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Remittances
Most remittances coming into Viet Nam are invested in property while a smaller portion is deposited in banks or used to buy durable products.
According to a World Bank survey in 2008, remittances help increase expenditure on land and houses while a small part is used for services businesses.
Viet Nam ranked 16th among countries receiving remittances last year.
Figures from the central bank show there were remittances of US$8 billion, compared to FDI of $9.6 billion and official development assistance of $2.6 billion. The figures do not include items and cash sent to Viet Nam through non-banking channels.
The remittances have helped offset nearly 50 per cent of the country's trade deficit and reduce the reliance on foreign funds.
Most remittances are from overseas Vietnamese in the US, Canada, and France. HCM City was the biggest recipient.
There are four million overseas Vietnamese living in nearly 100 countries and territories.
Due to the global economic uncertainty and the return of many Vietnamese guest workers from Libya, remittances have decreased recently.
The State Bank of Viet Nam says remittances to HCM City in April were down 19.6 per cent from March to $ 367.6 million. The fall in remittances is also caused by the drop in the interest rates for dollar deposits in Viet Nam.
Banks fear bad debts
Many banks are concerned about rising bad debts due to the economic situation and high interest rates.
Some banks with a tradition of prudent credit management have revealed that since the end of last year their non-performing loans (NPLs) have increased by 0.5 per cent.
Others admit to a rise of 1 per cent and even 2 per cent.
In HCM City alone, NPLs rose to 4.2 per cent by April, 5.6 per cent for State-owned lenders and 2.9 per cent for joint-stock entities.
Some financial leasing companies reported an NPL ratio of even 26.3 per cent.
Central bank governor Nguyen Van Giau estimates NPLs at around VND100 trillion, or $5 billion.
Fitch Ratings says that the share of NPLs in Viet Nam's banking system was a staggering 13 per cent, much higher than the official figures due to different criteria for identifying them.
The threat of NPLs will possibly become more stark in the late second quarter or early third quarter when the high interest rates tell on borrowers.
vietnamnet, vns
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