By Khai Minh
Posted Thursday, December 13, 2007 10:16 AM GMT+7
Towards the end of the year, every year, a huge amount of remittance from Viet Kieu (Overseas Vietnamese) flows into Vietnam and, for a number of years, this amount has been rising. Last year, in 2006, US$4.7 million in remittance passed through Vietnamese banks and money transfer service companies. This incoming cash flow is documented and it is more than five percent of the country’s gross domestic product (GDP). This year the figure is expected to reach US$5.5 billion. If so, overseas remittance flowing into Vietnam will be the second highest in Southeast Asia and fourth highest in Asia according to the US newspaper, the New York Times.
The amount of overseas remittance sent into Vietnam hit a new high in late November. When looking at company records it can be seen that in the first 11 months of 2007, US$840 million worth of overseas remittance passed through Sacomrex, an overseas remittance service connected to Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank). Sacomrex says it expects to have handled US$930 million in overseas remittance by the year’s end, a 41 percent increase over the same period last year. This would be a new high. Similarly, the Asia Commercial Joint Stock Bank (ACB) has processed more than 20 percent more overseas remittance than it did during the same period last year. Half of this came from the US. The Dong A Bank has its East Asia overseas remittance service company which handles overseas remittance and it received US$770 million worth of overseas remittance in the first 10 months of 2007, 20 percent more than in the same period of 2006. If the year’s figure climbs to US$850 million, that would be 40 percent more then in 2006.
By the end of November 2007, the Vietnam Import Export Commercial Joint Stock Bank (Eximbank) handled US$320 million in overseas remittance and the bank expects it to climb to US$400 million by the year’s end.
The head of the Overseas Remittance Department of Incombank, Ngo Xuan Hai, said that he expects that his bank this year will have handle about 50 percent more overseas remittance than it did last year, when Incombank handled 10 percent of the country’s total. The bank is predicting that it will be handling 15-16 percent of the remittance coming into Vietnam in 2007. Mr. Hai also said that for many years overseas remittance has been coming in from the US, the Republic of Korea, Australia and Chinese Taipei but this year, due to the growing number of Vietnamese laborers working in the Middle East, a significant amount is coming in from that region also.
Estimates are that overseas remittance in 2007 will be 157 times that which came in back in 1991, which would be an average growth of 37 percent per year. Over that period of time, more than US$29.4 billion in the form of overseas remittance has come into Vietnam.
There are two distinct groups of people who send remittance to Vietnam: 1) Vietnamese laborers working in places like the Republic of Korea, Chinese Taipei, Malaysia and the Middle East and 2) overseas Vietnamese (Viet Kieu - people of Vietnamese ancestry who have permanent residency or citizenship abroad). Nearly 1.3 million Viet Kieu live in the US.
Overseas remittance has increase in amount in part because procedures have been simplified and in part because more Vietnamese people are working abroad, said the deputy head of the Foreign Exchange Management Department under the State Bank of Vietnam, Nguyen Ngoc Lan. The State Bank of Vietnam has no idea how the remittance is used once it’s been handed over to the Vietnamese recipient but Mr. Lan said that he presumes that it gets spent in Vietnam.
More than US$29.4 billion in the form of overseas remittance has come into Vietnam from 1991-2007
Banks take their cut
As the number of banks grows, so also does competition, to a degree. Handling overseas remittance has been a wonderful way for banks to make money. To get more of it, many banks use a money transfer service and each bank has slightly different charges, plus at times promotions.
Sacombank very often does promotions to lure customers. Right now everyone who uses Western Union money transfer service at any of the 40 Sacombank branches that are located around the country will get a lucky draw ticket. One person will win the special prize, an LCD television worth VND20 million, there will be six first prize winners who will receive a digital camera, and then there are other prizes.
ACB also handles Western Union transfers and, if given the recipient’s address, they’ll bring the money right to the person’s home, within 24 hours in the city and 36-48 hours anywhere else. Dong A Bank uses Moneygram transfer service and they claim that money transmitted will be in the hands of the recipient within 10 minutes. And that’s cash, clean and simple. An Binh Commercial Joint Stock Bank (ABBank) is also on board with Western Union. They even welcome people who do not have an account at the bank. A fee is paid by the sender, no additional fee is required to collect the cash and the time for transferrence will only be five to seven minutes.
Since the latter part of October 2007, people outside of Vietnam can send money to Eximbank in Vietnam (if the amount is at least US$10,000).
Lately, Incombank installed new overseas remittance software that works with the bank’s INCAS system. Now money can be sent to Vietnam in just a few hours. The money is deposited into the recipients savings or ATM card accounts as soon as Incombank headquarters receives the overseas order. The recipient needs only to present his ID at any Incombank branch to receive the money. If the money that’s transferred in is directed to a person’s ATM account, it can be withdrawn at any Incombank ATM.
