According to Nguyen Hoang Minh, deputy director of State Bank of Vietnam’s Ho Chi Minh Branch, by the end of November, the amount of overseas remittance recorded in Ho Chi Minh totalled at US$4.3 billion.
From year-to-year, overseas remittance normally increases in the last quarter of the year, accounting for over 40% of the annual remittance. The country, however, is expected to receive roughly US$9 million in remittance this year, instead of the figure US$11-US$12 billion estimated at the beginning of 2016.
Minh noted that the decline in funds transferred to the country this year would not be able to meet the expectation, as in November, the flow of remittance has shown sign of slowing down. The effect of the US election and the new US government’s anticipated policies that support domestic over global trade, according to Minh, have strengthened the greenback and subsequently, tightening the remittance flow that otherwise would stream into the country.
Together with the expectation of three additional rate hikes in 2017, that could further reinforce the US dollar’s attractiveness-the dollar-denominated remittance- which usually take up 60% of Vietnam’s overseas remittance, will likely fall in the coming year, noted Minh.
According to a Ho Chi Minh based expert, who wished to be anonymous, the foreseen deteriorated remittance inflow in 2016, and possibly as a short-term trend, might chiefly come from the psychological factors. During the financial crisis of 2008-2009, overseas Vietnamese, while taking into account the high inflation, still found some profit on the money they sent back to Vietnam. Such high remittance now goes down hill as money senders are not expecting a high return, compared to the previous period.
“Anticipating a lower return from their investments in Vietnam or funds sent to Vietnam, overseas Vietnamese may think twice before sending their hard-working money back home”, said the expert.
Tran Van Trung, director of DongA Money Transfer Co.Ltd in Ho Chi Minh City, meanwhile, said that the overseas remittance will nonetheless creep up given the recent recovery of the local real estate market.
Positive trend in the property market, coupled with the gradually improved investment environment in Vietnam, according to Trung, is a magnet that pulls in overseas remittance to invest for profit.
Given over four million of overseas Vietnamese living and working in 187 countries around the world, remittance sent to Vietnam has grown tremendously over the years, making the country one of the top 10 nations that receive the most remittance in the world.
In the past 22 years, this particular flow of fund has increased some 100-fold, from merely US$0.14 million in 1993 to US$11 billion in 2013, and US$13.2 billion in 2015.