Overseas remittances likely to hit US$11 billion

Commercial banks are expecting a sharp increase in overseas remittances as 2013 draws to a close, estimating a yearly total approaching US$11 billion.

Vietnamese banks channel an annual average of approximately US$10 billion in overseas remittances, ranking among the ten highest overseas remittance recipients in the world.

Labour market recoveries in the US, Australia, Canada, and many other countries where Vietnamese nationals are residing have considerably increased remittances this year.

Unemployment rates in many countries have been cut in half over 2013, creating stable employment conditions for expatriate Vietnamese nationals and enabling wage remittances to relatives or investment in the homeland.

The Vietnamese Government has preferential policies intended to encourage overseas Vietnamese to send money back home. As of December 11, 2013 remittance recipients were allowed to withdraw money in Vietnam Dong (VND) or US dollars (USD) without paying income tax.

The stability of the VND in recent years has also encouraged Vietnamese nationals to send money back home.

Nguyen Hoang Minh, Deputy Director of the State Bank of Vietnam, HCM City Branch, says HCM City is likely to receive US$4.8 billion in overseas remittances in 2013 - a sharp increase compared to last year’s US$4.1 billion.

Most of the remittances are sent from the US and Europe. But money remitted from China and the Republic of Korea also increased dramatically in 2013, accounting for almost 5% of the total compared to the 0.2–0.3% of previous years.

Stable exchange rates have encouraged some recipients to convert USD into VND and thus enjoy higher interest rates.

Remittances are primarily used for short-term business production, real estate projects, and to cover household expenditures.

Former National Financial Supervisory Council Vice President Dr Le Xuan Nghia says the stock market’s short-term recovery has inspired projections for an influx of overseas remittance investment.

He even believes the real estate market will benefit, with remittance recipients potentially choosing to repurchase non-performing loans offered by the Vietnam Asset Management Company (VAMC).

Approximately four million Vietnamese nationals currently live, study, and work in 101 countries and territories around the world.  As many as two million are guest workers.

The US$8.6 billion in remittances Vietnam received in 2010 placed it 9th on lists of the developing world’s largest overseas remittance recipients.

In 2011, overseas Vietnamese remitted US$9 billion, contributing to the country’s positive trade balance. The figure rose to US$10 billion in 2012.