70% of overseas remittance were poured into Vietnam
Up to nearly 70% of overseas remittance were poured into Vietnamese production and business in the first nine months of this year, instead of real estate and securities.
In recent time the real estate and securities markets attracted a large amount of investment from overseas remittances. In 2011, the property sector lured the most overseas remittances, with USD4.7 billion, accounting for 52% of the total amount.
In the period between 2009 and 2010, when Vietnam’s inflation rate was at 17% to 19% per year, the State Bank of Vietnam (SBV) had to raise deposit interest rates to attract more capital. This helped the country to receive more overseas remittances during this phase.
However, currently, the frozen real estate and security markets, along with a sharp drop in deposit interest rates have discouraged overseas remittances.
Investment from remittances in production and business is considered to be more effective and pulls in more money from abroad than the real estate and securities sectors.
Nguyen Hoang Minh, Deputy Director of the State Bank of Vietnam’s branch in HCM City, said that investors now lack confidence in the property market in Vietnam. However, this type of investment has continued to pour into production and business activities, also partially helping to ease operational difficulties for enterprises and households.
According to Minh, billions of USD of overseas remittances, which would have been invested into the production and business activities is considered a “golden” source of capital at this time, particularly when local companies are struggling.
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