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Vietnam
This Week in AsiaOpinion
Ivan V. Small
Ivan V. Small

Asian Angle | How Vietnamese-Americans and other ‘Viet Kieu’ fuel capitalist dreams with remittances

  • International remittances to Vietnam are estimated at US$15 billion annually, making it one of the top 10 recipient countries in the world
  • This money from Viet Kieu – an informal term for overseas Vietnamese – pays for much but also provokes resentment

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A Vietnamese investor watches share price activity on a securities trading floor in Hanoi. Photo: AFP
Ivan V. Small
The catalyst for capitalist growth in Vietnam – often dubbed Asia’s next tiger economy – is frequently ascribed to market reforms starting in 1986 and subsequent foreign investment flows. But diaspora capital sent from abroad ­– from those who left the country as refugees and migrants after the end of the war in 1975 – has also contributed significantly to the country’s economic growth over the past 30 years.

International remittances to Vietnam are estimated at US$15 billion annually, making it one of the top 10 destinations in the world for money sent back by diaspora populations. About 7 to 8 per cent of households in Vietnam receive remittances from abroad. In fact, international remittance flows are higher than overseas development assistance, of which Vietnam is also a top 10 recipient.

Many Vietnamese left the country as refugees and migrants after the end of the war in 1975. Photo: AFP
Many Vietnamese left the country as refugees and migrants after the end of the war in 1975. Photo: AFP

Over the years, remittances from the diaspora have taken on different forms. In the 1980s, they largely came in the form of material goods sent from abroad that could be exchanged on the black market in an embargoed, socialist command economy starkly characterised by scarcity. Since the mid-1990s, there has increasingly been a shift to more formal transfer channels such as banks, Western Union and MoneyGram – though informal channels, including honour-based hawala-style transfers and courier services, continue to exist.

However, other categories of financial returns from the diaspora have also grown. These include collective remittances in the form of charitable, religious, or humanitarian development donations. In addition, the significant investment remittances from Vietnamese returning to start businesses were an important catalyst to early economic growth. Finally, there are “social remittances”, also known as “grey matter”, which are the ideas and knowledge that the diaspora bring home with them from elsewhere.

These days, there are increasing numbers of Viet Kieu – an informal term for overseas Vietnamese – returning to the country to work, live and retire – more than half a million each year, according to government estimates. There are also shorter-term diaspora returns, especially during Tet – the Lunar New Year – which are almost always accompanied by sums of money and other gifts with multiplier effects.
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