Is Vietnam real estate suffering from a drop in overseas remittances?
Is Vietnam real estate suffering from a drop in overseas remittances?
The strengthening US dollar impacts inflows of much-needed kieu hoi
A buttress to Vietnam’s economy, “kieu hoi” or remittances by overseas workers have decreased last year, VietnamNet Bridge reported, citing figures from the State Bank of Vietnam’s Ho Chi Minh City branch.
The city received USD5 billion in overseas remittances last year. Since HCMC usually accounts for more than half of remittances to Vietnam, this means that Vietnam only received around USD10 billion in overseas remittances, compared with USD12.2 billion in 2015.
Real estate only drew 21.6 percent of remittances last year, compared with 52 percent in 2014, according to bank figures. In 2015, the sector attracted around 20 percent of kieu hoi or a share of USD2.5 billion.
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Around 70 percent of kieu hoi were funneled into businesses and production in 2015, according to Central Institute for Economic Management.
Experts chalk up the drop in overseas remittances to recent raises in the US Federal Reserve interest rates and the strengthening of the greenback relative to the dong. Around 60 percent of overseas remittances come from the US.
Low service fees and preferences for kieu hoi recipients could serve as stimuli to remittances, according to Tran Thi Mai Huong from the Hanoi National Economics University.
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Source: Property Report