Change remittances policy: experts

Monday, Oct 03, 2016 09:00

Viet Nam needs more comprehensive policies to direct remittance to production and business, experts said at a conference late last week. — Photo
HA NOI (Biz Hub) — Viet Nam needs more comprehensive policies to direct remittance to production and business, experts said at a conference late last week.

At a conference on the relationship between remittance and Vietnamese investment held in Ha Noi, head of the National Economics University's Investment Faculty Pham Van Hung said that remittance is such an important source that almost every country worldwide tries to form policies to lure.

The remittance source directly supplemented capital for investment to develop production and business, contributing to increasing aggregate demands and boosting consumption, Hung said.

Chairman of the Viet Nam Association of Foreign Investment Enterprises Nguyen Mai said that overseas Vietnamese accounted for roughly 5 per cent of the country's total population. In fact, Viet Nam is listed among countries with the greatest quantity of remittance worldwide.

Statistics show that Viet Nam received roughly US$92 billion of remittance in 1991-2014, excluding roughly $10 billion of capital that Viet kieu (overseas Vietnamese) invested in the country through foreign direct investment (FDI). The total remittance was nearly equal to the total FDI to the country during the period.

However, experts said despite the large amount of the remittance, its contribution to the country's development was not as much as that of the FDI capital source. In other words, the FDI capital source effects development more profoundly than remittance.

Recent World Bank research shows that more than 50 per cent of the remittance to Viet Nam is used for consumption or debt payment. The quantity of remittance funds invested in production and business remains limited.

Statistics from the Central Institute for Economic Management's survery of the past 3-5 years showed that up to 30 per cent of remittance was deposited at banks; 20 per cent was used to buy gold; more than 16 per cent was invested in real estate; 30 per cent was invested in production and business; and 5-7 per cent was used for consumption. Only a small portion of remittance was indirectly invested in the stock market.

To direct more remittance toward investing into production and business, Mai recommended that policies should make remittance easier.

Besides creating favourable conditions for Viet kieu by allowing them to trade and invest in Viet Nam more freely, he said the country should also make it easier for Vietnamese people to study, work and reside abroad, which he believes will create an important human outside resource to help the country develop.

Hung suggested that Viet Nam take more policies to lure and utilize remittance more reasonably and sustainably.

In fact, the Government has taken drastic measures to improve business climate for the past few years, however, ministries and agencies as well as municipal and provincial authorities are still striving to implement these changes more effectively.

Viet Nam also needed to build up confidence and create motivations for Viet kieu through policies that encourage and support investment, Hung said, adding that the Government should set up production supporting funds for small-sized enterprises from the remittance source.

Besides, it was also necessary to map out strategies to attract talented persons to come back home and to professionalise labour exports, Hung said. — VNS

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