Overseas remittances hit $2.5 bln in HCM City

By Dam Tuan August 15, 2016 | 09:11 pm PT

Money came pouring back to the city during the first seven months of the year.

Vietnamese living overseas sent home $2.5 billion to Ho Chi Minh City in the first seven months of 2016, an increase of 4.16 percent compared to the same period last year.

From 2011 to 2015, money transferred from overseas Vietnamese to Ho Chi Minh City rose on avarage by 10 to 12 percent per year. Having already shown stronger signs of economic recovery than most of the country, the southern hub is expected to receive $5.7 billion in overseas remittances this year, climbing 5.6 percent compared to 2015, according to the State Bank of Viet Nam’s HCM City branch Deputy Director Nguyen Hoang Minh.

Rising overseas remittances show the insignificant impact of the State Bank's anti-dollarization policy, according to the Vietnam Investment Review.

overseas-remittances-hit-25-bln-in-hcm-city

Ho Chi Minh City is receiving huge amounts of overseas remittances. Photo by Reuters/Rick Wilking

Vietnam has attempted to reduce the dollar deposit interest rate to zero percent, and expects to stamp out dollarization by 2020. As a result, the dollar no longer seems so attractive, but that has had a minimal effect on remittances.

In recent months, real estate has been a magnet for overseas remittances thanks to Vietnam’s thawing property market. The government is also encouraging overseas Vietnamese to invest in their homeland by allowing them to send and receive overseas remittances in foreign currencies. Interest rates have been kept stable and the development of official money transfer services by commercial banks and enterprises are another reasons to entice overseas remittances.

Tran Van Trung, director of DongA Money Transfer, said that Vietnam currently has more than 4.5 million citizens living abroad, and that number keeps growing. The director said he was certain overseas remittances will continue to increase, especially now receivers no longer have to pay personal income tax on the money.

The United States, Australia, and Canada contribute the majority of Vietnam's remittances, followed by labor export markets like Malaysia, Taiwan and Japan.

Overseas remittances have mainly been pumped into manufacturing and business (70.6 percent) and real estate (20.7 percent), according to the State Bank’s HCM City branch.

Deputy Director Minh underlined that “most overseas remittances go into manufacturing and business, rather than saving, spending, real estate and the stock markets as in previous years.”

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