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Small change conversion service booming during pre-Tet days
The black market is heating up these days with a booming small change conversion service. Despite the exorbitant fees, the services are attracting a lot of clients because commercial banks refuse to give the service to clients.
Dinh Tien Hoang, Dinh Le and Nguyen Xi are well known streets in Hanoi for the money exchange service. As Tet is coming in just three weeks, now is the high business season of the service providers.
Vietnamese people always have a high demand for small change on Tet days. They need small change to give to children as a New Year’s present, called “li xi”, and offer to the Buddha’s altars when they go to pagodas.
However, the special thing of this year’s service is that the service providers not only can be found on these “famous” streets, but also on Internet and ad columns on websites.
A noteworthy ad piece appeared on an website on January 5, 2011, where the service provider asked to contact him by email trungnghia.vib@gmail.com and trungnghiaVIB@yahoo.com and the mobile phone number 0904.400.2xx. When reading the given address, someone may think that the service provider is now working for a commercial bank and he has the chance to access the “small change sources” (VIB is the name of a joint stock bank in Vietnam). However, when Lao dong’s reporters contacted the man, he refused to talk about his career.
The fees for small change conversions are high. If clients want 200-dong banknote, they will have to pay the fee of 45 percent. Meanwhile, they will have to pay the fee of 25 percent for 500-dong banknotes, 12 percent for 1000-dong and 2000-dong banknotes. Banknotes with the face value of 5000 dong and 10000 dong bear the fee of 1-9 percent. Of course, the fees will be lower if clients accept old banknotes, just about 2-10 percent.
The service providers not only provide small change but they also sell dollars. A 1-dollar banknote is selling at 25,000 dong (the current dong/dollar exchange rate on the black market is about 20,000 dong per dollar), while a 2-dollar banknote is selling at 49,000 dong. A very attractive advertisement has been posted on a website: “We, www.doitien..., have 10,000 2-dollar banknotes series 2003 and 1000 banknotes series 1976, 1963, 1953, 1928 and 1917. If you have the demand, please contact…”
The service providers on Dinh Tien Hoang and Dinh Le streets also charge exorbitant fees. Clients will have to pay a fee of 20 percent for 5000 dong to 20,000 dong banknotes, while a 30 percent fee is applied for smaller change.
Banks only serve VIP clients?
Though the service fee on the black market is very high, people still have to change money on the market, because they have been refused by commercial banks.
Phan Thu Huong, a primary school teacher in Hanoi said that though she uses the services of Vietcombank regularly, she still cannot get small change from the bank.
Meanwhile, a bank officer of a bank on Cau Giay street, frankly stated that normal clients will not be able to get small change, only VIP clients or relatives of bank officers can.
At other banks, clients have been told that as the volume of small change is limited, the banks only serve VIP clients.
Meanwhile, some commercial banks have decided to attract depositors by offering small change to them. An officer of SeAbank said the bank does not have small change to provide to everyone. However, if people make deposits at the bank, they will be able to get small change.
As the demand for small change is too high, the money change service can bring profits to service providers. Tran Anh Tuan, the owner of doitien.com website, said that he kicked off the service last month. Especially, Tuan said he is also providing “li xi” service. To date, he has got 200 orders for his service. The clients in Hanoi can send “li xi” to their relatives in HCM City. “Our 2-dollar banknote supply is big enough to satisfy all the demand from clients,” he said. The package fee is 20 percent. This means that clients have to pay 350,000-400,000 dong for a 2 million dong contract.
Tuan is now hiring 20 collaborators, who are in charge of taking orders and delivering goods.
Tuan revealed that he started the business in mid 2010. “Every month, I can pocket 15-20 million dong after paying expenses,” he said.
vietnamnet
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