According to global remittance data collected by the World Bank, in 2020, the number of international remittances to Vietnam was $17.2 billion instead of the initial prediction of $15.7 billion. Therefore the updated figures in 2020 increased by almost 3%, making Vietnam one of the top 10 receiving countries among the low and middle-income countries (LMICs).
In 2020 the international remittance transferred to Vietnam summed up to 5% of the country’s GDP. This helped Vietnam cement its position in the East Asia-Pacific as one of the top 10 countries with the highest proportion of remittances compared to GDP.
In the year 2021, the remittance flow to Vietnam is still strong and rising gradually. The Ho Chi Minh City branch of the State Bank of Vietnam (SBV) also noticed that international remittances to the city reached $2 billion only in the first four months, an 11% on-year growth. So it is safe to assume that in 2021, remittance inflow to Vietnam will not be lower than in 2020.
Experts believe that global growth will rebound further in 2021 and 2022. Additionally, experts expect remittance inflow to LMICs to increase by 2.6% in 2021 and 2.2% in 2022, reaching up to $553 billion and $565 billion, respectively. Director of Agribank’s Remittance and Payment Service Centre, Nguyen Quoc Hung, believes the volume of remittance inflow to Vietnam will benefit significantly from the seamless services provided by the increasing number of new-age payment platforms. In addition, these payment platforms create favourable conditions for Vietnamese workers and overseas Vietnamese who want to send money back home.
An upgraded remittance transferring infrastructure will add to the rising remittance flow to the country as well. Additionally, online transaction via digital channels has added convenience and affordability to the process of international remittance. As a result, the volume of global remittances coming into Vietnam through digital service providers and banks providing online services remain high.
Statista, a german data provider, estimated Vietnam’s remittance e-market to be at $22 million approximately in 2019. And they anticipate that the annual growth of the Vietnamese remittance e-market will reach 21.5% between 2020 to 2023, resulting in $47 million.
The World Bank also stated that in an ideal scenario, the complete remittance process would be digital. For example, if migrant workers receive their wages directly into a digital account, they could easily remit funds directly into a family member’s account back home. However, we also need to consider one more thing: for this to work, the employers would have to change their payment mode from cash-based to digital.
Mobile money implementations and the growing number of digital remittance service providers in Vietnam make international remittance more accessible to the public. In addition, Digital channels of remittances are safe and have successfully reduced the risk of money laundering and terrorism financing. Also, digital channels are cheaper and faster than any other traditional form of remittance.
When the pandemic hit globally, experts firmly believed the remittance flow would dip significantly. But to all our surprise, the remittance industry prevailed. It is only human to want to help our family and friends during their hour of need. This human nature assisted the remittance industry to survive as Vietnamese migrants kept sending money back home to their families. The funds sent to Vietnam did not just help countless families but also contributed to the national economy. With more migrants using digital services every day, we can expect a significant rise in remittance inflow to Vietnam in the coming times.
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