VietNamNet Bridge - The decline in remittances in 2016 and the slowdown in the first half of this year has caused concern among economists.

According to the World Bank, Vietnam is among the top 10 overseas remittance recipients worldwide thanks to the high number of overseas Vietnamese and export workers. A report of the State Committee for Overseas Vietnamese shows that there are 5 million Vietnamese living in 103 countries and territories.

In 1993, the amount of overseas remittance Vietnam received was modest, just $141 million, while in 2015, the figure soared to $13 billion, which meant the annual growth rate of 26 percent. 

In 1993, the amount of overseas remittance Vietnam received was modest, just $141 million, while in 2015, the figure soared to $13 billion, which meant the annual growth rate of 26 percent.

Analysts, citing big changes in the world economy, warned that the remittances would decline to $12 billion in 2016. However, the real remittance amount dropped more sharply than anticipated by 30 percent to $9 billion. 

HCMC received $2.1 billion in the first half of the year. Meanwhile, the remittances to the city always account for 50 percent of total remittances to Vietnam.

The US is one of the countries with the highest number of overseas Vietnamese and therefore, is the country from which Vietnam receives the most remittances. Fifty percent of overseas Vietnamese live in the US and 60 percent of overseas remittances are from the US.

This explains why the US policy on raising the dollar prime interest rate and Vietnam’s policy on curbing the dollar deposit interest rate at zero percent have significantly affected remittances.

Just within the first six months of the year, the US FED raised the dollar interest rate twice by 0.5 percent in total, thus broadening the dollar interest rate gap between Vietnam and the US.

It is expected that the US will once again raise the dollar interest rate this year before the rate reaches 2.125 percent by 2018. Therefore, some economists have suggested raising the dollar deposit interest rate in Vietnam, to attract remittances, an important source of capital for the country. 

US President Donald Trump's recent immigration policy has strongly influenced overseas Vietnamese psychology, negatively affecting remittances from the country. 

After winning election, Trump pledged to expel 3 million immigrants. The concerns about uncertainties have prompted overseas Vietnamese to hoard more money.

Also, since the US withdrew from TPP, remittances to Vietnam for investment projects in the country has stopped.

A report by Credit Suisse released earlier this year predicted that the ratio of remittances to GDP may drop by 0.4 percent as a result of Trump’s policy on tightening immigration. The policy would lead to the decrease of $1 billion in remittance this year, according to the report.

RELATED NEWS

Where does kieu hoi go to?

Real estate market heats up thanks to remittance flow

NCDT