Annually, remittances accounted for 6-8% of annual GDP in the period 2006-2017 in Vietnam, much higher than for other developing countries (which averaged about 1-2% of GDP), stated UNDP in its latest report.

Such flows contribute significantly to supporting the country’s economic development, increasing its foreign exchange reserves and balancing its current account, stated the report.

Out of total remittances into Vietnam, the US was the most significant source (55%), followed by nations such as Australia, Canada, France, Germany and South Korea. 

The largest sources were overseas Vietnamese and labor exports, with the former (mainly based in the United States, Canada, Germany and France) now accounting for a majority (80-90%) of remittances. 

Labor exports account for a small proportion (6-7%) of total remittances, but are increasing in step with sharp rises in labor exports to nations such as Japan, South Korea. Remittances into Vietnam are growing more steadily and the volume was four-fold higher than ODA volume (2016) and on a par with FDI (2017).

State Bank of Vietnam data revealed that to the end of 2016, Ho Chi Minh City’s inward remittances accounted for 50% of total remittances to Vietnam, of which 70% flowed into business and 20% into real estate. 

In ASEAN, remittances are an important part of the financing landscape of various countries. The Philippines is the largest recipient, with remittances totaling US$25.6 billion in 2015, almost double the volume (US$11 billion) of the second largest recipient, Vietnam, in 2015.

In the Philippines, remittances account for 17% of total finance while in Myanmar they account for 13% and in Vietnam 12%.

Given their strengthening flows, remittances can play an influential role in Vietnam’s development finance if, besides for consumption, they are channeled into productive investments and away from real estate or “storage” in foreign currencies or gold.