HVS Destination Market Report – Vietnam – By Samantha Poh, Feny Sindarta and Hok Yean CHEE
An increasingly strong destination market with a rapidly expanding manufacturing sector, Vietnam is growing its presence on the radar of hotel operators and investors.
Vietnam is a development success story. Political and economic reforms launched in 1986 transformed the country from one of the poorest in the world to one of the fastest growing emerging economies in Southeast Asia. With an estimated real GDP growth of 6.0% in 2014, the World Bank forecasts Vietnams growth to reach 6.5% by 2017. The growth accelerated in the third quarter to 6.81% from the year-earlier quarter, posting a faster growth than neighbouring countries in the region. This growth is greatly supported by the increasing FDI inflow and manufacturing exports.
The country is becoming more attractive as an alternative to China to manufacture hardware products, mainly due to lower labour and production costs and low corporate income tax.
The government is also focusing on improving the business environment and removing obstacles to doing business in Vietnam so that most of its important indicators catch up with those of top ASEAN countries.
According to the World Travel and Tourism Council, tourism directly contributed 4.6% to the nations GDP in 2014 and is forecasted to increase by 7.9% in 2015; the growth is expected to continue throughout the period of 2015 to 2025 at 6.6% per annum. Vietnam climbed 5 positions on the Tourism Competitiveness Index to the 75th position in 2015 (out of 141 economies) from the 80th position in 2013.
To enable Vietnam to accomplish its transition to an industrialised and modern economy by 2020, the latest Socio-Economic Development Strategy (2011-2020) identifies the countrys key priorities, which may be summarised as stabilising the economy, building world-class infrastructure, creating a skilled labour force, and strengthening market-based institutions.
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