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Remittances expected to rebound   2009-04-19 - VietNamNet/VNS

Foreign currency transactions at a VIBank branch in Ha Noi. Domestic commercial banks cut foreign currency deposit interest rates in the early months of this year when the demand for US dollar loans by businesses dropped.

Overseas remittances are likely to increase by the end of this year when the effects of global recession weaken, according to banking officials.

Global recession has led to increasing unemployment and falling consumption demand in Viet Nam.

The number of Vietnamese guest workers abroad who have to return home has also increased.

This has led to a fall in remittances sent home by overseas Vietnamese and guest workers in the first quarter of this year.

In the first three months of this year, remittances transferred via Sacombank (Sai Gon Thuong Tin Commercial Joint Stock Bank) reached US$120 million, a drop of 22 per cent compared with the same period last year.

Sacombank plans to pay remittances of up to $1 billion this year, equaling last year’s figure.

The Eastern Asia Commercial Joint Stock Bank (Dong A Bank) said the bank had received remittances of $258 million in the same period, while its plan for the entire 2009 was $1.2 billion.

A representative of the Dong A Bank’s Remittance Company said remittances would fall this year as a result of global recession, because Vietnamese residents abroad as well as Vietnamese guest workers were shouldering the burden of the crisis.

Unemployment and low incomes have forced people around the world to tighten their belts.

Other banking officials said two years ago when stock and real estate markets developed strongly, a large volume of remittances had been sent home to invest in these two areas.

Since the beginning of 2008, stock and property markets have experienced a slump, with many Vietnamese residents withdrawing their investment capital from these markets.

Remittances are likely to increase by late this year when the global economy recovers.

Remittances will then become more attractive because the US Federal Reserve system has announced the US dollar interest rate of 0.25 per cent, much lower than the interest rate in Vietnamese banks.

Domestic commercial banks cut foreign currency deposit interest rates in the early months of this year when the demand for US dollar loans by businesses dropped.

The highest interest rate for deposits in US dollars is 3.5 per cent a year.

As of April 13, this rate was being used by the Viet Nam ThuongTin Commercial Joint Stock Bank (VietBank).

"When the economy revives and grows, the investors, including Vietnamese residents, will send hoe remittances to buy real estate ad stocks," said Sacombank Director General Tran Xuan Huy.

The Committee for Overseas Vietnamese, said the volume of remittances sent to Viet Nam in 2008 was about $8 billion, an increase of $1.3 billion from the previous year.

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