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Where does kieu hoi go to?
Vietnam has successfully attracted big volumes of kieu hoi every year. However, it still has not succeeded in attracting the kieu hoi for the national economy development. Especially, no one can say for sure where the kieu hoi has been going to.
There are about 400,000 Vietnamese people working overseas and about 4 million Viet Kieu (Overseas Vietnamese) who have been settling in 100 foreign countries and territories. The 4.4 million Vietnamese people remit a big sum of kieu hoi to Vietnam every year.
Kieu hoi, or overseas remittance, is the money sent by overseas Vietnamese to their relatives in Vietnam to help them improve their lives. Kieu hoi has been counted by government agencies, because this is considered an important source of foreign currency, and an important statistical figure for the government to make decisions to regulate the national economy.
According to the State Bank of Vietnam, 2.5 billion dollars worth of kieu hoi was remitted to Vietnam in the first quarter of 2011. The figures were 2 billion dollars in the second quarter and 2.5 billion dollars in the third quarter. It is expected that the figure would reach 8.5 billion dollars by the end of the year, higher than the record level of 8 billion dollars seen in 2010.
In fact, the volume of kieu hoi could even be higher. Besides the amounts of kieu hoi remitted to Vietnam through official channels, there is also the money sent through unofficial channels, which, according to experts, are equal to 30 percent of the official volumes.
In 1999, the volume of kieu hoi just accounted for 4.2 percent of Vietnam’s GDP. Meanwhile, the proportion increased rapidly to 7.8 percent in 2002, and then to 7.7 percent of GDP in 2010 (GDP is estimated at over 100 billion dollars). While the foreign currency supply sources from other channels such as ODA (official development assistance), FDI (Foreign direct investment) and FII (Foreign portfolio investment) have become unstable, the kieu hoi has been flocking to Vietnam sustainably.
According to the State Bank of Vietnam, in 2010, kieu hoi offset nearly 50 percent of the trade deficit. Meanwhile, according to the World Bank, Vietnam ranked the 16th among the countries that received the highest amounts of kieu hoi in 2010. In South East Asia, the amount of kieu hoi Vietnam received was the second largest, just after the Philippines which received 21.3 billion dollars in 2010.
According to the World Bank, the kieu hoi to Vietnam has been mostly sent from the overseas Vietnamese settling in the US, Canada and France.
However, the amounts of kieu hoi sent to different localities are different. Most of the kieu hoi has been sent to HCM City, though the city did not have export laborers in the period of 2006-2008.
Where has kieu hoi been going then?
A survey conducted in 2008 on 4000 households in Vietnam came to the conclusion that the kieu hoi has increased the spending of households on land and houses. It is estimated that 48 percent of the kieu hoi remitted to Vietnam in the last five years has gone to the fields relating to the real estate sector. Meanwhile, a small sum of kieu hoi has been invested to develop tourism and services.
Meanwhile, kieu hoi does not play a big role in helping reduce poverty and eliminate hunger, because kieu hoi has been mostly sent to the well-off households, and the money has been used for accumulation and investment, not for daily expenses.
A banker said that in many cases, kieu hoi has been remitted to Vietnam to make payment for real estate transactions. Meanwhile, a lot of overseas Vietnamese sent dollars to Vietnam, so that their relatives in Vietnam deposit money at banks for profits. The problem is that the dollar deposit interest rates in Vietnam are much higher than the interest rates in foreign countries (0.25-0.5 percent per annum vs. 5 percent in Vietnam).
According to Dong A Bank, in the first six months of the year, the volume of kieu hoi remitted through the bank increased by 20 percent over the same period of the last year, while the proportion of people receiving kieu hoi and depositing money at banks has increased by 10-15 percent.
Meanwhile, a big volume of kieu hoi has been sold on the black market, which is a big problem because it puts pressure on the official market.
vietnamnet, TBKTSG
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