Remittances tumble amid instability

07:16 | 15/05/2011

Overseas remittances into Vietnam saw a decline in the past months on the back of economic vulnerabilities.

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According to statistics from State Bank’s Ho Chi Minh City branch office, overseas remittances via the city’s commercial banks and economic organisations amounted to $367.6 million in April 2011, down 19.6 per cent compared to March.

The remittance flows to the city via its commercial banks reached $457.6 million before 2011’s Tet which fell in early February 2011, said a State Bank Ho Chi Minh City branch office representative.

However, the remittance figure in February slid 17.6 per cent against January, partly due to long Tet holidays. Over $4.15 billion worth of remittance flows was received by the city’s bank system in 2010.

World economic slumps, scores of Vietnamese export labourers’ returning home before schedule, such as 10,000 Vietnamese workers returning home from war-torn Libya in early 2011, were allegedly the core reasons behind the shortfall in overseas remittances.

Some banks had attributed the shortfall to banks’ falling dollar deposit rates which now cap at 3 per cent per year from 5-6 per cent in early year.

A senior banking expert, however, said falling remittance flow in the first quarter was a seasonal feature. He put forward the evidence that the money inflows in the fourth quarter of 2010 accounted for more than one-third of total over $8 billion inward remittances in 2010. Therefore, he assumed overseas remittances would surge in the second half of 2011.

Local banks, however, set a hike in their inward remittance revenue in 2011.

Sacombank chairman Dang Van Thanh said the bank posted $1.3 billion in overseas remittance revenue in 2010 and is expected to see the figure climbing to $1.5 billion in 2011.

Director Tran Van Trung at the East Asia Overseas Remittance Company said the firm set growth of 20 per cent for inward remittances in 2011 against 2010’s $1.2 billion.

The East Asia Overseas Remittance Company has joined hands with Money Gram to open the first East Asia-Money Gram transaction bureau in Vietnam.

“With over $8 billion overseas remittances in 2010, Vietnam emerges as a promising market in the remittance industry which sees a revenue of $400 billion per year globally,” said MoneyGram International’s president Pamela H. Patsley.

With nearly four million overseas Vietnamese residing in more than 90 countries and territories worldwide, Vietnam is reportedly one of 10 world’s leading countries in overseas remittance amounts, with an average annual growth of 10 per cent.

Inward remittances to Vietnam in 2011 are forecast to hike 6.2 per cent against 2010’s, according to a World Bank report.

Thuy Vinh

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