More Vietnamese abroad send money back to their homeland


By Kathy Chu, USA TODAY
HO CHI MINH CITY — The billions of dollars sent to this country from overseas each year fund new homes, expand businesses and support extended families.

These funds — called remittances — are a vital link between those who have left Vietnam and those left behind. And they’re becoming an increasingly popular way for Viet Kieu, or overseas Vietnamese, to invest in their homeland.

From 2001 through 2008, the annual amount remitted to Vietnam more than tripled, to $7.2 billion, about 8% of the country’s GDP, data from the World Bank and the International Monetary Fund show. Last year, however, remittances to Vietnam fell to an estimated $6.8 billion amid the global economic downturn.

Still, “We would expect that as the world economy recovers, and as the Vietnamese government promotes more (jobs) overseas, that remittances would go up,” says Daniel Mont, senior poverty specialist in Vietnam for the World Bank.

Overall, remittances to developing countries, including Vietnam, are expected to increase 6.2% this year and 7.1% in 2011, the World Bank says. For low- and middle-income countries — which received $335.8 billion in remittances in 2008 — these funds not only raise the standard of living, but help finance countries’ imports and plug their trade deficits, says Ahmad Ahsan, the World Bank’s lead economist for the East Asia and Pacific region.

Developing economies’ reliance on remittances is only increasing as a sluggish global economy curtails other sources of funding. Already, “In many poor countries, remittance flows have become significantly higher than foreign investment flows,” says Ahsan.

As remittances balloon, mainstream financial providers are jumping in to capture the business. In the U.S., Wells Fargo now offers this service to 15 countries in Asia and Latin America. The bank has a footprint in some of the most diverse markets in America, so it makes sense to offer customers the ability to send money back to their homelands, says Daniel Ayala, Wells Fargo’s head of global remittance services. Among the countries the bank serves, the average amount remitted per transaction is highest in India, at $1,662, followed by Vietnam, at $1,369.

What’s unique about Vietnam, says Ayala, is that money sent from overseas is often used to support extended family — rather than just immediate family — as well as to fund businesses. “There’s a high level of entrepreneurial support by Vietnamese nationals to their families,” he says.

In recent years, a growing number of Viet Kieu are also sending money back for charitable causes, including those related to health care and education, says Mark Sidel, a law professor at the University of Iowa who has studied these flows. The funds come predominantly from the Vietnamese diaspora living in the U.S., but also from countries such as Australia, France and Canada.

“Remittances and investment have helped to provide several billion in inflows to Vietnam each year” as Viet Kieu increasingly reconnect with their homeland, says Sidel. “There’s no reason to think it won’t grow.”

Source:  USAToday


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