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2008 may see biggest overseas remittance so far
The Chairman of East Asia Bank’s Remittance Company, Le Tri Thong, which is now a big overseas remittance service provider, has predicted that 2008 would be the year which sees the biggest overseas remittance so far.
Thong said that the overseas remittance (the money sent by overseas Vietnamese to their relatives in Vietnam) has reached US $6 billion so far this year, equal to that of 2007. It is expected that the overseas remittance will arrive in vast quantities during the last month of the year and just before Tet. Therefore, Thong said, there is every reason to conclude that 2008 will see the biggest overseas remittance so far.
According to the Forex Management Department under the State Bank of Vietnam, the overseas remittance volume in the first six months of the year had reached US $3.5 billion. A lot of banks have reported the payment of more than US $500 million worth of overseas remittance to their clients so far this year, including Vietcombank, Agribank, East Asia Bank (EAB), Sacombank and Asia Commercial Bank (ACB).
Meanwhile, Thong from EAB Remittance Company said that the company has paid US $1.1 billion by the end of November 2008, or US $100 million higher than the volume of the whole year 2007.
The last months of 2007 and first months of 2008 were the time when overseas remittance arrived in Vietnam en masse. Viet Kieu (overseas Vietnamese) remitted money to Vietnam not only to make investments, do business, and purchase real estate, but also to make deposits for interests as well. At that time, the popular deposit interest rate was less than 5% in developed countries, while Vietnamese banks offered the rate at 15%, which proved to be very attractive for depositors.
Nguyen Ngoc Lan, Director of the Forex Management Department under the State Bank of Vietnam, said that overseas remittance has been increasing significantly as the State has been applying more open policies on forex management, while offering preferences for Viet Kieu and encouraging Viet Kieu to return home to make investment and purchase houses in Vietnam.
Besides, Lan said, the stable exchange rate policy and the eased difficulties of Vietnam’s national economy both also have helped attract more overseas remittance.
In the last five years, the increasing number of Vietnamese people going abroad for working and studying has also helped increase the volume of overseas remittance, which was US $3.6 billion in 2007 and is expected to reach US $8 billion this year.
According to the Overseas Workers Department under the Ministry of Labour, War Invalids and Social Affairs, there are some 500,000 Vietnamese people now working in 30 countries and territories, who remit 70-80% of their annual income to their relatives in Vietnam.
Director of EAB Remittance Tran Van Trung, said that the overseas remittance by labourers from the Middle East and South East Asian countries remains lower than the remittance from the US and EU, but has been increasing at a multiple level.
Nick Cunnew, Director of Asia Pacific of Money Gram, the group which has the average remittance turnover of US $1 billion a day worldwide, said that with more than 3 million Viet Kieu the overseas remittance market is expected to further develop.
The United Nations lists Vietnam among the 10 countries which received the biggest overseas remittance in 2006 and 2007.
However, finance experts have also warned about the difficulties Viet Kieu have to face in 2009 due to the lower income and financial difficulties.
It is estimated that the overseas remittance in 2008 is 160 times bigger than it was in 1991, which means an annual growth rate of over 35%. The total overseas remittance volume in the last 17 years has reached US $35 billion, equal to 70% of foreign direct investment (FDI) in the period of 1998-2007, and 1.5 times higher than the ODA disbursed since 1993. In 2007, the overseas remittance was nearly equal to 10% of the GDP of Vietnam.
Tien phong
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