Vietnam among Top 10 Countries in Receiving Remittances

According to the Summary Report on Migration and Development of the World Bank, remittances sent to developing countries are expected to increase by 6.3 percent and reach US$410 billion this year, and this figure will exceed US$500 billion per year in 2016.

 

According to the official statistics, the countries receiving the largest remittances in 2013 are India (about US$71 billion), China (US$60 billion), the Philippines (US$26 billion), Mexico (US$22 billion), Nigeria (US$21 billion) and Egypt (US$20 billion). Other countries with high inflow of remittances include Pakistan, Bangladesh, Vietnam, and Ukraine.

 

India and China alone accounted for nearly one third of the total amount of remittances in developing countries this year. The amount of remittances to developing countries will increase in the medium term with an average annual growth of 9 percent, and will reach US$540 billion by 2016.

 

The report shows that total global remittances, including the remittances transferred to high-income countries, are estimated to reach US$540 billion this year and will reach a record US$707 billion in 2016. The figure represents the estimated change in the national classification of the World Bank Group, in which a number of countries receiving remittances such as Russia, Latvia, Lithuania, Uruguay and Paraguay, are no longer in the group of developing countries. In addition, the number of remittances can also change because of the definition of remittances by the International Monetary Fund, based on which some types of transfers are no longer considered remittances, affecting a number of large developing countries such as Brazil.

 

"The most recent numbers show the importance of remittances. For a small countries like Tajikistan, that number accounts for half of GDP. For Bangladesh, this number is a significant support for the fight against poverty. In terms of numbers, India is known as a top country of remittance transfer of the world with US$71 billion. For comparison, that number is triple the FDI of India in 2012. Remittances have a significant impact on helping re-create balance in the case of the weak capital flows, as when the U.S. Federal Reserve announced the limited reimbursement program to pump more money in the economy to ensure the liquidity. "And when the local currency is weakened by the impact of remittances as a stabilization mechanism," said Mr Kaushik Basu, Senior Vice-President and Chief Economist of the World Bank.

 

Countries with high remittances as compared to GDP in 2012 include the Republic of Tajikistan (48 percent), the Kyrgyz Republic (31 percent), Lesotho and Nepal (25 percent) and Moldova (24 percent).

 

The growth of remittances in some regions of the world is very strong; however, in some countries in Latin America and the Caribbean, the growth of the remittances declines due to the weakness of the U.S. economy.

 

The money transfer fees through the formal channels remain high and are hindering the use of remittances for the development purposes while the money transferors still prefers the informal channels to transfer the remittances to their home. The global transfer costs of remittances are 9 percent and this figure has not changed since 2012.

 

According to this summary report, although the cost of remittances transfer does not seem to change, the bank has started some additional charges on the amount of remittances. The fees can be up to 5 percent of remittance transactions. Several international banks also close the accounts of some money transfer companies due to their concerns about money laundering and terrorist financing.