Ho Chi Minh City remittances set to fall 9 percent in 2016: central bank

By VnExpress   December 6, 2016 | 06:00 am GMT+7
Ho Chi Minh City remittances set to fall 9 percent in 2016: central bank
An employee counts Vietnamese dong bank-notes near U.S. dollar bank-notes at a bank in Hanoi. Photo by Reuters

Political and economic uncertainty have choked funds flowing into Vietnam from overseas.

Ho Chi Minh City is forecast to receive $5 billion in overseas remittances this year, a drop of about 9 percent from last year, said Nguyen Hoang Minh, deputy head of the city's State Bank of Vietnam branch.

Inflows to the economic hub usually account for half of Vietnam's total remittances.

This can be attributed mainly due to economic and political uncertainties in countries that are traditionally Vietnam's main sources of remittances, Minh said.

Remittances to Ho Chi Minh City in the final three months of the year usually account for 40-42 percent of the city’s annual total, with 60-62 percent coming from the U.S., official data showed.

The central bank official explained that the expected decline is partly driven by the possibility of the U.S. Federal Reserve hiking interest rates this month -- a decision that will make holding onto the greenback more profitable than sending the currency back home.

Besides, given the fact that the U.S.-led Trans-Pacific Partnership is likely to be scrapped under Donald Trump’s presidency, Vietnam will be viewed as a less attractive investment destination than it would have been if the trade pact had been put in place, leading to a decline in remittance inflows, said Minh.

Remittances to Ho Chi Minh City have increased on average by 10 percent annually over the past few years to $5.5 billion in 2015 from $4.1 billion in 2012.

Related news:

>The changing role of overseas remittances in Vietnam's economy

>HCM City rakes in $2.9 bln in overseas remittances from Jan-Aug

>Vietnam may tap foreign reserves to bolster currency: central bank