I appreciate the efforts of the Vietnamese government in supporting businesses, but the authorities can and should do more to further develop the economy.
|Peter Ryder - CEO, Indochina Capital |
For almost a year, Vietnam’s tourism industry has witnessed a recovery but is still behind other Southeast Asian neighbours. Vietnam welcomed 2.95 million foreign visitors in January-November 2022 while Thailand, Singapore, and Malaysia welcomed 10 million, 5.3 million, 6.2 million international tourists respectively during the same period. Many observers attribute the lack in foreign arrivals in 2022 to Vietnam’s restrictive tourist visa policies. More competitive and friendly tourism policies for international tourists such as 3-month multiple-entry visas, e-visa issuance, or granting visas-on-arrival at the airports will be suitable solutions to boost the tourism sector.
Vietnam is one of the most open economies within Asia-Pacific, thanks to a series of economic reforms undertaken by the country’s government to create a fair and attractive business environment for foreign investors.
The disbursement of foreign direct investment in Vietnam rose by 13.5 per cent over 2021, reaching $22.4 billion, according to the General Statistics Office. However, at some certain level, foreign investors are disadvantaged and suffer from increased project timelines caused by bureaucratic delays in issuing requisite approvals and permits, which needs to be further streamlined.
Since the beginning of the year, the Vietnamese government has directed the implementation and disbursement of public investment capital, to meet the demand for a quick and sustainable recovery of the economy.
However, in 2022, investment capital realised from the state budget reached an estimated VND436 trillion ($18.9 billion), equalling only 67 per cent of the year’s plan and lower than the same period last year. This is not enough, however, as Vietnam’s economy continues to suffer from a lack of critical infrastructure investment and public investment disbursement really needs to speed up.
Regarding Vietnam’s economic outlook for 2023, the Asian Development Bank has lowered the growth forecast from 6.7 to 6.3 per cent. HSBC has also dropped its 2023 projection to 5.8 per cent.
Vietnam’s industrial market has the potential to develop in the coming time, thanks to the shift of production from China, free trade deals, affordable real estate prices, low wage and high-quality workforce, convenient transportation network, and incentives policies from the government. To take maximum advantage of this enormous opportunity, Vietnam must focus on a large-scale infrastructure upgrade.
There are some challenges for Vietnam’s economy in short term. First, because of rising inflations and increasing interest rates, an economic slowdown perhaps even recession is being experienced in the world’s major economies such as Europe and America, which are the main markets for Vietnam’s exports.
Second, the Ukraine situation has led to supply chain disruptions, increasing the price of petroleum products and commodities such as wheat, coal, and fertiliser. Subsequently, Vietnam experiences an inflation rate hike.
In addition to that, the combination of increased interest rates and regulatory uncertainty is causing key business sectors such as banking and real estate to experience a challenging time.
| ||Thai newspaper delves into Vietnam’s tourism recovery efforts |
The Bangkok Post on May 10 published an article titled “Vietnam reimagines tourism” discussing the Vietnamese tourism sector’s efforts to respond to COVID-19 impact.
| ||Provinces urged to diversify markets for tourism revival |
Events in Ukraine could have a knock-on effect on Vietnam’s tourism market, with the sharp increase in oil prices set to negatively affect the profit margin of airlines. The impacts are believed to be short-lived, however, as airlines are finding alternative options to avoid conflict areas and diversify offerings
| ||Vietnam’s tourism ready to welcome foreign visitors back |
Vietnam has officially reopened international tourism today – March 15. At present, the whole tourism ecosystem, from aviation, travel agents to accommodation and entertainment service providers, is ready to open doors to welcome visitors back.