16:32 | 11/11/2016 Finance - Banking
(VEN) - With annual US$10 billion remittances, this is considered an important resource for socioeconomic development. However policies to attract investment from its cash flow are limited.
Overseas remittances are an important resource for socioeconomic development
Data from the State Committee for Overseas Vietnamese Affairs under the Ministry of Foreign Affairs showed that there are nearly five million Vietnamese residing in 103 countries and territories around the world. Overseas remittances to Vietnam reached US$96.66 billion during the 1993-2014 period, accounting for 6.8 percent of GDP in its period.
Overseas remittances to Vietnam have increased over the years, reaching an average of around US$10 billion a year in the last five years. According to the World Bank, remittances to Vietnam stood at about US$12.25 billion in 2015, ranking 11th among the top recipients. However remittances have not proved its efficiency in Vietnam. More than 50 percent of remittances are spent on consumption, while the amount for trade and production activities is inconsiderable.
Statistics announced by the Central Institute for Economic Management at a national scientific conference on the relationship between overseas remittances and investment activities in Vietnam organized by the National Economics University and the Vietnam Association of Foreign Invested Enterprises revealed that remittances to invest in trade and production activities have seen fluctuations in the different periods such as 27-30 percent in the 2010-2013 period, 16 percent in 2014 and 70.6 percent in 2015.
Remittances play an important role in the national economic development and macro-economic stability. To further promote its role, Vietnam’s policies should be open-minded, creating the most favorable conditions for overseas Vietnamese to send money home to their families. In addition, enhancing public confidence in the banking system and stabilizing the value of the Vietnamese dong are needed. Vietnam Association of Foreign Invested Enterprises Chairman Nguyen Mai said that the country should have a more comprehensive policy to direct the flow of remittances into trade and production activities.
The state needs to implement policies to drive remittances towards trade and production activities and other areas such as education to create positive effects for long-term development. It is possible to study from other countries to direct the flow of remittances into development programs for small and medium-sized enterprises, Dr. Ha Thi Thuy Van from the National Economics University suggested.
The state should establish a communication channel of the Ministry of Planning and Investment, the State Committee for Overseas Vietnamese Affairs and the State Bank of Vietnam to provide up-to-date information about the country for overseas Vietnamese.