Overseas remittances may exceed 1 trillion yen by 2025

Remittances from foreigners living in Japan to their home countries are increasing. Remittances from January to June 2025 reached 506.8 billion yen, a 38% increase from the previous year, setting a new record for the second half of the year. As foreign employment expands, overseas remittances are expected to grow further, making transparency and security a key challenge.

Japan’s Ministry of Finance’s balance of payments statistics show that remittances from foreigners in Japan have more than doubled over the past decade. Remittances typically increase in the second half of the year due to year-end bonuses and long holidays. Therefore, the full-year total is likely to exceed the previous record high of 847.5 billion yen set in 2024, surpassing 1 trillion yen for the first time.

According to Japan’s Ministry of Health, Labor and Welfare, the number of foreign workers in Japan increased by 12% year-on-year to 2.3 million by the end of October 2024, nearly tripling over the past decade. As of 2024, the largest nationality was Vietnamese, with 570,000 people, followed by Chinese (400,000, including those from Hong Kong and Macau) and Filipinos (240,000).

Similar to the number of foreign workers, the top countries for remittances from Japan are also Southeast Asian nations. In 2024, Vietnam ranked first with 326.2 billion yen, followed by Indonesia (102.1 billion yen), and the Philippines (90.2 billion yen).

International remittances are increasing globally. According to the World Bank, global remittances reached $517.8 billion in 2024, a roughly threefold increase over the past 20 years. Recent data shows that the United States leads in outbound remittances with $98.4 billion, followed by Saudi Arabia with $46.6 billion, with Japan ranking 25th.

Japan’s declining birthrate is worsening, and its reliance on foreign labor is increasing. Estimates compiled by the Japan International Cooperation Agency (JICA) and other organizations in 2022 indicate that to achieve the Japanese government’s economic growth targets by 2040, 6.74 million foreign workers will be needed.

There are two major risks associated with overseas remittances by resident foreigners. One is illegality. International remittances are susceptible to malicious use for financial crimes such as money laundering. While previously only officially registered companies could provide these services, foreigners are increasingly using unregistered underground remittance companies or entrusting friends and acquaintances to transfer money on their behalf.

A 2024 survey conducted by the Japan Money Settlement Association revealed that 27 of the 1,270 foreign residents who responded (2%) chose underground and agency remittances as their primary means of remittance. The most common reason cited (52%) was “high exchange rates,” while 89% cited “learning about these channels after arriving in Japan” as the reason.

Another risk is the impact on the yen exchange rate. When foreign workers remit money earned in Japan back to their home countries, they convert it into the local currency. If remittances increase, yen sales will also increase.

Remittances from Japanese residents living abroad to Japan reached 303.1 billion yen in the first half of 2025, a 10% decrease from the previous year. Actual yen sales (after deducting international remittances from domestic remittances) totaled 203.7 billion yen, the highest level since comparable data became available in 1996. While this is still relatively small compared to the vast foreign exchange market, where numerous financial institutions and companies conduct transactions, if it continues to expand, it could become a major factor in the yen’s depreciation.