Q&A: Prof. Hung Cam Thai on COVID-19 and Remittances in Vietnam

Ho Chi Minh City

COVID-19 is a mega disruption not only because of the resulting deaths—the virus also slammed the brakes on economies worldwide.

In this Q&A, Hung Cam Thai, Pomona College professor of sociology and Asian American studies, discusses how the costs of COVID-19 are not only lives lost, but funds lost as well—especially for low-wage workers across the globe. Thai, the author of the award-winning book, Insufficient Funds: The Culture of Money in Low-Wage Transnational Families, looks at Vietnam and tells us more about what’s been happening in that country with remittances—money sent by immigrants to their country of origin to assist friends and family members.

This interview has been condensed and edited for length and clarity.

During this time of pandemic, what has happened with remittances in Asia?

There have been some declines but uneven in the sense that some regions, like Ho Chi Minh City in Vietnam, continued to receive more remittances as the pandemic intensified, while other regions have seen a decline. This can be explained by the history of who migrated and for what reasons: for example, those who migrated as labor migrants tend to come from rural areas, thus they tend to have less money earned abroad and send less back. Such labor migrants have also a relatively recent pattern of migration from Vietnam, which means they have had less time to build economic resources. Those who migrated as family-sponsored migrants continue to send more because they are more established in their communities of settlements. 

So, there have been varied situations in Vietnam, and it’s similar in other countries, where you have regional variations in unequal access to remittances. It’s been very profound, and I saw this in the case of Vietnam. In some sense, developing countries have witnessed a surge in inequality as a result of the pandemic: among the factors contributing to this inequality is the “remittance gap” between those receiving money from families abroad and those who are not. 

How has Vietnam coped with COVID-19?

Vietnam had very good control of COVID-19 until this past April. From March 2020, when the initial lockdown happened globally, until April of this year, for about 13 months, Vietnam was actually open.

They were not open to foreign travelers, but the country did not have any type of lockdown. People were enjoying life in a very normal situation. And then in April, there were a number of outbreaks in a church and then in some factories.

By June of this year, the country had a severe lockdown. Until October, Vietnam had the most severe lockdown of any country that I’ve heard of globally. Vietnam’s policy was that people cannot leave their homes. You cannot even go to the park around the corner. You cannot leave your house. The government for about two months dispatched the military to deliver food to private homes, and all households were given coupons to purchase food accordingly. Anyone who got infected had to be sent to a quarantine camp, and those who just simply had contacts with infected people had to go as well. It was very chaotic. They realized within a month that the strict “stay-in-place” lockdown was not effective, especially compared to the strategies applied by nearby countries, such as Thailand. They underestimated the complexity of using the military basically like an Uber service to deliver food. It’s a country of 98 million people. Ho Chi Minh City has roughly 12 million people, which is the biggest city in the country.

By early October, Vietnam had only about one-third of infections compared to Thailand’s 1.5 million infected individuals, and yet, Vietnam had slightly more deaths of nearly 15,000 deaths compare to Thailand’s 13,000. I think this pattern compelled the Vietnamese government to ease back to “living with COVID-19,” starting October 15th, and in fact, some places will be opened to foreign visitors by early November.

All of this is interesting because 60% of the population of Vietnam—and I think it’s very similar in India and other developing countries—60% of the population live by working in the informal economy, which basically means that these people are living paycheck-to-paycheck, month-to-month, sometimes day-to-day. There are a lot of workers in the informal economy who work and get paid on a daily basis.

And so, with a lockdown, that meant that all the factories were locked down, with millions of workers out of work. In addition, people who are selling petty goods on the streets, people who provide various kinds of services like rickshaw and moped services, people who are selling various food and knickknacks on the streets immediately saw a halt to their daily incomes. Those people are wiped out because of the lockdown. Most of them come from rural areas and travel to big cities to work in the informal economy. One of the major problems was that these people could not return to their villages when the lockdown began: so they were stuck in the cities, with no jobs, and no money to pay for their basic housing costs and food. There were riots in some places, like near Ho Chi Minh City.

It’s very clear that for people who have access to overseas relatives, those overseas relatives have become a lifeline for people to get funding so that they can replenish themselves and buy food. Right now, in Vietnam there are people who are going hungry because they don’t have food.

The government announced during the lockdown that low-income earners in Vietnam would receive three separate stipends of about $70 each. It was their version of a stimulus package. In addition, the government provided basic staples like rice and vegetables to households. These provisions were very uneven with many people not receiving any money or food either because they didn’t know about the stimulus, or the bureaucracy made it difficult for some people to receive money, or simple corruption made it such that money was not distributed to the general public.

Why have remittances in Vietnam been uneven?

People who have access to overseas relatives are doing relatively fine, because now, it’s easy to send money. It used to be when you sent money, people actually had to go pick it up, or they had to get the funds delivered to them. But now it’s relatively easy. You can, for example, wire money directly into people’s accounts. Or you can use services to get money delivered within two hours. Of course, you must have access to the know-how and the channels, but it’s relatively easy to wire money to people’s banks directly. That’s even though they get a bad exchange rate by getting money wired.

I myself have actually been a remitter. I don’t have family in Vietnam, but I have very good friends who have been in trouble, some of whom are actually people who work in the informal economy, so I have sent them money.

But I have heard about people who live near friends who basically are going through hunger, a very limited food supply. I’m from a village in Vietnam which is about six hours from Ho Chi Minh City. I know of households who have been exclusively on an instant ramen noodle diet for a month. Every meal is instant noodles.

People who have access to remittances are doing way better. And this is both anecdotal, from my personal experience, but we have seen coverage in the Vietnamese media about this as well.

In your book, Insufficient Funds, you said that immigrants with low incomes send a large portion of their income back home. Is that still the case? What changes are you seeing in the amount of remittances being sent? 

Yes, definitely that is still the case. The absolute amount has gone up about 20 percent since my book was published six years ago. All of Vietnam received about $15.7 billion in 2020. It was only about $6 billion in 2010. And in the first half of 2021, Ho Chi Minh City saw a 22 percent year-on-year increase. The important pattern we know is still true globally is that low-wage earners tend to send more money than their high-wage counterparts, both in absolute amounts and in the proportion of their incomes.

What do you see in the near-to-long-term future with remittances in light of COVID? You can’t predict what’s going to happen with the pandemic, but how do you see things going forward?

We will see an increase in the widening of inequality. I think everyone in the Global South is going to go through some financial troubles, and this is especially true among low-wage workers. But the people who are in the informal market will take a very long time to recuperate from this.

We will see increases in household debts, people borrowing money, either formally from banks, but most likely through informal lending institutions, like payday loan situations, but also informal networks of loans.

I think that we will see dramatic increases in debt, which is what we usually see when there are disasters of any kind—whether natural disasters, environmental disasters, and certainly, epidemic disasters like COVID-19. We tend to see these inequalities.

But again, the people who have access to overseas relatives will be doing fine. And I think that even as we know that the people who live abroad are experiencing some economic fragility in their own lives…facing unemployment, reduced pay and all of this… the fact is that people living abroad only need to spare a little bit and it can go a long way in Vietnam. Just to give you an example: I have two friends—a married couple—living in the Mekong Delta to whom I have been giving $300 monthly when the lockdown started since they have been out of work in the informal economy. Normally, they would earn about $200 if they were working. The average national monthly income now is $175. In rural Vietnam the average monthly household income is less than $150 a month. And so, remittances can make a difference between people eating or not. You can only imagine how, for the many people in the country who do not have access to a remitter, life is comparatively much more difficult during normal times. But that difficulty has only intensified during the pandemic.   

Even if you were a low-income worker in the U.S., you could afford to send an occasional $100, $200 here and there, which can make a dramatic difference in people’s lives.

And I also think that in the case of Vietnam, we will also see disparate life decisions that will be very different according to the extent of remittances people get. So, I think people who are going through economic downfalls will delay or cancel major life decisions, like entering schools, colleges, universities, getting married, moving to the city for work, which many people do.

The rural-to-urban migration is a huge form of upward mobility for people in developing countries. But to do that, you need resources. You need a startup fund to do that. But in this climate, I think a lot of people would not have that access. So you will see these macrostructural things coming out post-pandemic. I think the recovery will be much slower, in part because of all of this, in part because of the economically repressed state, with much less provisions of state support than we see in the West.

Where do the majority of the remittances Vietnam receives come from? 

More than half come from the United States alone. One-third of overseas Vietnamese live in the United States, so that makes sense. Another 30 percent come from the countries of France, Canada and Australia, the other three “core” countries for Vietnamese immigrants. The remaining 20 percent come mainly from nearby migrants in Southeast Asia, such as in Thailand, Singapore, etc., as well as from other countries in Europe.  

What happens to the Vietnamese economy if remittances decline?

Remittances are significant for Vietnam. One quarter of Vietnamese citizens rely on remittances for their daily expenditures so it would be detrimental if there were steep declines.

Do you see people leaving Vietnam because of the lack of work? 

They are not leaving Vietnam during the pandemic because they can’t. Very few countries are accepting Vietnamese citizens, unlike Americans and Singaporeans, who have been able to travel since the vaccine rollout, for example to Europe.

In the past decade, the Vietnamese have become an important migrant labor force, meaning more and more of them are leaving the country as migrant laborers in low-wage work, such as to Singapore to work as domestic or sex workers or to South Korea as construction workers. But compared to, say the Philippines, the Vietnamese export a relatively small number of migrant laborers. One major reason is that they don’t speak much English, whereas Filipinos/as do so they can go to many places as migrant laborers.