Remittances Give a Major Boost to Vietnam’s Growing Economy
So what are remittances anyway? A remittance is when a foreign worker transfers money to an individual, usually a relative, in their home country. They compete with international aid as one of the largest sources of external finance for developing countries.
Vietnam is quickly becoming known as a tech haven for entrepreneurial millennials, and perhaps as a result, Vietnamese living overseas are seeing more value in investing in their country’s development through remittances. Ho Chi Minh City is the largest city in Vietnam, and has benefitted greatly from overseas contributions. Over the last five years, remittances to this metropolis have increased roughly 10-12% on average.
The city’s banks have received more than $20 billion in remittances over the last 30 years, accounting for more than 60% of the country’s total. The majority of the money went to production and businesses, another strong sign that the country’s tech scene is thriving. Ho Chi Minh City currently has 2,500 businesses with a combined investment of nearly $1.7 billion and 117 projects worth $275 million set up by remitted funds.
Remittances Make Real Estate Market Boom
Realty is another market that’s booming in Vietnam, and 21.6% of Ho Chi Minh City’s inward remittances have gone towards real estate. Vietnamese realty now ranks second in attracting foreign direct investment. And related policies and requirements have been loosened to help encourage foreigners and Vietnamese overseas to purchase real estate in Vietnam.
As Vietnam looks to develop tech parks comparative to Silicon Valley, remittances are an integral piece of the country’s future economic growth. They are mainly wired from the United States, Australia and Canada. In 2015, remittances to Vietnam topped $12.24 billion, up from $6.18 billion in 2007, accounting for 6.4% of Vietnam’s GDP.
The U.S. is the biggest sender of the money with about $7 billion in total in 2015, said Tran Thi Tuyet Mai, general director of VietinBank Money Transfer. Many banks in Vietnam are attempting to increase their inbound remittance flow by expanding their service to non-traditional markets, namely Russia and Taiwan, where there is a considerable number of Vietnamese businessmen and workers.
So, stay tuned!