Strong development motivation from remittances

Despite facing difficulties due to the world economic recession and political instability in many regions, during the past years, overseas Vietnamese still tried to adapt to the situation, stabilise their lives and continue to contribute to the homeland.

According to the State Committee for Overseas Vietnamese, nearly 6 million Vietnamese people are living, studying and working in 130 countries and territories across the world. Despite the global economic difficulties, Vietnam still maintains its position in the group of ten countries with the largest remittances in the world. As of November 2023, Vietnam also received 421 projects invested by overseas Vietnamese from 29 countries and territories, with a total registered capital of over 1.72 billion USD.

Remittances soar by 32%

The latest data from the State Bank of Vietnam shows that the amount of remittances to Vietnam was estimated at 16 billion USD in 2023, a rise of 32% compared to 2022. Of which, the remittances transferred to Ho Chi Minh City reached nearly 9.5 billion USD, a sharp increase of 43.3% compared to 2022, the highest growth rate in the last ten years. The State Bank of Vietnam - Ho Chi Minh City Branch also forecasts that the amount of remittances transferred through commercial banks and economic institutions in 2024 will expand by about 20% compared to 2023.

The World Bank (WB) also predicted that remittances to Vietnam will continue to expand, reaching 14.4 billion USD by the end of 2024. According to WB estimates, Vietnam received an average of 17-18 billion USD in annual remittances over the past three years. In the past ten years, remittances have become a highlight of Vietnam, and the country is ranked in the top ten countries with the largest remittances in the world and the top three countries with the highest remittances in the Asia Pacific region.

It can be said that remittances are an important resource that Vietnam receives each year. In particular, along with the flow of foreign direct investment (FDI), remittances have made a significant contribution to helping Vietnam increase foreign currency sources and have more resources to maintain a stable exchange rate policy and increase national foreign exchange reserves.

In 2023, the global economy encountered difficulties, so it was normal for a decrease in remittances, but the amount of 16 billion USD was a very high number, according to economic expert Associate Professor Dr Dinh Trong Thinh. This showed the confidence of overseas Vietnamese in the stable macroeconomic situation and favourable business and investment environment in Vietnam, as well as the mechanisms and policies of the Government and the State Bank on attracting remittances. In addition, many new policies to encourage investment into the production and business sectors are also one of the fundamental factors to attract this resource to Vietnam. “This is a large source of capital for the domestic private economic sector. This has greatly contributed to ensuring the lives of many families and supporting social security in the country,” said economic expert Dinh Trong Thinh.

Currently, there are nearly 6 million Vietnamese people abroad, of which more than 1 million are F2 and F3 generations of foreign nationalities whose parents or grandparents are Vietnamese. There are about 600,000-700,000 highly qualified businessmen and intellectuals, with many of whom, especially 60 years old, wishing to return to Vietnam to live, invest, and do business. Therefore, their need for housing in Vietnam is very large, said Peter Hong, Member of the Vietnam Fatherland Front Central Committee and Chairman of the Business Association of Overseas Vietnamese.

Creating conditions to attract “golden resources”

According to the State Committee for Overseas Vietnamese, the overseas Vietnamese community has about 6 million people, with a growth rate of about 5% per year. They are currently living in more than 130 countries and territories, with 80% residing in developed countries. This is a favourable factor to promote remittance growth in the future.

To attract the “golden resources”, commercial banks have implemented many preferential programmes to attract remittances, especially during the year’s end and Lunar New Year. For example, all customers will receive a gift worth 100,000 VND after completing the Western Union money transaction at Agribank from December 15, 2023, to February 15, 2024.

The increasing amount of remittances transferred to Vietnam not only helps banks raise profits from service activities but also serves the policy of attracting foreign currency sources to expand national foreign exchange reserves. Moreover, remittances transferred through commercial banks also help these banks increase their access to households to boost the retail segment to people in rural areas, promoting savings and effective investment from remittances.

Finance and banking expert Dr Nguyen Tri Hieu acknowledged that remittances play an important role in the national economy. The government needs to have complete and clear information about investment opportunities in Vietnam to attract remittances. At the same time, agencies that support overseas Vietnamese when they return to Vietnam should ensure issues related to health, security, visas, and others. Remittance receivers are also encouraged to use part of the money for consumption and invest the rest in projects in Vietnam.

From another perspective, Associate Professor Dr Dinh Trong Thinh said that to foster the attraction of the “golden resource”, the Government and management agencies need to continue creating a stable macroeconomic environment, favourable investment policies, and reforms of administrative procedures.

In addition, many economic experts also recommend that Vietnam needs to gradually improve the quality of its labour resources and promote high discipline for workers working abroad. In addition to stabilising the currency and foreign exchange markets, the Government should gradually improve the legal corridor to support investment activities and expand production and business to boost the effectiveness of remittances, contributing to forging economic and social benefits.

As for commercial banks, they need to have preferential policies regarding capital support for workers, fees, exchange rates, and savings interest rates, in addition to applying technology to ensure quick, safe, and secure transactions, helping limit the flow of remittances through unofficial and unmanageable channels.