Impact of remittances on the households expenditure structure in vietnam

UNIVERSITY OF ECONOMICS
HO CHI MINH CITY
VIETNAM

INSTITUTE OF SOCIAL STUDIES
THE HAGUE
THE NETHERLANDS

VIETNAM - NETHERLANDS
PROGRAMME FOR M.A. IN DEVELOPMENT ECONOMICS

IMPACT OF REMITTANCES ON THE HOUSEHOLD’S
EXPENDITURE STRUCTURE IN VIETNAM

BY

LE THI NHU AN

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

HO CHI MINH CITY, DECEMBER, 2015
HO CHI MINH CITY
UNIVERSITY OF ECONOMICS
VIETNAM


THE HAGUE
THE NETHERLANDS

INSTITUTE OF SOCIAL STUDIES

VIETNAM - NETHERLANDS
PROGRAMME FOR M.A. IN DEVELOPMENT ECONOMICS

IMPACT OF REMITTANCES ON THE HOUSEHOLD’S
EXPENDITURE STRUCTURE IN VIETNAM
A thesis submitted in partial fulfilment of the requirements for the degree of
MASTER OF ARTS IN DEVELOPMENT ECONOMICS

By

LE THI NHU AN

Academic Supervisor:
Dr. Nguyen Ngoc Thuy
HO CHI MINH CITY, DECEMBER, 2015


ABSTRACT
Since the Vietnamese economic reform called “Doi Moi” in 1986, Vietnam has
witnessed a blooming in economy as well as the huge remittances flow from the
internal and external migrants. Many researches choose the remittances behavior for
their study. Learning from the way people send back their income and the way people
in the homeland use this source of financial support is not only support the valuable
theory about remittances, but also bring out a practical experiment for one of the
developing economy, Vietnam.
Using the VHLSS 2012 data, this study explore the relationship between
remittances and the six categories of household expenditure. These categories are food
product, non-food (consider for the consumer goods), medical services, education
payment, housing facilities payment, durable goods. The method using is Tobit
regression for the education factor, and OLS for the other. Our results show that

overall, remittances have statistically significantly impact for food, housing, durable
and the medical expenditure. Meanwhile, consumption of remittance recipient
households is not different from non-recipient households.

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TABLE OF CONTENT
CHAPER 1: INTRODUCTION------------------------------------------1.1 The problem statement -------------------------------------------------------------1.2 Research objective -------------------------------------------------------------------1.3 Thesis structure -----------------------------------------------------------------------1.4 Scope of supply -----------------------------------------------------------------------

CHAPTER 2: LITERATURE REVIEW-------------------------------2.1

Household utility and expenditure theory -----------------------------------------

2.2

Review of empirical studies -------------------------------------------------------- International studies --------------------------------------------------------------- Related studies in Vietnam -------------------------------------------------------

CHAPTER 3: PATTERNS OF MIGRATION AND REMITTANCE
FLOWS IN VIETNAM --------------------------------------------------3.1

Overview of Vietnamese remittances ---------------------------------------------

3.2

International remittances -----------------------------------------------------------

3.3

Internal remittances -----------------------------------------------------------------

CHAPTER 4: RESEARCH METHODOLOGY--------------------4.1

Analytical framework ---------------------------------------------------------------

4.2

Econometric model ------------------------------------------------------------------

4.3

Description of variables ------------------------------------------------------------

4.4

Data sources --------------------------------------------------------------------------

CHAPTER 5: EMPIRICAL RESULTS ------------------------------5.1

Statistical result from VHLSS data -----------------------------------------------

5.2

Estimation results --------------------------------------------------------------------

5.3

Interpretation of the results. --------------------------------------------------------

CHAPTER 6: CONCLUSION & POLICIES IMPLICATIONS - Page 4

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LIST OF TABLES AND FIGURES
1. List of figures
Figure 1: Top ten remittances countries -----------------------------------------2. List of tables:
Table 1: Possible Positive and Negative Impacts of Remittances ------------Table 2: Ratio of immigration and migration in 1999 and 2009 -------------Table 3: Remittances and household expenditure ------------------------------Table 4: Details of dependent variables -----------------------------------------Table 5: Dependent variables -----------------------------------------------------Table 6: Independent variables ---------------------------------------------------Table 7: Number of recipient household -----------------------------------------Table 8: Sources of remittances ---------------------------------------------------Table 9: Non-parametric analysis -------------------------------------------------Table 10: Impact of some household characteristic on the total expenditure
-----------------------------------------------------------------------------------------Table 11: Preliminary regression model of remittances impact
variables ------------------------------------------------------------------------------Table 12: Regression results --------------------------------------------------------

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CHAPTER 1: INTRODUCTION
1.1 THE PROBLEM STATEMENT
Nowadays, with the explosion of economic transaction between country and
region, the numbers of people go to another place different from the birthplace for
earning the living has been dramatically increased. This migration human resource
flow certainly leads to one of the most important monetary flow- remittance.
Remittances are the money and goods that called internal remittance if migrants living
in the city bring back a part of their income to their families in rural area, and external
remittance if migrants living abroad send to their families in the mother countries.
Whether these funds come from internal or external, they can involve a change
in consumption patterns of the migrants' households back home. Remittances are one
of two sources (along with inflows of direct investment FDI) shown in the balance of
international payments as funds transfers (net), and represent for more than 10 percent
of gross domestic product.
According to World Bank statistic represented on April 2015, the total
remittances flow in all developing countries over the world was 351 billion USD in

2011, reach 436 billion USD in 2014. During these period (2011-2014), all developing
regions except for regions in Europe and central Asia- due to the Russia weak economy
status and the depreciation of rupee, have been recorded positive growth on the
remittance flow. Early this year, 2015, economics have expected the total remittance
flow in developing countries will have a moderate increase to 440$ billion as the result
of the strengthening US dollar and tightening immigration policy. Remittance flows are
expected to recover in 2016 to reach $479 billion by 2017, in line with the more
positive global economic outlook. For both estimation of remittance from developing
and developed countries, the total remittances transfer will reach to

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586$ billion in 2015 and 636$ billion in 2016, according to the report of World Bank.
Also, according to this report, five largest destinations for migrant are as follow:
United State, Saudi Arabia, Germany, Russia and the United Arab Emirate.
Remittances nowadays play an important role and increase significantly during
recent decades. In developing countries, remittances is not only the source of income,
it is also has a more important role than foreign direct investment. Remittances are
associated with the significant development impacts. At the macro point, remittance
has several impacts on the financial system of country and the economy. They are
considered one of the sources of national income, foreign currency exchange together
with the FDI. They have a dominant impact on providing financial support on the
remittances recipient. Orozco, et.al 2005 have made an empirical study and lead to the
conclusion that, remittances have lift people out of the poverty and tend to have more
savings than those who not receive remittances. One side of remittances impact is for
the global financial crisis. During the recession, remittances to have positive impact on
economy, unlike the capital flows or FDI, tends to fall during the downturn period.
Another saying, remittances are much more stable than many kinds of financial flow.
The explanation for this stability is that, remittances are migrant-to-family monetary

support flow, targeted to help their family- recipient remittances household have a
better life.
At the household level, remittances lead to a higher income that recipient can
consume, save or invest. Secondly, they help diversify the sources of income
depending on the usage of remittances. For the developing countries, they are one of
the important sources of income for necessary need such as consumption goods, health
care, education, ect and reduce poverty. With the up-level households, they can use
remittance as a source of capital for small businesses and entrepreneurial activities.
Thirdly, at the micro level, have important implications and financial stability,
especially for the international remittance. Especially during hard time or in recession

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period, migrant tend to send more and more remittances to support their family and
friends. Transparently, remittances directly help to reduce the poverty, increase the
welfare of the recipient household. Remittances are also used to settle small business,
create job for many people.
The important question is whether the remittances impact on the structure of
expenditure of each recipient household or not? If the answer is yes then remittance
promotes or inhibits the expenditure and how it affects to consumption section.
Studying this impact of remittance flows on recipient households has important
implications. Understanding the impact of remittance flows to expenditure will help
raise awareness about the positive as well as the negative that we can promote
appropriate policy.
1.2 RESEARCH OBJECTIVES
The major objective of this study is to identify the impacts of remittances on the
expenditure structure of Vietnamese recipient households. The study also aims at
offering policy recommendations regarding foreign employment and an effective use
of remittances.

Base on the question, we will focus on the two hypotheses tested by the OLS
and Tobit regression
-

Remittances significant improve the likelihood of spending on the six

categories of household expenditure
-

The impact of remittances on the household spending after adding the

control variables.

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1.3 SCOPE OF STUDY
As introduced above, this thesis mainly focus on the household expenditure
structure affected by the remittances, which can be increase or decrease, or even
unchanged according to the fluctuation of remittances receipt. To examine at the
household level, we use the VHLSS – Vietnam Household Living Standard Survey
conducted by The General Statistics Office (GSO) of Vietnam every two year. In the
thesis, we will use the most updated VHLSS data published in 2012.
The study is narrow to the spending of the household, classified into two groups,
receive or not receive the remittances. Source of remittance are come from the
international migrants and the internal remittances from domestic migrants.
The expenditure structure is classify to six main categories include food
consumption, consumer goods, education, health, housing facilities and durable goods.
1.4 STRUCTURE OF THIS THESIS
The paper is structured in 6 chapters and each chapter will cover the following

content. Chapter 1 gives the introduction about the research topic including the overall
information of remittances and theirs effects; the research objectives to find out what
should be focused on this paper. Chapter 2 briefly introduces the migration patterns
and remittances in Vietnam, Chapter 3 is some literature review covered the impact of
remittances on the household consumption structure from the previous researchers.
Next, Chapter 4 aims at explaining the methodology of research. Chapter5 is the
statistical models to discuss about the empirical analysis and present regression results
and detailed explanation. Finally, chapter 6 gives a conclusion for what has been found
and some policies recommended based on these finding.

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CHAPTER 2 LITERATURE REVIEW
2.1 HOUSEHOLD UTILITY AND EXPENDITURE THEORY
The methodology of this paper is conducted base on the Engel curves. Ernest Engel
(1821-1896) firstly introduced in his study published in 1857 for the basic theory
between food consumption and the income of household. He stated that, the spending
on food would decline when the household income increase. The relation between
household expenditure and household income are mathematized as follow:
Ci=fi(X,Y,Z,U) (1)
where, Ci: expenditure on category i; X: total expenditure; Z: household
characteristic; Y: Income of household; u: unobservable variation.
It represents the relationship between the household bud get shares changed by the
specific types of good to total household expenditure. Using this model, the difference
in consumption between households with different income can be observed. To apply
this function to this study, income here can be understood by the remittances
definition. Based on the Engel curve, several functional forms have been proposed for
the remittances variable. For example, Deaton and Muellbauer (1980) used the Engel
curves to exploit the relationship between remittances and spending; they found when

income increases, spending for food decrease, spending for clothing, fuel, lightning fee
remain the same, whereas the share of luxury goods increase.
One of the most famous practical studies using the Engel curve, Working-Leser
(Working, 1943, Leser, 1963) represented the model which is used as a foundation
econometric model of this study. The model describes the linearly relationship between
the budget shares of one certain expenditure category to the logarithm of the total
household spending:
(2)

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where, Ci/EXP is the budget share of food i spending over total expenditure. Note
that , total expenditure=1
The marginal budget share for good i and household j is defined as follows:
(3)

From the quotation (2), we take the partial derivative of budget share with
respect to the consumption:

(4)

Adding quotation (4) for solving the quotation (3), we have:

(
This quotation can be calculate after estimation for quotation (2)
The expenditure elasticity of household j for good i will be as follow:

(6)

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2.2 REVIEW OF EMPIRICAL STUDIES
INCENTIVES TO REMIT
Before going to details for the literature review of remittance, it is a good idea to
begin with figure out the reason why migrant people sending part of their income to
their family living in their birthplace area. De Bruyn and Kuddus (2005) concluded in
their finding that the reason for migrants sending remittances to their family is based
on five main incentives: mutual benefit, obligation, altruism, self-choice, and the last
one, pride. Having the same interest in this issue, Lucas and Stark (1985) have
mentioned in their report that the sending remittance behavior across regions is led by
the altruism and self-interest. The relationship between sender and receiver, although
they are living separately, they are still family, one united household. Lucas and Stark
pointed out that, when sending and receiving remittances, both of them have a Pareto –
mutual benefit in which remittance take the important part in redistributing the gains.
One easier saying, the migrant is sending the education fee/ living fee for the
household as the repayment. Another standpoint comes from Portes (1995), he
concludes that the remittance sending behavior is based on the responsibility of the
family member.
INTERNATIONAL STUDIES
The importance of remittances to the national economy is confirmed by a number
of macroeconomic studies.
One of the most extensive contribution for the remittances – mainly for the
international remittances is the study of De Bruyn, T. and Wets, J (2006). They
consider remittances are externalities (positive and/or negative) and point out that the
impact of remittances on the economy measured at the macroeconomic, household or
community level can be either positive or negative. According to their finding, at the
macro level, remittances seem counted more negative impact than the positive one. In

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contract, international play an important role in at the household level. Table 1 below
describe more detail of the De Bruyn, T. and Wets, J (2006) finding:
Table. 1 Possible Positive and Negative Impacts of Remittances
Positive Impact of Remittances

Macroeconomi
c level

Strengthening balance of
payments by provision of foreign
exchange
Remittances are stable and
counter-cyclical

Household
level

Allow family to meet basic
needs
Opening up of opportunities for
investing in children’s education,
health care etc.
Loosening of constraints in
family budget to invest in
business or savings
Emergency resources
Social security resource base

Community

Boost local economy

Increase inequality between families

and regional

Financing local development

who receive remittances and those

level

projects

who do not
Inflation

Source: De Bruyn, T. and Wets, J. (2006)


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Various studies have been conducted on migration, remittances and their
impacts. Tonga Acosta et al. (2008) provide a comprehensive report of the remittance
of seven Latin-American countries including Mexico, El Salvador, Guatemala, Peru,
Nicaragua, Jamaica and Dominican Republic) using the surveys on household

expenditure for standard categories such as food, durable goods, ect. For the food
sector, remittance recipient households aim to pay more for nondurable goods, durable
goods, housing, education, and health than for food with the exception for Jamaica.
They found a strong impact of remittances on the structure of expenditure for
education with the case of El Salvador, Guatemala and Peru, but not for Mexico,
Nicaragua, Jamaica and the Dominican Republic. Remittances have strong allocation
for the health expenditure in all countries except for Nicaragua. Higher education and
health spending only have the changing in the group of middle and upper-class
recipient. The expense for durable goods varies across countries. Consumption on
durable goods is only affected the most significantly by remittances in Mexico and
Jamaica then gradually reduces in Peru, El Salvador and Guatemala. In Nicaragua and
Dominica, the effect of remittances on durable goods is not considerable.
Many empirical researches have been contributed to the analysis of the
remittances’ impact on the expenditures in migrant-sending households. Initially, the
relationship between the remittances and spending can be linked by considering
remittances a source of households’ income. Tabuga (2007) investigated the impact of
remittances based on the household surveys in Philippines. He found that a
considerable percentage of remittances are spent on the apparently spending for basic
need such as consumer goods (fuel, light water, household operations, and
transportation and communication), leisure. The spending for education and housing is
also increase due to the remittances. Furthermore, households receiving remittances
spend less on tobacco and alcohol. Castaldo and Reilly (2007) used the data from
Albania Living Standards Measurement Survey in 2002 in four categories of

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commodity considered are food, non-food, durables and utilities to analyze whether the
remittances has allocated the expenditure pattern of the households. In contract with
what Tabuga (2007) has expressed in his report, Castaldo and Reilly (2007) realized

that Albanian households use their remittances mainly on durable goods and utilities.
The interesting finding in their report is that people who receive remittances display
only a little bit higher proportion by 3.1% than those who do not receive any
remittances. They explained that the remittances recipient households do not consider
the food as their necessary goods anymore.
Many papers in Mexico take into account the impact of remittances on health
expenditure. Amuedo-Dorantes et al. (2007) support the positive relationship between
remittances and health spending by using the linear regression function. They focus on
the spending of recipient external remittances from the primary to advanced health
services. They found that the total amount spent for health increase when the
remittances increase, but varies between groups. Primary health care is the most
popular services among remittances recipient households as it account of between 5%
and 9% of total remittances. Valero-Gil (2008) also looks at the impact of remittances
on health. They find that each household will spend 6 pesos for health care when they
receive 100 pesos of remittances.
Many studies provide the evidence that the remittances recipient households
will increase the spending for education when their remittances increase. For
examples, Cardona Sosa and Medina (2006) make the conclusion that beneficiary
households are using about 10% more in education than those who do not receive any
benefit from remittances. Furthermore, people who live in remittances households tend
to have a 14% higher possibility studying in private institution. These conclusion is
made based on their empirical results from Colombia Living Standards Measurement
Survey 2003 with 20 000 household samples. Edwards and Ureta (2003) find a similar
result that remittances have a positive effect on the education. The data in this reports

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is a cross-sectional data collected from the El Salvador Annual Household Survey 1997
with 14,286 individuals from age 6 to age 24. The authors apply the Cox proportional

hazard model to estimate the remittances impact. They conclude that this source of
income allocate the decision of households when making investment on schooling both
in urban and rural area. Two years later, with the report from Adams (2005)
investigated the relationship between remittances and poverty, a similar conclusion is
made. The data in this report is divided into three groups: group 1 for those who have
no remittance, group 2 for internal remittances (from Guatemala) and the last group is
for internal remittances (from USA). Household receiving remittances (both group 2
and 3) have higher percentage expenditure for education with 45% more for internal
remittances and 58% more for external remittances. Edwards and Ureta (2003) and
Yang (2005) both support for the theory that there is a significant positive impact of
remittance to the possibility of retention school rate in El Salvador and Philippines.
Although most of the reports show the positive impact of remittances on education, the
fact is the effect can be positive or negative, even unknown depend on each particular
case. Cattaneo (2012) show the evidence for no relationship between remittances and
education.
RELATED STUDIES IN VIETNAM
Remittances and consumption are also one of the interest topics of Vietnamese
researches. Most of them explore the relationship between the migration and
remittances in Vietnam over the time. The most popular studies can be listed as studies
from Dang et al., 1997; Dang, 2001; Dang and Nguyen, 2006.
VHLSS 1992/93 and VHLSS 1997/98 is the most sufficient information data for
the migration, remittances, house-holds’ behavior for sending – receiving remittance.
Consequently, many researches use these dataset to settle their studying. For example,
Cox (2004) uses this data to examine the internal transaction financial support
including the remittances and loans. With the model base on the characteristic

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of household for the transfer receipt, the transfer between generation, he finds that,

remittances is the main sources for the financial support distribution. The empirical
number to prove this is the remittances transaction is more the twice of the public
transfer.
Another study published in 1999 by Le and Nguyen (1999). By using the
VHLSS 1992/93, they focus on the international and internal remittances flow in
Vietnam. Their finding is that, the household with female head have more probability
to receive the remittances. Meanwhile, Friedman et. al (2003) finds no significant
impact of gender on the support transaction between generation, after control other
factors (marital status and age)
Remittance is one of the interesting topics for Vietnamese researchers. Many
studies have been investigated the impact of remittances in Viet Nam listed as
remittances on household welfare and poverty by Nguyen (2008), Nguyen (2009),
Pfau and Giang (2009), Nguyen et al. Other studies do not find the positive effect of
remittances on household consumption and poverty (e.g., Nguyen and Mont, 2012;
Nguyen et al., 2012).
However, a few studies about remittances in Vietnam are available to
researchers examined the relationship of remittances and the households expenditure
patterns though this topic has been carried out in many other countries. Le and Nguyen
(1999) use the 1992/93 VLSS to study domestic and international remittance flows in
Vietnam. We assume that each household has to allocate its expenditure on several
commodities and we want to understand whether receiving remittances have any
impact on the household decision. The analysis is conducted using different
approaches and empirical methodologies to ensure robustness of the results.

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CHAPTER 3: PATTERNS OF MIGRATION AND
REMITTANCE FLOWS IN VIETNAM
3.1 Overview of remittances flow in Vietnam

Vietnam began the economics reformation called Doi Moi in the late 1980s that had
led to the rapidly economic growth and large-scale economic transformation.
Additionally, since 1986, population increase put Vietnam into the shortage of landing,
more people but less land for agriculture purpose. This has been motivated many
individuals as well as the whole family make the migration, from rural to urban and
from Vietnam to foreign countries. With the positive impact of the migration flow,
since the 1990s, the remittance flow has experienced the dramatic increase, for the
transfers within the countries and from abroad as well. The main motivation for the
mutual migration is that due to the rapid industrialization and urbanization, the need
for employment in urban area increase; meanwhile, the unemployment in the rural area
maintained in the high rates, push people leaving their home to seek for living at a new
place.
Vietnam is a rare case for the remittances. In most of the countries, people migrants
due to the economics reason and their personal wishes, but for Vietnam, people
migrant because of the effect of the non-economics factors as political reason for the
international remittance and government policy for the case of internal remittances.
3.2 International remittances
It is not easy to summarize the external remittances as the information regarding
the number of Vietnamese migrant that had been considered migrant worker. External
remittances from abroad have significant increase since the early 2000s. The increase
can be considered the positive impact of a new policy of the Government of Vietnam.

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The governors open the door to welcome back overseas Vietnamese people who had
left the country for political reason after the Vietnam War in 1975. During 1970s
period, Vietnam has been through a big migration oversea. The biggest destination for
Vietnamese migrant is United State of America, account for 62.1% per total migrant.
Then, in 1990s, with the open market policy, Vietnamese government opened the

gate welcoming migrants back to Vietnam. Synonymously, they can legally connect
with their relatives in Vietnam and send the financial support for them. As the result of
this, a lot of financial assistances are sent through many channels to Vietnam from
migrant to their family in the homeland. Only after three years of open market policy,
around $0.5 billion are sent to families and relatives in Vietnam. (Nguyen Trieu, 1995).
This number even doubled in the next year, to $1 billion in 1996. The oversea
remittances to Vietnam comes from about $2.6 billion in 2003 to $10 billion in 2010
(equivalent to 10% of GDP), nearly five times increase within 7 years. More than that,
the number of total remittances in 2010 is nearly equal to the total value of two main
financial sources: ODA – Official development assistance and the FDI: Foreign direct
Investment.
Following is the summary for the value of remittances in Vietnam. According to the
World Bank’s economic prospects for 2006, Vietnam received the external remittances
from other countries is total 1.2$ billion in 1990s., nearly double compared with the
1990s.
The most recent report of World Bank (report 22 of year 2014) has summarized the
top ten of largest receiving remittances countries. Table 2 show the information for this
top ten. The largest remittances recipient country is India, then China. These two
countries have a considerable total value of remittances, $70 and $60 billion
respectively in year 2013. Also according to this report, Vietnam ranked the number
nine in the table 2, accounted for $11 billion US dollar, up to 6.5% higher than the year
2012.

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FIGURE 1: TOP TEN REMITTANCES COUNTRIES

2.3 Internal remittance
Between 1998 and 2006, the share of the population living in urban areas increased

from 22 to 27 (1998 and 2006 Vietnam Household Living Standard Surveys).
According to the 2009 Population and Housing Census, about 6.7 million individuals
or 8.6 percent of the population aged five and older in Vietnam changed their places of
residence during the period 2004-2009 (General Statistics Office (GSO) of Vietnam,
p.21, 2011). Only in 2009, around 1.3 million individuals had migrated between
provinces. This number account for 2.5% of total population in Vietnam at that time,
really a considerable number. The annual increasing rate of migration for period 2009
is 4.2% and expected to rise to 6.4% in 2019, reaching for 6 million people that have
made migration.
These migrants, mostly are young and active people, leaving family including
elderly parents, brothers, sisters, wives, children, in turns they send back part of their

18


income back to the family as for the responsibilities, to care for the household’s living
standard. Contributing to the characteristic of domestic migrant is the generation. With
the open market, more and more teenagers have freedom and choose what they want.
They prefer challenge from potential change from another land than their mother
birthplace, and motivate their migration.
One of the important explanations for the migration explosion in Vietnam is the
support from the Government policy. As is the case in many developing countries, the
migration in Vietnam will present numerous challenges for policy makers and be
closely related to the government decisions. The Vietnamese Government strictly
control the migration by the migration polices with the support from the management
of Household registration system (Ho Khau in Vietnamese). As a result of this, the
increasing in migration from period 2004-2009 is foreseen based on the Decisions and
Decrees issued to stimulate the migrant among Vietnam.
The Decision No. 190/2003/QD-TTg is the beginning for this blooming. The main
objective of this Decision is to relocate, arrange and settle population to the certain

area pointed by Government to develop the potential development in a new land. The
target individuals of this program are free migrant, nomadic households, landless
households, less-production land located households, ect. These migrant will get the
best support from the Government for their migration by both financial support and
physical support. The Vietnam Internal Migration Survey in 2004 can be considered a
survey reporting for the result of the Decision No. 190/2003/QD-TTg. This survey was
carried out by General Statistic Office of Vietnam, the same owner with the VHLSS.
They announced that nearly 50% of total internal migrants have sent their remittance
to their families and relatives in previous 12 months.
Several years later, the migration in Vietnam is still under the The Decision No.
190/2003/QD-TTg. Until 2006, new policies are applied with Decision No.
193/2006/QD-TTg in 2006 and Decision 33/2007/QD-TTg in 2007. Then Miimi, et.al

19


(2009) stated that on average, one migrant would send around 17% of their total
earning back to their home.
Douglass et al (2002) computed around most of people moving from the rural to
urban for a better living are employment famers. Also, they are pointed out three
important internal migration flows within Vietnam: 1) from the North to the South, 2)
from the northern uplands to Red river delta. 3) From the central coast, the northern
upland, the red river delta to the central highlands. Also, according to the VHLSS data
in 2009 (published in 2011), more than 2 million people migrated from the rural area
to the urban area. Most of the destinations are Ho Chi Minh City, Hai Phong city, Da
Nang city, Quang Ninh, Binh Duong and Dong Nai (according to the finding of
Brennan et al. 20012).
TABLE 2 : RATIO OF IMMGRATION AND MIGRATION IN 1999 AND 2009

Region

North east
East west
Red river delta
Central North
Central South
Highland
Southeast
Mekong river delta
*

ratio between immigrant over the total local household
* ratio between migrant over the total local household Source:
Vietnamese internal migration report by UN, page 27

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According to the population survey in 1999 and 2009, represented as data in Table
2, the Southeast region is the largest destination for migrant, account for 135.40% in
2009 as it has a lot of industrial parks and having received most of the FDI coming to
Vietnam. Compared with the year 1999, although Highland region attracted many
migrants, up to 86% of the total migrants as the result of government decision, in 2009,
it is taken the first place by South east region. The central region of Vietnam is not
only has severe climate, but has lack of resources for development. That is the reason
why the migration rate of Central regions always in top, but the immigration rate is at
the bottom.

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CHAPTER 4: RESEARCH METHODOLOGY
4.1 ANALYTICAL FRAMEWORK
As introduced in chapter 2, the simplest model can be written under the
summarized function as follow:
Ci=fi(X,Y,Z,U) (1)
The relationship between the remittances and the household expenditure can be
figured out as below table:
Table 3: REMITTANCES AND HOUSEHOLD EXPENDITURE
Remittances
Only internal remittances
Only international
remittances
Both types of remittances

Household
characteristic
Migration
place of living
household size
gender
age
education
Employment
self-business