- Overview on the Tourism Sector in Vietnam
Through the natural beauty of the landscape and a rich historical and cultural heritage, Vietnam has a lot to offer for tourists. In addition, with the friendly and welcoming population Vietnam has all the requirements to become a leading destination for travelers. By now, the tourism and hospitality industry has been a key contributor to Vietnams economic and social development and will undoubtedly continue to be a very important contributor moving forward.
As of October 2017, 10.43 million international visitors were welcomed in Vietnam. This was an increase year on year of 28% with arrivals by air growing the fastest. The stock of Tourism lodging stands at nearly 25,000 locations with over 500,000 rooms. The Tourism industry contributes 13,9% to Vietnams GDP when calculating all direct, indirect and inferred inputs.
Vietnam’s ability to further grow its tourism and hospitality market and industry is a very important strategic issue for the continued economic and social development of Vietnam. Asia’s tourism receipts in 2013 were measured as being USD 359 billion representing nearly 30% of the world total. ASEAN region, the World Travel and Tourism Council expect that the region will achieve annual average sector GDP growth rates of 6.2% for each of the years to 2026. In the long term Vietnam has an incredible potential gain from the further development of the tourism and hospitality industry, ranking 5th out of 184 countries in terms of the importance of contribution to GDP from the industry for the period 2016-2026.
The year 2017 saw many positive actions taken, including the critical decision by the Politburo of Vietnam to classify tourism as a key economic sector. Further improvements to the legal and policy framework that is supportive and competitive with Vietnam’s neighbors is critical. Budgetary support for the development of the industry and cooperation and coordination with the commercial enterprises should be made priorities -to integrate public and private promotion and development of the industry.
- Visa Policy
By planning travelling abroad the requirement to obtain a visa is a major consideration for travelers. This is particularly true for leisure travelers traveling for the purpose of tourism and business tourism travelers (Meetings, Incentives, Conferences and Events – “MICE”) and has been cited by the World Tourism Organization (UNWTO) as a key factor in determining the flow of tourism globally and within regions. Tourists evaluate the cost of obtaining a visa in terms of money, time and effort. This is particularly important in the context of an increasingly competitive regional travel market. Compared to other Asian countries, Vietnams Visa policy is still more laborious
The government should make permanent the waiver of visa for the current countries that are eligible for visa waiver. Also, the government should think about to extend the permitted period of stay to 30 days for all of the above countries. Travelers from long-haul destinations, particularly from Europe, tend to take longer holidays when travelling. Limiting the visa exemption to 15 days for distant countries may turn away travelers.
However, the government should also consider for any decisions affecting changes in visa policy, decisions should be made well in advance of any decision expirations as the international travel market plans on a one year in advance basis.
- Destination Marketing
Since the focus is on the expansion of tourism, new marketing strategies must be developed. Vietnam has several natural advantages that it can use to draw visitors, both international and domestic, including its long coastline with numerous beautiful beaches, long history and diverse cultural offering. The key to leveraging these advantages is broad and robust marketing, because these are not Unique to Vietnam in ASEAN and also are not yet very well-known throughout the world.
3.1. Public-Private Cooperation
Tourism Advisory Board (“TAB”) is comprised of leading Vietnamese and foreign-invested enterprises in tourism, travel and hospitality and has worked closely on a number of matters, particularly in the area of marketing. The VNAT which was adviced from the TAB appointed OlgivlyOne Worldwide and created a new global website: www.vietnamtourism.vn. Which is a a new key platform for e-marketing to international travelers. Vietnam Airlines, a member of the TAB, has put attractive and effective promotional material on all of their in-flight screens and other major industry players have also contributed to the promotion of Vietnam.
- Budgetary resources for marketing
A key issue regarding the marketing of Vietnam as a tourist destination is the resources that are available to the tourism authority to promote the country. Vietnam needs a Tourism Development Support Fund and Vietnam has recognized this issue and the Government has noted the need. This is a positive signal and a needed step. It is critical that the resources to market the country are provided and there is a major opportunity to work with the TAB and the endeavors of the private sector. For further improvements the Government should invite the TAB to consult and coordinate with the relevant Ministries and Provincial authorities in the preparation of tourism development strategies, policies and marketing plans. Also the provinces should put in place region-wide coordination structures to focus and maximize the actions of cooperating the provinces and facilitate cooperation
Like companies the provinces should improve the product, province by province, to meet (future) market needs and providing more things to do for visitors staying in the region’s expanding accommodation base. Part of this product improvement should also be the development of stronger regional products that clearly reflect destinations and attractions.
- TOURISM DEVELOPMENT FUND
In the future there will be a Tourism Development Assistance Fund, the Government announced therefore plans to establish the Fund in the next years. This is a very positive sign and development for the tourism industry. But the key questions around this will be how funding is sourced, how the fund is managed and the priorities that the fund will be used to advance the tourism industry. There are several priorities that could be addressed. Among the most important would be providing more resources to the marketing of Vietnam as a “must-see” tourism destination for international visitors. The key needs that could be addressed through such a Fund include the marketing described above, improving and expanding tourism and hospitality training and allocation for funds to Provinces for technical assistance from local and international experts on integrated planning of tourism infrastructure and master planning.
When the Fund is set up funding should come from sources that are neutral to the attracting of international visitors. Any change in visa policy that may involve an increase in the requirements for obtaining a visa will be counterproductive to the growing of the tourism industry.
The Government should consider that the TAB and other industry representatives should be involved in setting up and assisting in administering the Fund. The current TAB is already mobilizing capital towards a goal of VND 70 billion for the development of tourism from the private sector. This represents a golden opportunity for Public-Private cooperation for the economic and social development of Vietnam.
Once the fund is established, it should be allocated on the basis of national and regional goals and broadly across the entire tourism sector. The focus should be on marketing and increasing awareness of the wonderful offering Vietnam has, improving standards and service and coordination of planning and other efforts by regions and provinces in developing the tourism industry.
- Outlook on major trade Agreements TPP11 and EUVNFTA
In January 2017, US President Donald Trump decided to withdraw from the US’ participation in the TPP. In November 2017, the remaining TPP members met at the APEC meetings and concluded about pushing forward the now called CPTPP (TPP 11) without the USA. The agreement shall be signed by all member states by the first quarter of 2018. After that, it has to be ratified in each member state before taking effect.
The TPP 11 is targeting to eliminate tariff lines and custom duties among member states on certain goods and commodities to 100%.
With the National and Most-Favored Nation Treatment principle, the TPP is ensuring a fair competition which will attract new foreign investments as well as support for the agriculture sector in its restructuring process.
Moreover, national farmers must adopt high-developed technologies in nutrients and animal healthcare to be competitive. This will lead to more safety and trust of the consumer in the agriculture market in Vietnam.
Another notable major trade agreement is the EUVNFTA between the European Union and Vietnam. The EUVNFTA offers great opportunity to access new markets for both, the EU and Vietnam. It will help to bring more capital into Vietnam. In addition, the EUVNFTA will boost the most economic sectors in Vietnam.
Furthermore, the Investor State Dispute Settlement (ISDS) will ensure highest standards of legal certainty and enforceability and protection for investors. We alert investors to make use of these standards! We can advise how to best do that! It is going to be applied under the TPP 11 and the EUVNFTA. Under that provision, for investment related disputes, the investors have the right to bring claims to the host country by means of international arbitration. The arbitration proceedings shall be made public as a matter of transparency in conflict cases. In relation to the TPP, the scope of the ISDS was reduced by removing references to “investment agreements” and “investment authorization” as result of the discussion about the TPP’s future on the APEC meetings on 10th and 11th November 2017.
Further securities come with the Government Procurement Agreement (GPA), which is going to be part of the TPP 11 and the EUVNFTA.
The GPA in both agreements mainly deals with the requirement to treat bidders or domestic bidders with investment capital and Vietnamese bidders equally when a government buys goods or requests for a service worth over the specified threshold. Vietnam undertakes to timely publish information on tender, allow sufficient time for bidders to prepare for and submit bids, maintain confidentiality of tenders. The GPA in both agreements also requires its Parties assess bids based on fair and objective principles, evaluate and award bids only based on criteria set out in notices and tender documentation, create an effective regime for complaints and settling disputes, etc.
This instrument will ensure a fair competition and projects of quality and efficient developing processes.
If you have any question on the above, please do not hesitate to contact Dr. Oliver Massmann under firstname.lastname@example.org . Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
Thank you very much!