2017’s overseas remittances inflow could decelerate

Vietnam could very well sit back and relax, with total overseas remittance inflows estimated at around $13 billion for 2016, higher than the earlier projection of $11-12 billion – but the stream could slow in 2017.

While the official record of overseas remittances streaming into Vietnam for 2016 has not been released, according to Western Union - a money transfer agent popular among inshore and offshore Vietnamese, remittances to the country may have grown slightly, given the increase in outward migration in the previous year.

“We do not have the data to substantiate the increase. World Bank data, however, indicates that remittances in 2015 to Vietnam equal $13.2 billion, and from 2000 to 2015, remittances to Vietnam have increased at a compound annual growth rate of 16 per cent,” wrote Western Union in an email interview with VIR.

The American money transfer firm, citing statistics from the Department of Overseas Labour, noted that in 2016, 126,296 Vietnamese went to work abroad. This exceeded the projection by 26.69 per cent and was a  108.89 per cent growth on-year.

Outward immigrations in 2015 reached 115,000, up from roughly 106,000 in 2014, Western Union said.

BIDV deputy general director Can Van Luc, meanwhile, noted that Vietnam could be expecting a total of roughly $13 billion in overseas remittances in 2016, up $1 billlion from 2015, based on his own team’s data. The prediction was $11-12 billion at the beginning of the year. 

Over the past 20 years, the flow of overseas funds has increased some 100-fold, from $140 million in 1993 to $11 billion in 2013, and approximately $13.2 billion in 2015 from both official and unofficial channels. During the period of 2002-2015, remittance was said to be equivalent to approximately 6 per cent of Vietnam’s annual GDP.

“Ho Chi Minh City receives the highest amount of overseas remittances, and remittances are mostly received from the US,” said a Western Union representative. According to local statistics, the southern city has witnessed some 10-15 per cent on-year growth in remittances received from overseas in recent years.

According to Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s Ho Chi Minh City Branch, by the end of 2016, the total amount of overseas remittance recorded in Ho Chi Minh City added up to $5 billion, a drop of some $500 million compared to the end of 2015.

The figure given by Minh for the city accounted for roughly 57 per cent of the nation’s remittances in 2016; in the past, it usually represented 45-47 per cent of national overseas remittances.

In December alone, Minh said that foreign transfers to Ho Chi Minh City reached $700 million, up $300 million compared to the 11 month average recorded previously.  

From year to year, overseas remittances normally increase in the last quarter of the year, accounting for over 40 per cent of the annual remittances.

Although the country could actually enjoy a slight growth in remittances for 2016, Western Union warned of a possible slowdown in 2017, given global economic and political conditions.

These conditions include the new US political regime, a strengthened US dollar, and higher US interest rates that may keep money inside the US – or revert foreign investment flows back to the US – that could have otherwise streamed into Vietnam as remittances.

By Trang Nguyen