Vietnam earns dollars from three main sources: Former governor

Vietnam is always suffering a large trade deficit of approximately 20 percent against exports every year and in 2010, the lowest trade gap was also up to 16.8 percent, according to Cao Sy Kiem, former governor of the State Bank of Vietnam (SBV).

Thus, foreign exchange earnings in the export‐import operations are always negative, about $20 billion, and $12 billion in 2010.

Meanwhile, fortunately, Vietnam always enjoys remittances, mainly US dollars sent home by workers. The balance from this source is always positive, about almost $10 billion. In 2010, the remittance was estimated at $8 billion.

Foreign investment flows into Vietnam, including non‐refundable aid (ODA) and direct investment (FDI) was estimated tens of billions of US dollars each year.

Thus, if separately calculating the amount of foreign currency revenues from export and import, the balance will be negative, but calculating the three sources of foreign currency flows to Vietnam, the balance will always be positive.

However, the weakness is that, for several years, Vietnam has published the balance of payments with errors at $6‐10 billion, and the question is where this amount goes.

According to some sources, then, this errored amount can flow abroad or in the form of smuggling. The government is clearly determined with this error.

Kiem acknowledged that the foreign currency management of Vietnam is quite loose, such as accepting payment in US dollars on the market. Therefore, the dollar was circulated in every place, maybe in overseas accounts, located at banks and the people.

State authorities do not know the specific numbers of dollars in circulation and therefore the dollars cannot be managed, Kiem said.

According to Kiem, the amount of US dollars in the population is estimated at about $15 ‐ 17 billion. Also according to the data of the State Bank, the figure is about $570 million. – Vietbiz24

Tags: Vietnam foreign currency market