VietNamNet Bridge – The black market is heating up
these days with a booming small change conversion service. Despite the
exorbitant fees, the services are attracting a lot of clients because commercial
banks refuse to give the service to clients.

Dinh Tien Hoang, Dinh Le and Nguyen Xi are well known
streets in Hanoi
for the money exchange service. As Tet is coming in just three weeks, now is
the high business season of the service providers.

Vietnamese people always have a high demand for small
change on Tet days. They need small change to give to children as a New Year’s
present, called “li xi”, and offer to the Buddha’s altars when they go to
pagodas.

However, the special thing of this year’s service is
that the service providers not only can be found on these “famous” streets, but
also on Internet and ad columns on websites.

A noteworthy ad piece appeared on an website on
January 5, 2011, where the service provider asked to contact him by email and and the mobile phone number 0904.400.2xx. When reading
the given address, someone may think that the service provider is now working
for a commercial bank and he has the chance to access the “small change
sources” (VIB is the name of a joint stock bank in Vietnam). However, when Lao
dong’s reporters contacted the man, he refused to talk about his career.

The fees for small change conversions are high. If
clients want 200-dong banknote, they will have to pay the fee of 45 percent.
Meanwhile, they will have to pay the fee of 25 percent for 500-dong banknotes,
12 percent for 1000-dong and 2000-dong banknotes. Banknotes with the face value
of 5000 dong and 10000 dong bear the fee of 1-9 percent. Of course, the fees
will be lower if clients accept old banknotes, just about 2-10 percent.

The service
providers not only provide small change but they also sell dollars. A 1-dollar
banknote is selling at 25,000 dong (the current dong/dollar exchange rate on
the black market is about 20,000 dong per dollar), while a 2-dollar banknote is
selling at 49,000 dong. A very attractive advertisement has been posted on a
website: “We, …, have 10,000
2-dollar banknotes series 2003 and 1000 banknotes series 1976, 1963, 1953, 1928
and 1917. If you have the demand, please contact…”

The service providers on Dinh Tien Hoang and Dinh Le
streets also charge exorbitant fees. Clients will have to pay a fee of 20
percent for 5000 dong to 20,000 dong banknotes, while a 30 percent fee is
applied for smaller change.

Banks only serve VIP clients?

Though the service fee on the black market is very
high, people still have to change money on the market, because they have been
refused by commercial banks.

Phan Thu Huong, a primary school teacher in Hanoi said that though
she uses the services of Vietcombank regularly, she still cannot get small change
from the bank.

Meanwhile, a bank officer of a bank on Cau Giay street, frankly stated that
normal clients will not be able to get small change, only VIP clients or
relatives of bank officers can.

At other banks, clients have been told that as the volume
of small change is limited, the banks only serve VIP clients.

Meanwhile, some commercial banks have decided to
attract depositors by offering small change to them. An officer of SeAbank said
the bank does not have small change to provide to everyone. However, if people
make deposits at the bank, they will be able to get small change.

As the demand for small change is too high, the money
change service can bring profits to service providers. Tran Anh Tuan, the owner
of doitien.com website, said that he kicked off the service last month.
Especially, Tuan said he is also providing “li xi” service. To date, he has got
200 orders for his service. The clients in Hanoi
can send “li xi” to their relatives in HCM City.
“Our 2-dollar banknote supply is big enough to satisfy all the demand from
clients,” he said. The package fee is 20 percent. This means that clients have
to pay 350,000-400,000 dong for a 2 million dong contract.

Tuan is now hiring 20 collaborators, who are in charge
of taking orders and delivering goods.

Tuan revealed that he started the business in mid
2010. “Every month, I can pocket 15-20 million dong after paying expenses,” he
said.

C. V