A VPBank employee counts US dollars. More than one-third of overseas remittances are used for daily expenses in Viet Nam. — VNS Photo Truong Vi

HA NOI (VNS) — Most overseas remittances to Viet Nam have been used for meeting daily expenses and for purchasing gold, according to the Central Institute for Economic Management (CIEM).

A study by CIEM and Western Union, released on Wednesday, to review overseas remittances to Viet Nam and their contribution to the country's socio-economic development showed that more than 35 per cent of these remittances were used for daily expenses; 16 per cent for business purposes; and the remainder was spent on casual shopping, debts, fees for healthcare services, and so on.

"More than 16 per cent of overseas remittances was poured into production, and businesses have played the role of a life vest for investors who had difficulty accessing bank loans due to strict regulations," it added.

In terms of investment, one-third of the surveyed remittance recipients put the money into savings accounts, 27-30 per cent invested in production, 20 per cent invested in gold trading, and 16-17 per cent invested in the real estate market.

Statistics reported by the State Bank of Viet Nam's HCM City branch told a different tale, revealing that overseas remittances were mostly invested in production and the property sector over the past three years.

Vo Tri Thanh, CIEM's deputy director, said this year that Viet Nam ranked amongst the world's top recipients of overseas remittances.

The total remittances to the homeland so far this year have been estimated at US$11-12 billion and will likely remain unchanged for the next two years, Thanh remarked.

The total remittance value was equivalent to 8 per cent of the country's GDP.

In the period 1991-2013, the annual average growth rate of overseas remittances to Viet Nam was 38.6 per cent, with a total value of $80.3 billion.

Some 57 per cent of Viet Nam's remittances came from overseas Vietnamese living in the United States, followed by those residing in Canada (8.4 per cent), Germany (6 per cent), Cambodia (4 per cent), and France (4 per cent).

He added that the remittances have had a positive effect on the economy as they increase the country's foreign currency reserves.

In addition, remittances invested in stocks and the property sector have been on the decline, which is a positive sign for remittance flows.

In the period 2007-13, overseas remittances were the second-largest source of income for Viet Nam after foreign direct investment and a higher than disbursed ODA.

In the period 2004-06, remittances formed the largest source of capital inflow into Viet Nam.

According to the Bureau of Consular Affairs, last year, more than five million Vietnamese were living and studying in 104 countries and territories.

The number of Vietnamese labourers in foreign countries was expected to rapidly increase in the coming period after Viet Nam integrated with the world and the region.

The CIEM-Western Union study also showed that 25 per cent of remittances had been transferred through informal channels. — VNS