Remittance flows maintain positive momentum

05-Dec-2021 Intellasia | Thoi bao Ngan hang | 11:36 AM Print This Post

According to the State Bank of Vietnam (SBV) HCM City branch, the amount of remittances transferred to the city in the first nine months of 2021 was 5.1 billion US dollars, up by 22 percent year-on-year. This is a fairly impressive increase in the context of the Covid-19 complicated situation which has negatively affected the world economy for nearly two years and caused a sharp decline in the global remittance flows. With the current developments, many forecasts mentioned that the remittances to HCM City in 2021 will exceed 6.5 billion US dollars.

In 2020, the remittances to Vietnam reached about 17.2 billion US dollars, higher than the 15.7 billion US dollars initially projected by the World Bank (WB). This year, the WB said that the remittances to Vietnam will not decrease compared to 2020, estimated at about 18 billion US dollars.

Dr Can Van Luc, an economic expert, said that the remittances in the world declined by about seven percent in 2020 due to the epidemic, but the remittances to Vietnam in the past year still grew by three percent, reaching 17.2 billion US dollars. Thus, as the epidemic is now under control in many major economies, the economy is on a positive recovery momentum, and the income of expatriates is less affected, the remittances transferred to Vietnam are predicted to continue to be positive.

Vietnam currently has about 5.3 million people living and working in 130 countries and territories. The role and prestige of the overseas Vietnamese community is increasingly enhanced, becoming one of the important resources contributing to the country’s development. According to data from the Ministry of Labour, War Invalids and Social Affairs, in the past five years, about 10,000 Vietnamese workers have moved to work abroad every year. The additional Vietnamese labour force in many markets promises to increase the supply of remittances to Vietnam in the near future.

In recent years, the remittances to Vietnam have focused more on production and business areas, which has contributed to supporting the economic development of localities in particular and the country in general. According to experts, more remittances flow into production and business because overseas Vietnamese have seen the stable and positive growth of the Vietnamese economy over the years. Particularly, despite being affected by the Covid-19 epidemic, Vietnam is still one of the few economies that maintained a positive growth rate in the past year and is forecast to continue to grow by about three percent this year.

The report on socio-economic situation of the General Statistical Office showed that in October, there were 8,233 newly established businesses in Vietnam with total registered capital of 108.6 trillion dong, up by 111.2 percent in the number of businesses and 73.9 percent in registered capital compared to the previous month. In addition, 4,304 businesses have resumed operations, up by 29.8%. These numbers also show the recovery of businesses; the business registration situation also reflects the support of people and businesses with the government’s orientation to change from Covid-19 prevention and control to safe and flexible adaption and effective control.

The positive signals in the amount of remittances will contribute to supporting the economic growth of Vietnam, helping stabilise the foreign currency supply. In fact, the government is gradually opening up the economy, the trade balance is expected to improve in the last months of the year, coinciding with the time when remittances flow strongly to Vietnam. Experts believe that the foreign currency supply and demand in the market will be more balanced, and the US dollar/dong exchange rate, thanks to that, can be kept stable.

To welcome the remittance flow at the end of the year, banks have actively launched money transfer and receipt services. In mid-October 2021, Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) cooperated with Vietcombank Remittance Company Limited to launch the promotional programme titled “Open account receive remittances double incentive”. Accordingly, 7,000 customers successfully open accounts in dong and receive remittances through the new accounts opened at Vietcombank will receive an amount of 100,000 dong in their accounts. Previously, Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) partnered with Visa Card Organisation to launch a promotional programme for customers who receive Visa Direct money transferred from abroad via MoneyGram or Remitly services with Sacombank Visa Debit cards. In early June 2021, Commercial Joint Stock Bank for Agriculture and Rural Development of Vietnam introduced the annual preferential programme called “Agribank remittances accumulate points to receive gifts”. Accordingly, in the last six months of the year, each transaction of transferring or receiving remittances through the WU system at Agribank will automatically accumulate points by the system.

 

Category: Finance, Vietnam

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