The wake of the Covid-19 pandemic and the swift change in the behaviors of consumers have pushed the banking sector in Vietnam towards digital transformation. The post-Covid “new” normal has presented Vietnamese banks with challenges. To survive, they have to catch up with the digital trends; however, new opportunities are open to them and investors in this sector when digital banking seems promising to grow. 

Market potential

In Southeast Asia (SEA), digital sectors have experienced substantial growth, reaching 100 billion USD in 2020, expecting to surpass 300 billion USD in 2025. In the region, Vietnam currently ranks 3rd in attracting investment in companies operating on online platforms, including digital services and fintech. Besides, by 2025, Vietnam's digital economy will account for about one-fifth of GDP, which will increase by 7 - 16% by 2030, equivalent to about 28 - 62 billion USD, signaling the golden time to promote digital business. 

Customer behavior

In a recent survey by KPMG, in Asia–Pacific emerging markets, the share of consumers actively using digital banking increased sharply, rising 33 percentage points from 54% to 88% in a period of 5 years (2017- 2021). In contrast, the level of digital adoption among consumers in developed Asia–Pacific markets has remained stable at approximately 90%. The increase in active digital bank users is arguably higher in Vietnam compared with APAC - emerging and some APAC - developed markets, with the numbers rising by 41 percentage points to 82% in 2021 (KPMG, 2021). 

The population of Vietnam is currently more than 98 million people (General Statistics Office, 2021), of which 70% are in the adult age, and 72% own at least a smartphone which is equivalent to approximately 70 million people. This number of Vietnamese smartphone users ranks second in SEA, only behind Indonesia. Likewise, 67% of Gen Y users choose mobile as a common payment method, and 61% of them prefer opening an account online rather than going to the banks (MB Bank, 2021 quarterly report). Concurrently, 80% of Gen Z use digital banking on smartphones, becoming the generation that sets the pace for the future development of digital banking. Furthermore, as the population of Vietnam largely comprises the young generation, with the ability to quickly adapt to new technology and being tech-savvy, an increasing number of people have adopted digital financial services, which has presented a potential pool of customers for the growth of digital banking in Vietnam. The number of banking application users in Vietnam recorded a growth of 73% in the first 9 months of 2020, the highest rate in the entire region. However, digital banking penetration is still moderate, and Vietnam's digital financial services have a lot of room for development in the coming years.

In 2021, Vietnam record 8 million new digital users of which 97% are using online services, and 99% intend to keep doing so. Also in the report “Year in search” of Google, the search interest in “ ngân hàng online (online banking)”  and “mở thẻ online (open card online)” increase by over 58% and 76% respectively.  Rising searches in 2021 paint a picture of how the many newcomers have not only dipped their toes into the online world but also taken the plunge to integrate digital into their lifestyles. In the next five years, eight in 10 merchants anticipate more than half of their sales to come from online sources, 81% of them likely to increase their usage of digital payments in the next one to two years. 

This is a watershed moment for the bank to think about digital ways to be readier to respond to future changes that may lie ahead, while still keeping the customer at the center of what you do.

Collaborations with Fintech 

The survey on Fintech activities of financial companies globally in 2017 by KPMG shows that 81% of banks oriented cooperation models. According to the Global Fintech Report 2017 of Capgemini Information Technology Group (France), 77% of bank managers surveyed considered Fintech as a future cooperation partner.

In Vietnam, current fintech transactions are also based on collaboration with bank accounts. Therefore, the development of digital banking will have several advantages when integrating its products and services with Fintechs. In this way, fintech firms will help banks expand the reach of their digital financial products and services. In addition, capital resources are a challenge for all fintech companies. Especially when it comes to raising capital for credit activities and increasing transaction volume and consumer lending, only banks have the ability to perform as Fintechs are currently limited to low-volume transactions. Accordingly, banks can help fintech companies scale up the volume of their transactions substantially.

Conclusion

Ample opportunities are waiting for those who take risks. Yet, the investors should consider the legal framework in the digital banking sector. If you are interested in investing in the Vietnam digital banking sector, don't hesitate to contact our Vietonkin consultant team via email or contact page. Our professionals, who are insightful of the Vietnam market and legislation, can provide detailed advice on penetrating this potential market.

The Vietnamese lifestyle maybe nothing new to Australians who grew up anywhere near the metropolitan areas of Sydney, Melbourne, or Canberra; or have been to Footscray and Cabramatta which very much resemble Hanoi on the other side of the ocean. But how is it actually like living in this Southeast Asian Country? What are the perks of life in Vietnam compared to that in Australia? Whether you have an eye on the place as your next destination or are currently in the country, this article provides a broad picture of what life in Vietnam has to offer.

Life quality in Vietnam

1. Lifestyle

Vietnam is one of those rare places in Asia where you can both experience the jam-packed activities of metropolitan life while at the same time being reminiscent of the laid-back Aussie lifestyle. Most cities in Vietnam are bustled with traffic and activities, but Vietnamese people also like spending their day chatting away over a cup of artisan coffee. Coffee is a serious culture in Vietnam. If Australia has been credited with inventing lots of modern coffee types such as flat white and long macchiato, you would be overwhelmed by the Vietnamese coffee culture and its abundant coffee shops. 

Both Hanoi and Ho Chi Minh City are known for their street food culture. You can grab a meal from a food truck (or rather, food-carts/bikes/motorbikes here in Vietnam) or a street food stall for as cheap as $3.79. And the food scene rivals that of Melbourne and Sydney in its variety and fusions from Korea, Japan, Singapore, Thailand, China and Taiwan.

Bistros/Cafes are popular among office workers and students who look for the casual dining’s standard of quickness and courtesy. These are small restaurants serving moderately priced simple meals in a modest setting with alcohol, prices around $4-5 per meal. Fining dining or formal dining restaurants are also popular and offer an upscale setting and service while featuring unique menu options.

2. Sports and Leisure

A wide range of sports and recreational activities are available to locals and expatriates in Vietnam. If you are used to the fast-paced football and cricket bats over in Oz, you might find Vietnamese sports well, a little less than sports. Popular sports include soccer, badminton, volleyball, and martial arts. Playgrounds and recreational grounds are plentiful in major cities. You will also find gyms and sports centers in most neighborhoods that cater for a range of indoor activities and classes such as cardio, weightlifting, yoga, zumba, and squash. A typical fitness club subscription in Hanoi/HCMC costs around $21.74 If you are an outdoor person, tennis, volleyball, and badminton are country-wide favorites. And Vietnamese specialize in martial arts: you can join any classes for as low as $5 per session. 

3. Utilities

The average cost of basic utilities (electricity, heating, cooling, water, garbage) for a typical household of 4 people in Hanoi and HCMC is $70 monthly. This is significantly lower compared to Australia, where the same cost would be for one person. Likewise, monthly internet subscription of unlimited data is $9.74 in Hanoi and $12 in HCMC, the equivalent of which in Australia costs an average of $52.75.

Tourist destinations

Vietnam is an attractive tourist destination with over 18 UNESCO recognized World Heritage sites, including 2 natural heritages (Ha Long Bay, Phong Nha – Ke Bang National Park), 5 cultural heritages (Thang Long Imperial Citadel, Hanoi Citadel, Hue Imperial Citadel, Hoi An Ancient Town, My Son Temple), a mixed heritage (Trang An Complex), and other intangible cultural heritage.

If you love the sunshine on the coast of Sydney and East Melbourne, Vietnam does not pale in comparison with its 2,000 miles of coastline plus renowned island destinations. Vietnam has no shortage of stunning beaches, from the shores of the UNESCO-designated Ha Long Bay to the rolling dunes of Mui Ne and the island getaways of Con Dao and Phu Quoc. Da Nang coastal city is popular among expatriates for its high quality of life and refreshing atmosphere. Besides its sunlit coast, 40% of Vietnam is forested and home to some 1534 known species according to the World Conservation Monitoring Centre, at least 10500 species of vascular plants, of which 3.4% is protected under IUCN categories I-V.

Some tourist hotspots

Ha Long Bay: The seascape of Ha Long Bay is one of the world's most spellbinding sea views and is a UNESCO World Heritage Site. Thousands of limestone islands sit within this bay in the Gulf of Tonkin, eroded into jagged pinnacles by wind and water action over millennia.

Ho Chi Minh City: For big city fans, no visit to Vietnam is complete without a visit to Ho Chi Minh City, the  commercial hub of the country. The streets at night are buzzed with activities; the dining scene is incredibly cosmopolitan, and the shopping is the best in the country.

Ha Giang: Ha Giang is a rugged, remote, and spectacular rural area. This area features some of the best views in the country, overlooking terraced rice paddies and deep valleys that have been carved into the limestone mountains over thousands of years.

Ninh Binh: This is one of the most popular options for a day trip in Vietnam. The limestone karsts, serpentine rivers, and lush scenery make for perfect holiday photos. Most trips to this area are combined with a visit to the Trang An caves and grottoes.

 Hue: This historical city has witnessed the ebbs and flows of Vietnam imperial kingdom. The centerpiece is the Citadel and the enclosed Imperial City overlooking the serene Huong river.

Hoi An: This Southeast Asian trading port that fuses indigenous and foreign cultures gets even more magical at night being lit up by lanterns. This town is also home to hundreds of professional tailors who specialize in Vietnamese traditional craft. 

Phu Quoc:  This island off the coast near the border with Cambodia has some of the most pristine beaches in the country. Parts of the island have big resorts, but others are secluded, with nothing but palm trees and the waves.

Nha Trang: Set against a stunning backdrop of white sandy beaches and verdant mountains, this coastal city is home to the Champa Kingdom and Buddhist temples. The nightlife is a lot of fun, and there are so many extreme activities for the adrenaline junkies among you such as jet skiing, surfing or even a fly board.

Accommodation

1. Hanoi

With its expanding campuses, extensive partnerships with overseas institutions, and a vibrant intellectual community, Hanoi has emerged in recent years as an ideal destination for international students looking to study in Vietnam. Overseas students enjoy a wide range of accommodation options both inside and outside the city’s central districts, with the most popular ones including homestay, studio apartment, rental houses, and shared apartment. Student accommodation in Hanoi is estimated 75% lower than in Australia. Average accommodation cost in the central districts of Hai Ba Trung, Hoan Kiem, Dong Da, Tay Ho, and Long Bien ranges from $357.76 for a 1-bedroom to $751.46 for a 3-bedroom apartment.

For professional workers and entrepreneurs looking for long-term stay in Hanoi, the accommodation outlook in the city appears prospective. Decentralization trend and increased housing developments in the western suburbs may lead to softer rents in the city. According to the 2020 market brief of Savills - an independent real estate consulting firm -, future supply of housing in Hanoi is expected to push westward into districts such as Cau Giay, Nam Tu Liem, Bac Tu Liem, Thanh Xuan, and Ha Dong. The research also projects that by the end of 2021, 20 projects will enter Hanoi, 39% of which are in the Western suburb with some notable projects being Vincom Mega Mall Smart City, Vincom Mega Mall Ocean Park, and Hinode City,

On average, the price for purchase of an apartment in Hanoi is $1460/m², significantly lower than that in Australia which approximates $5860/m². And with Australia’s estate prices continuing to grow, Vietnam’s cheaper prices are an attractive offer. Residential property might also be a good investment in Vietnam as its urbanization level still lags behind other SEA countries and Asian peers. 

For investors and company-owners looking to establish locations in Vietnam, the average office rent is $20/m² per month. Reported trend reveals decreasing rent and increasing occupancy, with grade A offices having the strongest occupancy growth following several successful projects launched in 2019. On the other hand, the average monthly costs of prime office occupancy in Australia is $57/m2. Costs in major cities are significantly high, up to $102/m² in Sydney and $58/m² in Melbourne and Brisbane. Co-working spaces are also a popular alternative in Vietnam, with prices ranging from $64.72 to $172.58 for a fixed desk per month, significantly cheaper compared to Australia’s average of $544/month for a fixed desk.

Serviced apartments in Hanoi are a potential field with a significant increase in vacancy in recent years. Several locations to keep in mind for business travelers or temporary workers are Thanh Xuan, Cau Giay, Nam Tu Liem, Bac Tu Liem, and Hoang Mai Districts (peripheral areas surrounding central districts). The average rent is $26/m² per month or approximately $2600 for a three-bedroom apartment. Meanwhile, serviced apartments in Oz are highly concentrated in major business and tourism hubs such as NSW, VIC, and QLD, and average rent ranges from $2,754 to as high as $3,321 in Sydney and Melbourne.

2. Ho Chi Minh City

As Ho Chi Minh City gains reputation as an emerging hub for engineering and telecommunications, more and more students are drawn to the place as a destination for their studying. One of the perks of choosing HCMC as your college destination is, of course, its incredible affordability. Average rent is $393 for a 1-bedroom apartment outside the city center or up to $780 per month for a three-bedroom. Apartments inside the city are on average $548 per month for a one-bedroom and $1,194 for a three-bedroom. Again, this is incredibly cost-saving compared to an apartment in Aus’ major cities, which approximates from $850 to $1,450 and can be as high as $2,054 for a three-bedroom apartment in the city center.

For workers and entrepreneurs who might consider purchasing an apartment either for long-term stay or to invest, the average price for an apartment in HCMC is $1,460/m2. While the prospects for apartments in HCMC are dimmed by the pandemic - supply of buildings decreased 52% to a five-year low -, it still stands as an attractive option compared to apartments in Australia that approximate $5,860/m2.

Office rent in HCMC is slightly higher than that in Hanoi, approximating $32/m2 per month. However, it is projected that by the end of 2022, over 376,00m² from 24 projects is scheduled for entry. Increasing vacancies will leverage negotiations for tenants. Co-working space is always a back-up alternative with prices ranging from $64.72 to $172.58 for a fixed desk per month.

Being a high-on-the-list destination for FDI, demand for HCMC’s serviced apartments is in the high. However, with the current situation of the pandemic, vacant units of serviced apartment have increased from 1900 in 2019 to 2400 in the first half of 2020. The average rent is $23/m² per month, significantly lower than that in Australia. 

Transportation

Yes, admittedly, Vietnam lacks the availability and flexibility offered by a wide range of public transportation options in Oz, and traffic etiquette is quite chaotic. However, once you get used to the flexibility of commuting via motorbikes, it is a cost-effective and convenient way of commuting to work. Private motorbike is the most popular mode of transportation in Hanoi, as over 58.5% of the city's population opts for private motorbike.

Public transportation includes regular buses and BRT, a monthly pass for which is approximately $20 compared to the regular price of Australian monthly pass which is $108. Also, you can always opt for a taxi with an average price per tariff of $0.52. Private cars are another popular alternative in Vietnam given its rapidly developing network of highways.

Insurance

Even though Vietnam lacks a nation-wide healthcare plan that covers all residents with basic medical care, its current health insurance system is extensive, and the medical cost is only a fraction of that in Australia. Health insurance is deducted from monthly salary, and private insurance companies can provide premium plans from $250 to $1000 for an adult above 30 years of age. The use of private hospitals is a popular choice among expatriates; these provide excellent standard of service and are staffed by doctors from the USA, Korea, Japan, and France, as well as Vietnamese doctors who have trained overseas. They generally accept international health insurance. 

Australia foreigners who work in Vietnam under an indefinite or definite term of a labor contract are qualified for compulsory social insurance in Vietnam, which covers maternity, illness, retirement, labor accidents, occupational diseases, and survivorship. The rates of contribution to social insurance are the same for both foreigners and those Vietnamese: 8% for employees and 17.5% for employers.

A premium plan of life insurance in Viet Nam averages $30, much lower than the global average of $595 and Southeast Asia’s average of $74.

Of course, a few bullet points can hardly do justice to a country, but it is hoped that after reading this article you feel more confident knowing the place, which might later inform your future directions and goals. And should further insight and advice be needed, your Viettonkin experts are always ready to help.

READ FURTHER: Why Hongkong investors should invest in Vietnam

Thanks to the diverse culture, splendid landscape, up-and-coming cities, and lovely beaches, Vietnam becomes an attractive tourist destination in Southeast Asia. Tourism and hospitality develop parallelly, hence when tourism thrives, hospitality grows, especially accommodation. This article will provide you a brief outlook about Vietnamese high-end hotels and reasons why you should invest in hotel real estate.

Vietnam hotel industry outlook for 2020

The hotel sector has boomed for the last three years. Vietnam has been an affordable tourism destination in foreign visitors’ eyes, hence the number of travelers coming to our country reached 8.5 million in the first six months of 2019. Thanks to a large number of domestic and foreign visitors, the hotel market in Vietnam is also extending. Hotel performance is much more diversified within Vietnam from Ho Chi Minh City to Cam Ranh in the South to Da Nang and up to Hanoi in the North.  
By the end of the third quarter of 2019, it is estimated that more than 442 four-star and five-star hotels were opened in Vietnam, increasing 21% annually each year since 2015 (called a compound annual growth rate - CAGR). Da Nang and Khanh Hoa - the two most favourite destinations - led the supply of upscale hotels with a growth rate of 19% in each city, followed by Ho Chi Minh City and Hanoi.
In addition, revenues for high-end hotels rise dramatically in 2019. According to the newly-released Hotel Survey 2019 by Grant Thornton, the revenue per room grew by 5.4% from 2017 to $83.4 in 2019. Kenneth Atkinson, the senior board adviser of Grant Thornton Vietnam, confirmed that the average occupancy rate at 5-star hotels remained at a high proportion of 75.6%.

The chart shows the average occupancy room rates at 4-star and 5-star hotels in Vietnam.

The revenues from luxurious hotels increase gradually year by year, which may indicate the higher number of tourists staying at high-end hotels then there is a potential for opulent accommodation.
It is predicted that the earnings from the hotel sector in 2022 can be double the revenues in 2017, to more than US 890 million. 

Reasons why you should invest in the hotel sector

Impressive demand growth for hotel

Obviously, the higher number of tourists will boost the higher demand for accommodation, especially luxurious hotels and resorts.
International tourists arriving in Vietnam has accelerated considerably, reached a remarkable growth of 21% within 11 months of 2018. In addition, the growth rate of foreign visitors arrivals also increases in the decades, which is two times higher than the Asia Pacific annual growth rate. 
Furthermore, outbound travelers come to Vietnam from a variety of countries. Visitors from Asia accounted for the large proportion of foreign tourists in 2019 with over 81%, of which Chinese visitors reached more than 5.2 million and Korean tourists reached more than 3.2 million. Tourists from Europe, America, Oceania, and Africa also increased by 13.4%, 10.2%, 0.4%, and 19.8%%, respectively, annually. 

Vietnam is a good place for MICE and event organization

Sofitel Metropole Hanoi - a place holding Trump-Kim meeting.

Vietnam has been chosen as a host for a lot of business conferences, meetings, and summits. When important events are organized in Vietnam, it definitely motivates entrepreneurs, visitors, and delegates to come to the destination. For example, the Trump-Kim summit in Vietnam in February 2019 had positive impacts on Vietnamese tourism. At that time, five-star hotels in Hanoi run out of rooms to rent. Just a week before the summit took place, a lot of high-end hotels such as Grand Plaza, Hilton, Intercontinental, Sofitel Metropole, Sheraton, and JW Marriott announced that no more rooms were available from Feb 25 to the end of the month. In the near future, Vietnam will be the host of SEA games 31 in 2021. This event will attract many news reporters, Asian people to come here to encourage sports teams and it is forecasted that hotel owners will earn huge revenues and gain more profits.

Favourable geography and low-cost air ticket

Vietnam’s rich geographic, topographic diversity and local climate are advantages that Mother Nature endows us. Favourable climate conditions support a variety of tourism appeals. Where tourism develops, there are a lot of hotels and resorts. Popular tourism destinations in Vietnam are Da Nang, Hoi An, Nha Trang, Phu Quoc, Hanoi, Ho Chi Minh, Ha Long and so on. Coastal cities like Da Nang, Nha Trang, and Phu Quoc island impress foreign visitors with crystal-clear water, stunning beaches, beautiful landscapes, and friendly people. In these cities, a lot of luxurious hotels and resorts of prestigious brands namely Silk Path, InterCon, JW Mariott, FLC group… are built and invested to provide spaces for entertainment such as golf courses. It is predicted that real estate for hospitality at these places continues to attract many foreign investors.

Government support

The Vietnamese government has provided infrastructure improvements with new international routes to encourage tourism as well as enable Vietnam to transform from Experience Destination to Holiday Destination with repeated guests. Besides, the government also approves gambling in the casino under certain conditions. This new regulation supports hospitality growth and widens the regional competition.

Technology application boosts Vietnam hotel tourism and hospitality

The Vietnamese government plans to target USD 45 billion in tourism revenue in 2025. In order to achieve the target, technology application is one of the priorities. 
Industry 4.0 with its advanced information technology has paved the way for Vietnam tourism and hospitality. Traditional tourism will transfer to smart tourism. Technology allows travelers to book flight tickets, accommodation online while searching for places to enjoy the local cuisine without depending on travel agents. 
Technology application is being indeed developed but it is now available in major cities. The application in hotels in remote areas is still somehow limited, therefore the investment required to develop smart applications can be huge. 
Moreover, artificial intelligence in hospitality can be a fertile ground to improve the competitiveness among luxurious hotels within Vietnam as well as in the region. The wow factor of AI application in hospitality is obvious. AI, in particular Face ID,  allows visitors to check out in 3 seconds or paying supplement services quickly and high personal information security. In Vietnam, Vinpearl is the first hospitality company to apply facial recognition technology. 
In addition, you can look FDI guide in Vietnam at Viettonkin's blog.
To sum up, hospitality in Vietnam has a huge potential for foreign investors. Vietnam tourism and hospitality are on the way of fast-speed development with a lot of advantageous factors regarding demand growth, endowed geographic, an ideal place for big event organization and government support. Thanks to the technological application, hospitality in Vietnam is predicted to develop further in the near future.

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