Tag Archives: tourism

Location, location, location – 5 areas to watch in Vietnam

With the second fastest growing economy in the world after China, Vietnam offers investors an almost overwhelming range of ways to get in on its continuing success story.

 

From energy to real estate, transport to tourism, a multitude of areas are experiencing growth and attracting domestic and foreign investment. The push to ease regulations is set to continue, and the government is working to ensure an evermore fertile business climate. But with so many options, where is a good place to start?

 

Here are five spots currently generating some real excitement:

 

  1. Soc Trang

 

The Mekong Delta province of Soc Trang recently held an investment promotion conference and, with the backing of the Prime Minister, managed to rally investment pledges totalling nearly US$5.4 billion. The 47 projects are mainly focused on clean power generation, high-tech agriculture and tourism services.

 

With work already underway to reform and streamline administrative procedures, a new injection of cash could inspire even more growth over the coming years.

 

During the conference, the PM set out an aggressive development strategy for the province, underlining his vision that the coming decade would see Soc Trang expand its economy to achieve middle-income status.

 

Specifically, the province was urged to set its sights on high-tech agriculture adapted to climate change, clean seafood production and processing targeting high-value markets and eco-tourism linked with ‘smart’ agricultural models. To achieve this kind of sustainable development, provincial authorities will need to invest in human resources and education. Co-operative models between farmers, investors, banks and distributors will help the development of value chains and quality standards for agricultural products.

 

  1. Ninh Thuan

 

For those with eyes on the renewable energy sector, the province of Ninh Thuan is looking like a hot prospect. Construction on the country’s biggest solar power plant, with a capacity of 168 MWp and total investment of roughly US$194 million, commenced in the southern province early in June.

 

The plant is a project by Singapore’s Sunseap Group – a large provider of clean energy solutions – and is slated to cover an area of 186 hectares. Once operational in June 2019, the plant is expected to supply over 200 million kWh of electricity to the national grid annually.

 

Sunseap is not the only player taking advantage of the province’s valuable location and abundance of sunlight, with four other plants kicking of construction this year in Ninh Thuan. With backing from provincial leaders, the province aims to become a renewable energy hub, with the generation of 2,000 MW of solar power by 2020.

 

So far, the province has 15 wind power and 27 solar power projects, with designed capacity of nearly 800 MW and 1,808 MW, respectively.

 

  1. Ho Chi Minh City

 

With properties priced at a fraction of those in neighbouring Singapore and Thailand, Vietnam is drawing a number of real estate investors and becoming a popular destination for foreign buyers.

 

Interest in Ho Chi Minh City, in particular, has been growing among foreign buyers with a number of projects already for sale and some approaching completion in the next one to two years. Given the political stability of the government, some investors see Vietnam as having the possibility to grow like China.

 

Home prices in Vietnam have been rising over recent years, making a modest increase last year on the back of 6.8 per cent economic growth and rapid increase in direct foreign investments.

 

  1. Coastal hot spots

 

The hotel and hospitality sector is experiencing a resurgence in Vietnam, with many properties reporting strong occupancy rates and a large number of new operators entering the market, especially in coastal areas such as Da Nang and Nha Trang.

 

These sites were already known as popular destinations for both domestic and foreign tourists, with the number of international guests visiting the country reaching over 13 million last year. In the first four months of 2018, more than 5.5 million international guests visited Vietnam, an increase of 29.5 percent over the same period last year. As interest continues to mount, so too do opportunities for investors in the hospitality sector.

 

Thanks to the strong development of tourism infrastructure and improvements in accommodation, cities like Da Nang and Nha Trang now offer a wide selection of hotels, luxury resorts and beach villas to suit a range of budgets and preferences.

 

Condotels are a growing trend in this sector, and several developers have adopted this model as a method of refinancing. Experts forecast that up to 18,000 condotel units will be added to the market in the next two years in key tourism destinations, accounting for 60% of the total new supply.

 

With major groups such as Vingroup, Sungroup, FLC, Muong Thanh and Empire, as well as well-known international brands snapping up segments of Vietnam’s hospitality market, this area will be one to watch in the coming years.

 

  1. Quang Binh

 

The central province of Quang Binh has drawn up a list of 48 projects to be completed in the 2018-2020 period, with total expected value of over US$2.2 billion.

 

The projects are expected to cover more than 8,000ha of land, with a focus on tourism, trade and services, industry, and agriculture, as well as education and health care.

 

Of the projects, 14 are in tourism, including coastal and ecological tourism and resort complexes. These are considered high-value projects that will spur local job creation, boost the budget and foster tourism development in the province.

 

For more information about investing in Vietnam, please contact Giles at GTCooper@duanemorris.com or any of the lawyers in our office listing. Giles is co-General Director of Duane Morris Vietnam LLC and branch director of Duane Morris’ HCMC office.

Lawyer in Vietnam Oliver Massmann Tourism and Visa

Travel and tourism is a growing contributor to the Gross Domestic Product (GDP) and employment sector. With regards to GDP, in 2013, travel and tourism directly contributes 4.6% to the GDP (equivalent VND149,753 billion). It is forecast that this number will increase by 8.9% in 2014. Until 2024, direct contribution of travel and tourism is expected to grow by 6.3% per year, making contribution to GDP of 4.7%. This contribution is generated by industries such as travel agents, airlines, hotels and other services directly supported by tourism.
Travel and tourism also contributes a number of employees, when it supported 3.7% of the total jobs in 2013. In 2014, this number is expected to rise by 5.4% and by 1.5% per year (3.9% of total employment) in 2024.

Visa exemption, visa waiver and visa on arrival
The biggest impact on the number of travel and tourism flow has the entry visa policy. Visitors will switch to another country which has a more convenient entry policy to save time and cost. Thus, in order to ensure competitiveness, attract direct investment and international tourist flows, many countries are now under the process of adopting visa exemption policy (either unilaterally like Thailand, Malaysia and Singapore or bilaterally). As a result, there has been an increasing number of visitors coming to these countries from the adoption of such policy.
From 01 July 2015, the visa-free travel policy will be applicable to citizen of five European countries including Germany, France, UK, Italy, and Spain, with a permitted 15-day stay for each entry. As such, Vietnam will waive visas for such citizens within one year from the Resolution’s effective date (i.e., from 01 July 2015 to the end of 30 June 2016).
This measure will hopefully enable Vietnam to attract international tourists, when the recent statistics on foreign tourist arrivals does not really appear satisfactory
Vietnam could also potentially increase tourism arrivals by 8% to 18% if it were to move to a program of visa on arrival, which should be different from the procedure which is taking place at the moment where people have to wait hours to get their paperwork done.

Transit and visa on arrival
It has been proved that the grant of extended transit visa’s on arrival has led to an increase of tourism stop overs and spending by transiting passengers. However, even when tourists have to transit in two different cities in Vietnam (i.e., arrival and departure cities are not the same), they are required to obtain a 30-day tourist visa to take a domestic flight which lasts for only two to three hours. Therefore, it is recommended that Vietnam provide 24-72 hour domestic transfer authority to allow for transfer between airports. It is further suggested that Vietnam creates a visa-free zone in tourist attracting places for major international/ regional flights to create a transit hub, thus attracting more tourists coming to Vietnam.

Vocational Training Opportunities Scheme (“VTOS”) and its impact on hotel star rating
VTOS is considered as a great attempt by the Government in developing larger, better qualified and well trained employees in the tourism sector. This scheme, when being applied in locally managed 1-3 star hotels without international standard training programs, could significantly lead to positive results.
It should be noted that international branded hotels, despite not being considered as training institutions, conduct their own trainings to their employees based on their recognized brand standards. This makes them stand differentially from other competitors. Thus, it is necessary to figure out a solution to adopt VTOS for local hotels and at the same time recognize international standards by internationally branded hotels. It would be very wrong if we require compliance with VTOS by such international hotel chains and place financial penalties for their incompliance.

Destination marketing
In order to attract tourists, value and experience that each destination brings to visitors are of utmost importance. They are a result of unite cooperation among several public and private service providers, working together towards a common goal to ensure the viability and integrity of their destination. In that sense, destination management plays an important role. In Vietnam, destination management is largely the responsibility of the Department of Culture, Sport and Tourisms to report to the provincial People’s Committee. There is no regime for shared responsibility among government agencies. It is now time to start a strategic planning initiative to strengthen destination management at each place with tourist value.
In addition, regional tourism management should also be enhanced. Tourists normally do not visit a single place but make a tour throughout a region based on its available tourism products. Thus, destination management should not only require efforts at each destination but also collaboration within the region, whether in the form of public-private partnership or other forms, to develop joint regional products. These products will encourage visitors stay longer and plan their trip back to many different parts of Vietnam.

Current marketing efforts by the Government
Since its establishment in 2014, the Tourism Advisory Board (“TVB”) has worked closely with the Vietnam National Administration of Tourism (“VNAT”) to develop a global marketing program for Vietnam. The aim of this program is to increase global awareness about Vietnam as a must-see destination in South East Asia, attract high-value visitors with long stays and high expenditure, and increase number of international visitors to Vietnam, etc. Till the end of 2015, TVB and VNAT will launch a campaign for online marketing. This is said to be an effective channel to attract tourism given the limited Government’s budget. Key target markets of this campaign are USA, Germany, France, UK, Japan, Singapore, Malaysia and Australia.
However, budget for the global marketing campaign is very constrained. Up to now, the funding is less than US$1.5 million, which is too little compared with the contribution of Vietnam’s neighbouring countries to their national tourism promotion plan. Taking into account the fact that travel and tourism in total accounts for about 10% of the GDP, the Government is recommended to provide further support to the industry.

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Please do not hesitate to contact Mr. Oliver Massmann under omassmann@duanemorris.com if you have any questions on the above. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.