Remittances have consistently increased over the years

14/01/2020

In 2019, remittance inflows to Vietnam reached USD 16.7 billion, an increase of 4.4% compared to 2018, bringing the annual average level in the 2016 - 2019 period to over 2.33 times higher than the corresponding level of the 1999-2015 period and 34.7 times higher than the corresponding level of the 1993 – 1998 period.


Currently, remittances bring a large amount of foreign currency compared to other sources of foreign currency. Vietnam also ranks 9th among the top 10th recipients of remittances globally. 


If compared the flows of remittances to GDP, Vietnam is in a higher position (in Vietnam, remittances accounts for 6.3% of GDP, higher than that of China which accounts for 0.5% of GDP, India 2.8%, and Mexico 3.3%). 


If calculated per capita, the figure of Vietnam in 2019 reached USD 173.1, also ranked higher than several countries with a larger total remittance volume in higher positions. The structure of remittance sources has shifted in a positive direction.


Remittances to Vietnam have brought about positive effects in many aspects. The most obvious is bringing about a large amount of foreign currency, contributing to improving the overall balance of payments, increasing the country's foreign exchange reserves.


Particularly the amount of remittances sent by workers working abroad also has specific positive effects. The most visible positive effects are job creation, a source of foreign currency earnings and a number of other benefits, such as changing the lives of people, helping the workforce to access advanced machinery and technology, management mechanisms, industrial workmanship, etc. Many people have become investors or found startup investment opportunities, etc. when they return home.


The inflows of remittances increased and reached a large amount for many reasons, including the large number of overseas Vietnamese and Vietnamese workers working abroad and notable positive points from the Government policy, i.e. foreign exchange receivers with extra income, even personal income shall not have to pay personal income tax like other personal income. This favor is so much better than many countries in the world. In addition, overseas remittance recipients can decide to receive in their original foreign currencies, or convert them into VND for use, immediate receipt or savings deposit.


The convenient and quick transfer/receipt of money from remittance service units also helps the amount of remittances to increase and reach a large scale. In addition, the much higher VND deposit interest rates than the very low interest rates for savings deposit overseas while the VND/USD exchange rate has been stable for many consecutive years are also factors influencing growth in remittance inflows.
 

Kylie Nguyen

© 2019 Vietnam Bank for Agriculture and Rural Development No. 2 Lang Ha street, Ba Dinh district, Hanoi, Vietnam
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