Opportunities for investors in 2020



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  • The Vietnamese tourism sector is an important pillar of the country’s economic development, contributing 6% of Vietnam’s GDP.
  • Vietnam plans to attract around 17-20 million tourists in 2020.
  • To make the sector attractive, the government is working on several reforms including infrastructure projects and the overnight economy.

Contributing over six percent to Vietnam’s GDP each year, tourism is one of the most important drivers of Vietnam’s economic development. Taking note of this, in 2011 the government issued the “Vietnam’s tourism development strategy until 2020, vision for 2030To provide guidelines for cities and provinces to promote their tourism industry.

As part of this strategy, Vietnam aims to attract 17 to 20 million international visitors in 2020. As of November 2019, Vietnam had welcomed 16.3 million international travelers, an increase of 15.4% year-on-year.

Each region’s specific action plan and emerging trend in the industry can help push growth even further.

What are the main tourist destinations?

Vietnam’s capital, Hanoi, continues to perform well in 2019. In the first nine months of 2019, Hanoi welcomed 21.5 million visitors, including five million international travelers. This is a ten percent year-over-year increase. The city is also preparing for the first Formula One Race in April 2020 with the government working on the overhaul of transport infrastructure and visa exemption for foreign spectators. The number of visitors to Hanoi is expected to experience a significant increase thanks to this international event.

Due to the strategy’s goal of prioritizing the development of other provinces for tourism, Binh Duong has become the second most popular destination in southern Vietnam, behind Ho Chi Minh City.

Binh Duong also promotes the tourism industry with its own “Binh Duong Tourism Development Strategy to 2020, Vision to 2030”. The strategy includes a wide range of activities throughout the year to introduce visitors to the distinct cuisines, cultures and people of Binh Duong, such as “Spring in Binh Duong”, “Binh Duong’s Street Food 2019”.

As a result of such dynamism, Binh Duong thus attracted more than $ 2.4 billion in foreign investment in the first nine months of 2019, an increase of 81% year-on-year. During the same period, five million tourists came to Binh Duong, just behind Ho Chi Minh City’s six million.

Booming medical tourism

Vietnam is emerging as a key player in the medical tourism industry in Southeast Asia. In 2017, 80,000 foreign tourists came to Vietnam for check-ups and medical treatment, bringing in a total of $ 2 billion. The medical tourism industry is expected to grow 18 to 20 percent per year.

The main reasons for Vietnam’s attractiveness to foreign patients are its central location in Southeast Asia, political stability, affordability, and relatively good medical care.

The key locations for medical tourism are Phu Quoc, Vung Tau, Nha Trang and Da Nang. The seaside resorts in these regions have tried to integrate facilities to make them more suitable for medical tourism.

Tourism is growing but challenges remain

Such significant achievements in the tourism industry led Vietnam to rank 63rd over 140 countries of the Travel and Tourism Competitiveness Index 2019. Despite an improvement over the 67 of 2017e ranking, out of the 14 index criteria, Vietnam still scores low in airport infrastructure, night time economy and human resources.

Night economy

Although nighttime activities and services contribute 70% of Vietnam’s tourism income, most tourism activities operate from 7 a.m. to 5 p.m., leaving the night period from 6 p.m. to 2 a.m. under-invested. In addition, European and North American tourists, who have a significant time difference with Vietnam, cannot explore tourist attractions at night while adjusting to a new time zone.

Therefore, Prime Minister Nguyen Xuan Phuc recently asked the Ministry of Culture, Sports and Tourism review China’s policy to promote and regulate nightlife.

For example, most major Chinese cities, such as Beijing and Shanghai, operate their metro trains until 12:30 a.m. on Friday and Saturday, while the mini markets remain open 24 hours a day.

However, the root cause of Vietnam’s underdeveloped nightlife economy is the lack of culturally distinct tourism products. While traditional art forms only last a morning, night market shops offer generic goods like T-shirts and basic souvenirs. This translates to an average spend of just $ 900 per visitor.

To remedy this, the provinces of Hanoi, Ho Chi Minh City, Hue and Quang Binh have started experimenting with small nightly projects. Hanoi now allows all shopping activities and night markets in the Old Quarter to operate until 2 a.m. on Friday, Saturday and Sunday. Quang Binh, a famous beach destination in central Vietnam, has also taken the initiative to introduce night tours of the city by electric cars.

These initiatives present a good investment opportunity in shopping, leisure and entertainment centers that can fit well into the overall landscape of the region.

Infrastructure

Although Vietnam’s investment in infrastructure doubles the global average, airport facilities remain largely neglected.

The overcapacity of all major Vietnamese airports is the main obstacle to the sustainable growth of the tourism industry. In 2019, the number of international visitors arriving by air has continued to increase, tripling that of the road and the seaway combined.

According to Vietnam airport companies (ACV), Ho Chi Minh City’s Tan Son Nhat Airport, which has not undergone any renovations since 2015, is operating at an overcapacity rate of 30%. Hanoi Noi Bai International Airport also has an overcapacity rate of 15%.

The authorities have introduced some short-term measures, such as reducing the number of food and drink restaurants, reorganizing counters and building more waiting rooms, but there is still a lot to be done.

Long-term measures involve building new airports in key tourist areas to ease the infrastructure burden in large cities.

The government plans to relocate Ho Minh City Airport (currently in the city center) about 40 km east of Ho Chi Minh to Long Thanh in Dong Nai Province. The airport is expected to be completed by 2025. State-owned ACV will invest $ 1.6 billion, equivalent to 37% of total capital, in the first phase of the project. It is part of the government’s plan to invest US $ 3.7 billion in the aviation sector.

The airport will be able to accommodate 100 million passengers and will be much larger than the capacity of Noi Bai Airport of 21 million passengers.

Human ressources

Vietnam’s tourism industry faces a shortage of human resources in both quality and quantity. While many training programs have been put in place, the requirements are still not met. This is especially true for hotels that struggle to find qualified staff for housekeeping, maintenance, customer service, etc. Foreign language and customer skills are important factors that may be required in the hospitality industry. These skills can only be acquired through education and training.

In addition, the tourism industry will require around 40,000 workers per year, but currently only 15,000 people study and specialize in tourism. Despite its potential, Vietnam’s tourism productivity is the lowest in the region at US $ 3,477 per year, far less than Thailand and Singapore.

To fill these gaps, the government will need to encourage and train workers in the industry if it is to cope with the increase in international arrivals. Fortunately, the government’s strategic vision emphasizes the training of human resources as one of the factors to achieve its objectives of promoting tourism and realizing its potential.

Future growth

Vietnam’s share in total Southeast Asia arrivals has increased over the past three years, reaching 14% in 2018. However, challenges in terms of infrastructure and business model remain. As long as decisive action on these issues is taken, Vietnam is in a good position to use its various natural and cultural strengths to be able to compete with other ASEAN countries.


About Us

Vietnam Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors across Asia from its offices worldwide, including in Hanoi and Ho Chi Minh City. Readers can write to [email protected] for further assistance with doing business in Vietnam.

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