Why are remittances to Vietnam reaching record highs?

Amid global turmoil, Asia's workforce is driving remittances to the country to a record $16 billion.

Remittances to Vietnam grew slowly during the Covid-19 period, even declining in 2022. However, this cash flow recovered strongly last year, reaching a record number in recent years.

Speaking to VnExpress , Mr. Dao Xuan Tuan, Director of the Foreign Exchange Management Department (State Bank), estimated that the amount of remittances flowing into the country in 2023 would reach about 16 billion USD, an increase of 32% over the previous year.

The locality receiving the largest amount of remittances continues to be Ho Chi Minh City with nearly 9.5 billion USD, accounting for nearly 60% of the whole country.

As an area with many Vietnamese living, studying and working abroad, Ho Chi Minh City last year recorded a remittance increase of more than 40% compared to last year. This is also the highest growth rate in the decade, partly due to the low base of 2022.

A leading remittance company in the South - Saigon Thuong Tin Commercial Bank Remittance Company ( Sacombank -SBR) - also said that it recorded outstanding growth in remittance turnover. In 2023, the company recorded a remittance turnover increase of more than 95% compared to 2022, the strongest increase in the past 5 years.

Looking at this positive development , experts say that after Covid-19, some countries have begun to loosen immigration restrictions, helping to increase the number of Vietnamese laborers exported, which is one of the reasons why remittances have increased sharply compared to last year.

Mr. Tran Kim Khoa, Chairman of Sacombank-SBR, said that in 2023, the total number of Vietnamese workers going abroad to work and study will increase by more than 158,000, an increase of more than 11% compared to 2022. "This is an important factor contributing to increasing the source of remittances sent to Vietnam," he said.

According to figures released by the Ministry of Foreign Affairs , there are currently 6 million Vietnamese living in 130 countries and territories, 80% of which are developed countries. In Ho Chi Minh City alone, there are about 2.9 million overseas Vietnamese living and working in other countries.

In the context of the global economic difficulties, the main driver of remittance growth in 2023 will come from the labor force in the Asian region. Meanwhile, remittances from Africa and the Americas will decrease or increase slightly.

The Asian region contributes more than half of the remittances flowing to Ho Chi Minh City and recorded a growth rate of over 140% compared to 2022. According to Mr. Nguyen Duc Lenh, Deputy Director of the State Bank of Ho Chi Minh City, Asia is a region with economic and political stability along with increasingly expanding economic relations and labor cooperation. Therefore, this will be the region that has an impact on remittance growth in the coming time.

In general, Mr. Tran Kim Khoa assessed the increasingly important role of the Asian region in remittances, including the three largest labor markets: Japan, South Korea and Taiwan. In 2023, when the US, Europe,... face high inflation and instability due to the impact of the Russia - Ukraine and Israel - Hamas wars, remittances to Vietnam will increase but at a slower rate than in the Asian region.

"In addition, despite the economic difficulties in many countries, overseas Vietnamese still save and increase remittances to support and help their relatives in the country stabilize their lives and develop their family economy. Banks and companies have also boldly invested in technology and improved service quality to attract more of this golden resource," Mr. Khoa shared.

The Deputy Director of the State Bank of Ho Chi Minh City assessed that remittances are one of the sources of supply that contributes to ensuring the relationship between foreign currency supply and demand, while effectively supporting monetary policy, exchange rates and the foreign exchange market. This is even more significant in the context of strong currencies fluctuating, inflation in some countries putting certain pressure on exchange rates and the relationship between exchange rates - interest rates and inflation.

The amount of remittances sent home from 1993 (the first year of remittance statistics) to 2023 reached over 200 billion USD, putting Vietnam in the top 10 countries in the world for receiving remittances.

Quynh Trang

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