Remittances to Vietnam rise sharply over global uncertainties

The Ho Chi Minh City branch of the State Bank of Vietnam reported that overseas remittances to the southern city, the most populous locality in the country, hit nearly US$9 billion last year, representing a year-on-year rise of 35% and tripling the total amount of foreign direct investment (FDI) capital the city attracted during the year. Notably, overseas remittances to Ho Chi Minh City normally make up 55-60% of the total national amount.

The World Bank in its August 2023 report forecast that Vietnamese remittances would hit US$14 billion in 2023, helping the country enjoy a current account surplus. But following the release of the data on remittances from Ho Chi Minh City, the total amount of remittances for the whole country may exceed the World Bank’s forecast.    

According to Nguyen Duc Lenh, deputy director of the Ho Chi Minh City branch of the State Bank of Vietnam, to promote post-pandemic economic recovery, some countries have eased restrictions on immigration and health, paving the way for Vietnam to increase labour export, and as a result the amount of money remitted by the guest-workers has also increased considerably. In addition, overseas Vietnamese, despite financial difficulties, still care and support their relatives in the fatherland.

Some money transfer companies said that the amount of remittances increased considerably last year. Faced with geopolitical insecurities in the world, Vietnamese expatriates tended to remit more money back home, both in terms of amount and number of remittances. The amount of money transferred back to the country is forecast to increase sharply in the coming days ahead of the lunar New Year festival, the biggest of its kind in Vietnam.

Statistics show the amount of remittances to Vietnam from 1993 to the end of 2022 reached more than US$190 billion, nearly equal to the amount of disbursed FDI capital. By the end of 2022, overseas Vietnamese from 35 countries and territories had invested in 385 FDI projects in 42 localities across the country with a total registered capital of US$1.72 billion, contributing to spurring socio-economic development, creating jobs for local workers and increasing tax revenue for the budget.

Out of the total amount of remittances transferred to Vietnam every year, the US takes the lead as it is home to the largest community of Vietnamese nationals globally. The US is followed by the UK, Australia, and Canada. As for labour export, remittances mainly come from Vietnam’s major labour export markets such as Japan, the Republic of Korea, and Taiwan (China).

The World Bank forecasts that Vietnamese remittances are expected to rise to US$14.4 billion in 2024, while the International Organization for Migration reports Vietnam has received up to US$17 - 18 billion in remittances each year over the past three years.

Over the past 10 years, remittances have become an important source of finance for Vietnam. Despite global upheavals, Vietnam has retained its position in the top 10 countries with the largest amount of remittances in the world and in Top 3 recipients of remittances in the Asia-Pacific region. Overseas remittances, along with FDI capital, help the government stimulate domestic consumption, support private investments, get more resources to maintain a stable exchange rate policy and increase foreign exchange reserves.

Currently, approximately 6 million Vietnamese expatriates are living in more than 130 countries and territories worldwide, mostly in developed economies. Between 130,000 and 150,000 are sent to work abroad every year, making a great contribution to Vietnam financially.