Illustrative image (Source: tapchitaichinh.vn)
In the first seven months of 2018, Ho Chi Minh City received US$2.9 billion worth of remittances, 20% higher than the same period last year.
Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s HCM City branch, said in the past few years remittances to the city have been increasing steadily by 10% each year.
Since the beginning of this year, the amount has risen month-on-month, he added.
The country’s macro economic and exchange rate stability means remitttances are converted into VND instead of retained in dollars. Banks pay zero interest on the greenback.
Minh said in the last three years, 21% of remittances, which have been around US$5 billion a year, have been invested in real estate, which is fostering property businesses and economic development.
Dr Bui Quang Tin from the HCM City University of Banking said remittances could continue to increase this year though the US Federal Reserve has been increasing interest rates - which affects remittances by attracting flows back to the US - since the increases are only by 0.25% – 0.5%.
Meanwhile, a savings interest rate of 7%-8% in Vietnam means converting remittances into VND and depositing them is still highly profitable, he added.