Vietnam remittances fall, may take hit from US border policy

Economists say overseas remittances to Vietnam have fallen in the past year and could take a larger hit in the future from tighter US immigration policies.

According to government figures, remittances to the Communist country from Vietnamese working in the US and other countries increased steadily over the past 20 years to a record USD 13.2 billion in 2015 before falling to USD 9 billion last year.

Economist Nguyen Minh Phong said today that last year's decline in remittances from the US mainly resulted from Vietnam cutting interest rates to about 0 per cent from 5 or 6 percent. The lower yields on bank savings offer less incentive for sending money back.
 

Nearly half of the 4.5 million Vietnamese living overseas reside in the US. They sent about 60 per cent of the total remittances home.

Credit Suisse said in a report released this week that tighter border controls imposed by the administration of President Donald Trump could reduce remittances equivalent to 0.4 per cent of Vietnam's GDP.

Such changes would reduce remittances to the Philippines by 0.2 per cent and to India by 0.1 per cent. "Vietnam and the Philippines face higher negative impact on GDP growth, given their relative high reliance on remittances to fund growth," the report said.

Many developing countries in Asia and elsewhere rely heavily on earnings from overseas workers or those who have migrated to wealthier countries.

Remittances from the US account for 4 per cent of Vietnam's GDP, its total economic activity, and 3.0 per cent of GDP in the Philippines, the report said.

It said property markets and retailing would be the most affected.

Tighter restrictions on immigration would mainly affect illegal immigrants and those with work visas, especially holders. They account for up to 38 per cent of all workers in the US from the Philippines, Vietnam and India.

Half of Indian overseas workers are employed in the Middle East, so restrictions would have relatively less impact.