VietNamNet Bridge – Recipients of overseas remittance are buying land and houses instead of depositing money in banks or keeping the cash, as they believe that real estate prices will climb due to new government policies.


Nguyen Thi Ngoc of Nam Dinh City, for example, plans to buy a land plot with money her husband, a worker in Japan, has sent to her.

“The land price in Nam Dinh is really reasonable,” Ngoc said. “Previously, you could not think of buying land if you did not have VND500 million in your pocket at least. But now you can buy a land plot with VND300 million,” she said.

Like Ngoc, many other Vietnamese, who have idle money, are seeking to buy land and houses instead of depositing money at banks, as deposit interest rates are on the decrease.

Kieu hoi, or overseas remittance, is the money sent by overseas Vietnamese to their relatives in Vietnam. The money is given to their relatives in Vietnam to help cover their families’ basic needs or make investments.

Kieu hoi has been counted by government agencies, because this is considered an important source of foreign currency, and an important statistical figure for the government to make decisions to regulate the national economy.

There is no official report about how kieu hoi is used, but economists believe that a high percentage is invested in the real estate market.

Unofficial statistics from foreign financial institutions said 52 percent of the kieu hoi in 2011, or $4.7 billion, was invested into the real estate market.

A representative of the Dat Xanh real estate trading floor noted that the market has become busier following a series of government policies aiming to stimulate demand.

He noted that it is a good time for buyers and sellers. It is the time when buyers receive money from kieu hoi to buy valuable assets, and prices are “very reasonable” thanks to an abundant supply.

As for sellers, they want to sell more to ease inventory and get money to pay debts.

The latest report from VNREA, the Vietnam Real Estate Association, showed that many apartment projects are to be launched into the market, and the supply is at a high level.

In the high-end market segment, Vinhomes Royal City, Mulberry Lane, Ho Guom Plaza and New Skyline have caught the attention of the public.

In the mid-tier market segment, Van Phu Victoria, Spark Nam Cuong, and HP Landmark Hai Phat are popular choices as construction has been completed.

Le Minh Dung from the BIM Group noted that Vietnam’s real estate has become more competitive than in other regional countries, and therefore, investors feel secure about the market.


Survey charts overseas remittances

Most overseas remittances to Vietnam have been used for meeting daily expenses and for purchasing gold, according to the Central Institute for Economic Management (CIEM).

A study by CIEM and Western Union, released on December 17, to review overseas remittances to Vietnam and their contribution to the country's socio-economic development showed that more than 35 percent of these remittances were used for daily expenses; 16 percent for business purposes; and the remainder was spent on casual shopping, debts, fees for healthcare services, and so on.

"More than 16 percent of overseas remittances was poured into production, and businesses have played the role of a life vest for investors who had difficulty accessing bank loans due to strict regulations," it added.

In terms of investment, one-third of the surveyed remittance recipients put the money into savings accounts, 27-30 percent invested in production, 20 percent invested in gold trading, and 16-17 percent invested in the real estate market.

Statistics reported by the State Bank of Vietnam's HCM City branch told a different tale, revealing that overseas remittances were mostly invested in production and the property sector over the past three years.

Vo Tri Thanh, CIEM's deputy director, said this year that Vietnam ranked amongst the world's top recipients of overseas remittances.

The total remittances to the homeland so far this year have been estimated at 11-12 billion USD and will likely remain unchanged for the next two years, Thanh remarked.

The total remittance value was equivalent to 8 percent of the country's GDP.

In the period 1991-2013, the annual average growth rate of overseas remittances to Vietnam was 38.6 percent, with a total value of 80.3 billion USD.

Some 57 percent of Vietnam's remittances came from overseas Vietnamese living in the United States, followed by those residing in Canada (8.4 percent), Germany (6 percent), Cambodia (4 percent), and France (4 percent).

He added that the remittances have had a positive effect on the economy as they increase the country's foreign currency reserves.

In addition, remittances invested in stocks and the property sector have been on the decline, which is a positive sign for remittance flows.

In the period 2007-13, overseas remittances were the second-largest source of income for Vietnam after foreign direct investment and a higher than disbursed ODA.

In the period 2004-06, remittances formed the largest source of capital inflow into Vietnam.

According to the Bureau of Consular Affairs, last year, more than five million Vietnamese were living and studying in 104 countries and territories.

The number of Vietnamese labourers in foreign countries was expected to rapidly increase in the coming period after Vietnam integrated with the world and the region.

The CIEM-Western Union study also showed that 25 percent of remittances had been transferred through informal channels.-VNA

D. Anh