16:04 | 31/05/2018 Finance - Banking
(VEN) - According to the latest report of the World Bank, Vietnam received about US$13.8 billion in remittances last year, up 16 percent against the preceding year, making it the eighth highest recipient of remittances in the world.
The major sources of remittances to Vietnam are Vietnamese export workers and overseas Vietnamese living in other countries. The US accounts for 60 percent of all the remittances sent to Vietnam, while 20 percent are sent from Europe.
Other major sources include China, the Republic of Korea, and Japan. Economists say overseas remittances in 2018 will bear the impact of the US policy on restricting immigration and the US Fed’s policy on raising interest rates.
Remittances to Vietnam are not only a key source of capital for the economy but also contribute to foreign exchanges and helps offset trade deficits. Remittances to Ho Chi Minh City in the first quarter of 2018 increased by 4.5 percent against the same period last year to reach US$1.12 billion.
Of this amount, 70 percent was channeled to trade and production activities, and 22 percent was invested in real estate, while the remaining was meant as financial support for families and friends.
The Vietnamese dong continued to maintain its stability, a fact also considered favorable to attract remittances. Some analysts believe overseas remittances will be stable, thanks to the country’s macroeconomic stability and the flexibility of Vietnam’s monetary policy.
According to financial expert Nguyen Tri Hieu, several measures by the State Bank of Vietnam (SBV) to limit lending to the real estate sector will affect its market in 2018. However, this could present a boon for remittances, because if the SBV tightens loans, investors will seek alternative sources of investment, including remittances. In addition, land policy has to change so that it can lure more investment from overseas Vietnamese
Vietnam’s improved business environment has enhanced investor confidence and attracted remittances into the country, both for investment in the economy and for support of family and friends.