Tourism contributes a significant share to Vietnam’s GDP, yet during the ravage of Covid-19, the country closed down the international flight routes, limited the number of foreign investors, and shifted to domestic travel to buoy the sector. Under the new normal, Vietnam’s travel sector has bounced back and prospects of international travel become increasingly feasible with vaccination rollouts. Thus, the recovery of all tourism activities has opened up new opportunities for foreign investment in the tourism sector.
The recovery of international arrivals
After the re-opening of international flight routes, the tourism sector has shown signs of flourishing. In particular, the search volume of international tourists on Vietnam’s airlines and accommodations has increased by over 75% since December 2021, being the highest figure globally. From the beginning of 2022, the number of foreign searches for aviation to Vietnam has been rising rapidly with an upturn of about 247% year on year, climbing to 425% in early February and peaking at 654% in the middle of the same month. The surge in the searches has shown a bright picture for the promising increase in Vietnam tourism demand.
Thanks to effective and efficient control measures of Covid-19 of the Vietnamese Government, Vietnam still leaves its mark on the international media. Most recently, British travel magazine – Wanderlust – listed Vietnam as the 20 most worth-visiting destinations in March. Thus, with the positive perspective of foreign investors on Vietnam, in the first two months of 2022, international visitors to Vietnam were estimated at 49,200 arrivals, up 71.7% over the same period last year. Of this figure, the number of arrivals by air reached 43,200, accounting for 87.8% of international arrivals to Vietnam (the General Statistics Office, March 2022). In this way, the increase in the number of tourists will lead to the full revival of tourism, the resort real estate market, and aviation. “When the number of tourists increases again and the industry regains its previous growth momentum, investment promotion opportunities will be ample,” said Nguyen Trung Khanh – General director of the Vietnam National Administration of Tourism.
The Vietnamese Government has issued several policies to boost the recovery of the travel sector. In particular, resolution 08-NQ/TW of the Politburo on Vietnam’s tourism development strategy identifies multiple potentials and advantages. Following the Resolution, by 2030, tourism will become a spearhead economic sector, becoming an indispensable engine of economic growth.
Hence, from the end of 2021, the Ministry of Culture, Sports and Tourism (MCST) has issued a program with the theme of “Safe travel-Full experience”, focusing on launching safe, flexible, and adaptive domestic tourism, effectively controlling the COVID-19 epidemic and rolling the program out across the country. After that, the MCST gradually piloted international tourist arrival programs in accordance with the temporary guidance on piloting international tourist arrivals to Vietnam. According to the Vietnam National Administration of Tourism, since the implementation of the pilot program from November 2021 to February 8th, 2022, Vietnam has welcomed more than 8,900 international tourists.
At the beginning of 2022, the Vietnamese Government took the first initiative to reinstate international flight routes and open more than 20 ones later. From March 15, the Vietnamese government issued Resolution 32/NQ-CP 2022 whereby visa exemptions shall be applied to citizens from 13 countries with a temporary residence period of up to 15 days from the entry date. This Resolution marks a milestone in fully opening borders with foreigners for both business and travel purposes. The list of countries, five of which have reopened flights with Vietnam beforehand, are as follows: Belarus, Denmark, Finland, France, Germany, Italy, Japan, Norway, Russia, South Korea, Spain, Sweden, and the United Kingdom. Noticeably, citizens from these nations will get visa-free travel regardless of immigration purposes and types of passports.
In addition, quarantine measures for foreigners were removed. Foreign visitors are now able to travel freely with a negative COVID test upon arrival, according to the latest rule issued by the Vietnamese government. Under the new normal conditions, most international visitors to Vietnam only need to be tested for Covid-19 before boarding (within 24 hours for the rapid test method, 72 hours for the RT-PCR method) with self-paid testing costs and pay an insurance premium of about 30 USD.
Provinces across the whole country also promulgate incentivized policies for enhancing tourism. Especially, tourism stimulus packages reduce the traveling cost at several famous places by 50%. Along with that, provincial financial support has also been implemented in some localities namely Quang Ninh, Thua Thien Hue, Quang Nam, Khanh Hoa, Ninh Thuan, and Ba Ria Vung Tau, among others. The packages have attracted domestic and international visitors to Vietnam, fostering the increasing demand for Vietnam tourism
Regarding tourism infrastructure, several provinces in different parts of Vietnam have made moves for the infrastructure development of tourism, thus offering tremendous investment opportunities for foreign investors. Notably, the Ho Chi Minh City-Moc Bai expressway project (Tay Ninh) is being implemented with expected completion in the next 5 years. The expressway will solve traffic problems for Tay Ninh province and Ho Chi Minh City, thereby contributing to the socio-economic development and tourism in the whole region.
Additionally, Kien Giang mobilizes resources for investment in transport infrastructure namely roads, waterways, and seaways, and takes advantage of the central budget support under the target tourism infrastructure development program in the 2016-2020 period. The province has added a number of tourism infrastructure projects and implemented sub-projects to support the comprehensive growth of the Greater Mekong Sub-region. Plus, Kien Giang implements specific guidelines, mechanisms, and policies, creating favorable conditions for foreign investors in Phu Quoc city. The province also invests and calls for investment in eco-tourism, sea-island resorts, and experience tourism in combination with conferences, seminars, history, and spiritual tourism. In this way, the investment potentials are tremendous, thus, the investors can take tourism infrastructure into consideration
In short, the resumption of international tourism has stirred hopes of a recovery, yet it will be a long time before the industry returns to pre-pandemic levels. However, under our analysis, Viettonkin firmly believes that the current policies of the Government and the burgeoning demand of visitors have revived the travel sector in no time. Once tourism regains its momentum, investment opportunities will be wide open, thus, investors should promptly capture the chances to obtain a sizable market share. With our professional and comprehensive insight into the Vietnam market and legislation, Viettonkin is always in companion with you along the investment journey. Let’s start your business now!