Remittances to Ho Chi Minh City forecasted to hit record this year
|Remittances to HCM City increased 19 per cent in 2020|
|Remittances to Vietnam's Ho Chi Minh City at record $6.1 bln in 2020|
|Overseas remittances heating up for Tet holiday|
Vietnam expects rising remittances from overseas Vietnamese to help keep the currency stable, allowing the central bank to focus on supporting virus-hit businesses and boosting economic growth, according to a senior central bank official.
Nguyen Hoang Minh, deputy head of the State Bank of Vietnam in Ho Chi Minh City, said remittances to the city are forecast to reach about $6.5 billion this year, after rising 15% to a record $6.1 billion last year. The city, Vietnam’s economic hub, received about 50% of the country’s total remittance inflows in previous years.
“Remittances have surprisingly surged during the pandemic, and significantly helped us keep the dong stable,” Minh said in an interview. “Apart from rising remittances, increases in foreign direct investment and exports this year will also help ensure sufficient supply of foreign currency, facilitating our policies in helping businesses cope with impacts from the Covid-19 outbreak.”
An employee counts U.S. banknotes at a bank in Hanoi. Photo by VnExpress/Giang Huy.
The central bank said last month it will continue to pursue monetary policies that reduce borrowing costs for businesses and boost economic growth while keeping inflation in check. The government wants to make sure the country remains among the world’s fastest-growing economies, and expects 2021 growth to meet its goal of 6.5%, according to Bloomberg.
The dong traded at 23,058 per dollar as of 10:24 am in Hanoi, little changed from 23,060 yesterday, data from banks compiled by Bloomberg show. The dong gained about 0.3% last year, when it was among the most stable currencies in the region.
“Interest rates will probably be stable this year as there is not much room to cut policy rates while inflation is picking up,” Minh said. The central bank, which aims to balance growth and inflation, is pushing for more flexibility on loan-interest payments to help businesses struggling in the outbreak, according to Minh.
Remittances to Ho Chi Minh City at a record high of $6.1 billion in 2020
The total remittances to Ho Chi Minh City in 2020 increased 12 percent on-year to $6.1 billion, setting a new record despite the impact of the COVID-19 pandemic, Vietnam Investment Review reported.
This was shared by Nguyen Hoang Minh, deputy director of the State Bank of Vietnam's Ho Chi Minh City branch. This came as somewhat of a surprise because the figure was initially expected to be $5.5 billion. In the first seven months, remittances reached $3 billion only, down 1.2 percent on-year. Furthermore, the World Bank for the first time forecasted that the remittances in Vietnam would decrease in 2020.
The growth is doubly impressive in the context of the COVID-19 outbreak which has affected the incomes of overseas workers.
Remittance inflows soared in Ho Chi Minh City at the time leading up to the Lunar New Year, when Vietnamese people living abroad could not return home for the festival due to travel restrictions.
Normally, recipients prefer receiving foreign currency in cash, however, due to COVID-19, they are encouraged to receive Vietnamese currency to their via bank accounts.
Despite or due to the COVID-19 pandemic, remittances to Ho Chi Minh City soared last year. Photo: VIR
Almost all remittances came from the US, Australia, and Canada, which are home to the largest Vietnamese communities, as well as Japan, Taiwan, and South Korea which are the main labour export markets of Vietnam.
Historically, during the 2009 global financial crisis remittance inflows also soared on-year to Vietnam thanks to the increasing number of overseas Vietnamese and Vietnamese people working abroad.
Statistics from the State Committee on Overseas Vietnamese Affairs under the Ministry of Foreign Affairs shows that 5.3 million overseas Vietnamese are living in about 130 countries and territories, 80 percent of whom are in developed nations with a high level of GDP per capita such as the US, Australia, Canada, France, and Germany.
About 3,000 businesses run by overseas Vietnamese have been operating abroad, which also contributes to pushing up remittances to the country.
In addition, about 580,000 Vietnamese laborers are working abroad, also contributing to these inflows.
Vietnam's remittances from the U.S. made up 4 percent of the country's gross domestic product in 2016.
Overseas remittances to Ho Chi Minh city in the first seven months of 2017 reached USD 2.5 billion, representing an increase of 4.16% over ...
Vietnamese living abroad remitted around USD1.4 billion to HCM City in the first four months this year, 19.6% higher than last year’s same period.