HCMC – Incoming remittances to Vietnam would rise 10% year-on-year to some US$12.5 billion this year, the Foreign Exchange Management Department under the State Bank of Vietnam (SBV) announced at a press conference yesterday, December 28.
The figure is much lower than the World Bank’s (WB) forecast of US$18 billion.
A representative of the Foreign Exchange Management Department said the WB’s figure is just a forecast and often differs from SBV’s data.
“SBV’s figure is based on the official data of transactions through credit institutions, remittance companies and post offices,” he said.
“Despite the Covid-19 pandemic, remittances to Vietnam still grew steadily in 2020 and 2021. This is an important source for the country’s foreign currency market and reserves,” he added.
SBV deputy governor Dao Minh Tu said remittances were mainly sent to Vietnam through credit institutions. Of the balance, some 28% were sent through remittance companies and 2% through post offices.
HCMC leads the country in terms of incoming remittances, accounting for some 30% of the country’s total. Remittances to the city came mostly from the United States, Australia, Canada and European countries.
Remittances went mainly into manufacturing and trade. Vietnamese living abroad also sent money home to help their families during the Covid-19 pandemic.
According to the Migration and Development Brief released by KNOMAD and the World Bank (WB), remittance flows to low- and middle-income countries are expected to reach US$589 billion in 2021, a 7.3% increase over 2020. Remittances now stand more than threefold above official development assistance and, excluding China, more than 50% higher than foreign direct investment.
“In all the developing regions of the world, migrants stepped up their support to families back home, especially to countries affected by the spread of the Covid-19 Delta variant. Their ability to help was enabled by a welcome pickup in economic activity and employment in major migrant destination countries,” Dilip Ratha, Lead Economist, Migration and Remittances and Head of KNOMAD, explained.
In 2021, the top five remittance recipients in current US dollar terms were India, China, Mexico, the Philippines and Egypt.
The United States was the most significant source country for remittances, followed by the United Arab Emirates, Saudi Arabia, and Switzerland.
Remittances are expected to continue growing in 2022, but there are downside risks.
“The Covid-19 crisis is far from over and poses the most crucial downside risk to the outlook for global growth, employment, and remittance flows to low- and middle-income countries. The fiscal stimulus programs in major migrant destination countries cannot continue indefinitely,” Ratha said.
Moreover, the shift from cash to digital remittance channels, which was observed at the peak of the Covid-19 crisis in 2020, has likely run its course.
The KNOMAD head suggested that policymakers continue their efforts to keep remittances flowing by lowering the cost of remittances, increasing access to banking for migrants and remittance service providers, and making policy responses to the Covid-19 crisis (in terms of access to vaccines, healthcare, housing, and education) inclusive of migrants.