Vietnam has about 4.5 million people living abroad. Accordingly, the number of remittances transferred to Vietnam has continuously increased over the years, reaching the top 10 of the world in 2017 with 13.81 billion US dollars. In 2018, the remittances to Vietnam were estimated at 15.9 billion US dollars, according to the World Bank (WB)’s statistics.
In different statistics, the remittances transferred to East Asia and the Pacific increased by nearly seven percent in 2018 to 143 billion US dollars, higher than the five percent recorded in 2017. In Vietnam, the remittances were estimated to reach 18.9 billion US dollars in 2018, up by 37 percent compared to 2017.
Sheshagiri Sukesh Mailiah, director of MoneyGram’s Indian Subcontinent, Malaysia and Indonesia, said that the remittance flows to Vietnam often remained high over the past years and will continue to be positive in this year, even when the world situation is more volatile.
“Vietnam is among the top 10 leading countries, ranks the second in the Asean after the Philippines (34 billion US dollars) in terms of remittance inflows in the world. MoneyGram has worked with many trusted partners in Vietnam in the past few decades and will continue to maintain this in the near future, because Vietnam is one of the most important market. MoneyGram receives international remittances from more than 95 countries into Vietnam,” said Mailiah. He added that MoneyGram has recently cooperated with HCM City Development Commercial Joint Stock Bank (HDBank) to enhance money transfer services in Vietnam.
Nguyen Hoang Minh, deputy director of the SBV HCM City branch, shared that in the first eight months of 2019, the remittances to HCM City were estimated at 3.45 billion US dollars and are expected to increase to nearly six billion US dollars in 2019.
According to Minh, since the macroeconomic situation is stable and the pressure of exchange rate due to psychological factor is eliminated, the recipients of remittances have gradually shifted from foreign currency holding to holding dong. In the recent years, the remittances to HCM City have been on an upward trend. In 2018, the remittances transferred to HCM City reached above five billion US dollars.
The main countries transferring remittances to Vietnam still include the US, Cambodia, Australia and France, where there are large Vietnamese communities. Taiwan, South Korea and Japan are expecting to see increasing migration of workers.
Although the foreign mobilisation interest rate in the domestic is being kept at zero percent, according to financial analysts, this will not significantly influence remittances and this capital source is forecasted to continue flowing strongly into Vietnam. On the other hand, thanks to the flexible and stable exchange rate policy, the remittances to Vietnam have mainly been converted into dong and put in savings.
Assessing the remittance source to Vietnam this year, banks said that it will increase over the previous year. At HDBank, in the first six months of 2019, the remittance payment reached about 300 million US dollars and the target for the whole year is 500 million US dollars.
Pham Hong Hai, Member of the Board of Members at HSBC Vietnam believed that with the growth of foreign investment (both direct and indirect capital) and the annual abundant source of remittances will have a positive impact on the exchange rate.
Thanks to that, the exchange rate is unlikely to see strong fluctuation at the end of this year. It is forecasted to increase by only one to two percent for the whole year, even though the Chinese yuan is in a downtrend.
Tran Thanh Hai, a financial and monetary expert said that with an average remittance flow of about 16 billion US dollars per year in the recent year, the remittances to Vietnam in 2019 are forecasted to not be lower than this number. This is a great resource for the economy of Vietnam.
Meanwhile, according to Dr Pham Sy Thanh, director of the Chinese Economic Research Programme at the Institute of Economic and Policy Research (VEPR), the fluctuation of the Chinese yuan usually does not much affect the dong exchange rate. However, it should be noted that the dong is getting stronger, while the currencies of other countries are weakening, and this is not favourable for export.
Nevertheless, from now until the end of the year, the dong is predicted to maintain stability and not increase by more than two percent, as anticipated by the SBV.
