision


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