According to the World Bank (PDF), officially recorded remittances to developing countries were estimated at $401 billion in 2012, and remain a key resource flow far exceeding official development assistance as well as private debt and portfolio equity. Growth in remittances to developing countries decelerated to 5.3 percent in 2012, but is expected to accelerate to 8.8 percent during 2013-15. Vietnam ranks 9th in the world in remittances, which amounted to an increase of $1 billion over the previous year and an impressive 7.1% of GDP ($141 billion).
Pham Binh Minh, Vietnam’s Foreign Minister, noted earlier this year that “The amount of remittances has accounted for 60-70 percent of foreign investment in Vietnam since 1991 and this is the real source of money contributing effectively to the national economic development, to the stabilization of the exchange rate and the increase of foreign exchange reserves.” In addition to t he 4 million overseas Vietnamese in the U.S., Canada, Australia, France and other countries, there are also 400,000 Vietnamese workers in Japan, Korea, Malaysia, Taiwan, the Middle East, etc. One key difference is that 30% of the remittances were sold to banks in 2012 vs. 14% in 2011. The reason is the policies that the Vietnam State Bank implemented to maintain a stable exchange rate, thereby closing the gap between commercial banks and the black market. So who receives this money and what is it used for? It goes disproportionately to well-off family members living in urban areas, particularly Ho Chi Minh City (HCMC). Last year, about $4.1 billion, or 41%, went to HCMC. Of that amount, 70% was used for production and business, 23% for real estate purchase and 6% for assisting relatives. Ironically, the $10 billion that was transferred to Vietnam last year is one of the silver linings in the waves of emigration that occurred during and after the American War. MAA