Vietnam’s inbound remittance has been rapidly increasing since the beginning of this week and is expected to rocket next week, when the current lunar year reaches its final days and Vietnamese are ready to celebrate Tet (Lunar New Year).
A director of a Vietnamese remittance company, which is managed by a local joint-stock bank, revealed that the amount of overseas money wired via the firm has hit US$50 million in January, up $8 million compared to its monthly average in 2015.
A hike in inward remittances has been recorded this month as its ending, when overseas workers receive their salary, also happens to be near the end of the current lunar year, the director explained.
January 29 coincides with the 20th day of the final month of the lunar year. Vietnamese people are on a shopping spree to prepare for the Lunar New Year, which falls on February 8 and is considered the biggest celebration in the country.
Overseas remittances are expected to soar next week, Tran Van Trung, director of DongA Money Transfer, a subsidiary of DongA Commercial Joint Stock Bank, said, adding that money transfers have been on the increase since the beginning of this week, forcing the firm to push its personnel to meet clients’ demand.
According to Nguyen Hoang Minh, deputy director of the Ho Chi Minh City branch of the State Bank of Vietnam, said that inbound remittances often surge between the final quarter of a year and the first month of the following.
Remittances are mainly wired from the United States, Australia and Canada, among which 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.
Over 70.8 percent of Ho Chi Minh City’s inward remittances are directed to local business activities, 21.6 percent poured into real estate, and seven percent given to families and relatives, according to the southern branch of the State Bank.
Overseas money is being channeled into realty as the industry has warmed up and ranked second in attracting foreign direct investment in Vietnam, Ngo Tri Long, an economist, said.
Another expert, Nguyen Tri Hieu, backed the opinion by saying that overseas Vietnamese as well as foreigners are encouraged to purchase houses in Vietnam, as related policies and requirements have been loosened.
There has been concern over the possibility that the amount of overseas cash sent to Vietnam will be affected because U.S. deposit interest rates were reduced to zero percent in late 2015.
However, many remittance firms stated that their business has not been heavily affected by the reduction.
The World Bank said in its latest report that Vietnam’s inward remittance in 2015 was worth $12.25 billion while that of 2014 was $12 billion.
Many banks in Vietnam are trying 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 people, businessmen and workers.