Remittances from Korea to Southeast Asia: Trends and Implications

Remittances, money transfers sent by international migrants to their kin at home, are increasingly recognized as a new source of development finance by the international community. Remittances to developing countries are large in volume, increasing steadily, and less volatile than other types of external financial inflows. Transferred directly to the households in need, remittances are widely credited for their contribution to poverty reduction in developing countries. Remittances to Southeast Asia show patterns similar to those of other developing regions. Within the region, the Philippines accounts for the most of the remittances flowing into the region although its share has been on a gradual decline. Populous countries like Indonesia and Vietnam, are receiving increasing volumes of remittances, as their migration outflows are on a steady rise. Remittances per capita exceed Official Development Assistance per capita in most Southeast Asian countries except Cambodia and this suggests that remittances may have potential that could complement foreign aid. Korea has emerged as an important source of remittances, mostly for Asian countries, which means that Korea's contribution to global development finance may be larger than previously thought. Host countries, including Korea, should continue to make an effort to reduce the costs of transferring remittances and to enhance the efficiency of the overall payment flows, in addition to providing financial information services and implementing better data collection on remittance behavior of migrants.