The recently amended Capital Law, passed by the National Assembly on May 28, has introduced a transformative legal framework for Hanoi. This law aims to foster synchronized, sustainable, and distinctive development while enhancing social security and living facilities. By emphasizing innovation and decentralization, it creates opportunities for city authorities to utilize unique mechanisms and mobilize resources effectively. A standout feature of this amendment is the pilot implementation of two innovative urban development models: Transit-Oriented Development (TOD) and Business Improvement District (BID).

Urban Planning as a Key Driver

Urban planning has been highlighted as a critical tool for managing Hanoi's growth. While TOD and BID are well-established models in many developed countries, they are newly introduced to Hanoi through this legal amendment. Their implementation has the potential to redefine the city’s urban landscape, offering a fresh approach to sustainable and inclusive development.

The Transit-Oriented Development (TOD) Model

The TOD model prioritizes the development of residential, commercial, and entertainment areas around public transport hubs, such as bus stops and railway stations. By reducing dependency on personal vehicles, this model aims to create a more sustainable and accessible urban environment. It also enhances the quality of living by ensuring that essential public services are within easy reach.

Hanoi’s urban planning project has already identified the construction of 14 urban railway lines, which will serve as the backbone for TOD implementation. These railway lines will form the foundation for new urban areas, strategically located to allow residents to walk conveniently to public transport hubs. This integration of public transport into urban planning is expected to reduce traffic congestion, improve environmental quality, and provide better access to amenities.

The Business Improvement District (BID) Model

BID is another forward-thinking approach that combines economic development with cultural preservation. This model involves collaboration between governments, corporations, and communities to create vibrant urban areas. By promoting cultural and commercial activities, BID serves as a catalyst for local economic growth, environmental conservation, and heritage preservation.

In Hanoi, the historic "36 old streets", known for their cultural significance, provide a perfect opportunity for BID development. These areas can be revitalized into bustling hubs of cultural and commercial activities, attracting tourists and generating economic benefits while safeguarding the city’s heritage. Such initiatives have been successfully implemented in countries like the United States, Germany, and Japan, United Kingdom, Australia, and Singapore, offering valuable insights for Hanoi’s future development.

Opportunities and Challenges

The implementation of TOD and BID presents significant opportunities for Hanoi to enhance its urban identity and improve the quality of life for its residents. However, several challenges must be addressed to ensure the success of these models.

One major hurdle is the current state of urban development in Hanoi. Certain inner-city districts have been poorly managed, resulting in issues with urban landscapes and building architecture. Additionally, uneven development between inner-city and peripheral districts creates disparities that may hinder the smooth adoption of these models.

Both TOD and BID require substantial financial investments, which pose challenges in securing early-stage funding. Successful implementation will also demand close collaboration among government agencies, businesses, and local communities. The risk of public infrastructure being overwhelmed and real estate prices rising around these development zones further complicates the process. Addressing these concerns will be essential to achieving sustainable and equitable urban growth.

Strategies for Successful Implementation

To overcome these challenges, Hanoi’s authorities must adopt a comprehensive and strategic approach. A synchronized planning system, encompassing socio-economic, construction, and transportation planning, is crucial. Clear development roadmaps will help ensure that the goals of TOD and BID are met efficiently.

Integrating public transportation, commercial activities, and residential spaces into urban planning is another essential step. By creating well-connected urban areas with both surface and underground infrastructure, the city can provide residents with easy access to services and amenities without long commutes.

Preserving Hanoi’s historical and cultural values should also be a priority. The unique architecture and cultural heritage of the city’s urban areas form a strong foundation for socio-economic growth. Leveraging these assets will enhance the city’s identity and improve the quality of life for its residents.

Mobilizing resources effectively is key to the success of TOD and BID. By utilizing specific mechanisms allowed under the Capital Law, Hanoi can attract non-state investments and prioritize critical projects like parks, pedestrian zones, and advanced public transport systems. Technology can play a vital role in monitoring and addressing issues during the implementation process, ensuring timely solutions and efficient management.

Conclusion

The introduction of TOD and BID under the amended Capital Law represents a groundbreaking step for Hanoi. These models hold the promise of transforming the city into a more sustainable, accessible, and vibrant urban center. By addressing challenges such as resource constraints, infrastructure demands, and social equity, Hanoi can unlock the full potential of these development approaches. With strategic planning and collaboration, the city stands poised to usher in a new era of growth and innovation.

Author: Master, architect Pham Hoang Phuong is an expert in research and critical theory on architecture, planning and urban development management, with nearly 25 years of experience; former deputy editor-in-chief of Vietnam Architecture Magazine and is currently working at the National Institute of Architecture (Ministry of Construction).

You might also like: Vietnam's Real Estate: Opportunities and Taxes

Going to Indonesia? Understanding Indonesia’s culture, history and food is your first competitive advantage. As a consultant with over two decades of experience in FDI and manufacturing trends across dynamic Asian markets like Vietnam, China and Malaysia, I’ve seen firsthand how cultural fluency can make or break an enterprise. My cross-ASEAN expertise grounds this guide in both business strategy and cultural empathy. We’ll help you decode Indonesia’s social, spiritual and professional landscape—so your next step is intentional, not accidental.

The complexity of Bahasa Indonesian adds another layer to this, as understanding the actual meaning of words and phrases in different contexts is crucial.

Here are your key takeaways for navigating Indonesia:

• Culture is a key factor in business success, from negotiations to daily operations.
• Indonesia’s diversity means approaches must be nuanced and regionally aware.
• Core values like social harmony and respect for hierarchy are key in all interactions.
• Religion impacts schedules, legal frameworks and social customs.
• Communication often requires understanding indirect cues and unwritten rules.

Indonesia Introduction

Indonesia is a country with rich history and diverse culture, comprising over 17,000 islands in Southeast Asia. Central Java, in particular, showcases a diversity of ethnic groups and religions, highlighting the cultural aspects and local identity tied to the region. The official language of Indonesia is Bahasa Indonesia, a standardized dialect of the Malay language that serves as a unifying force across the archipelago. With a population of over 272 million people, Indonesia is home to more than 300 ethnic groups, each with their own culture, customs and traditions. Indonesian culture is a mix of various influences, Hindu, Buddhist, Islamic and Western cultures. The country’s strategic location has made it a hub for trade and cultural exchange, shaping its local cuisine, music and art. This rich tapestry of influences is evident in the daily lives of Indonesian people, making the country a fascinating destination for both investors and tourists.

Why Culture Matters in Indonesia for Investment and Tourism

Culture isn’t just context—it’s currency in Indonesia. Understanding and respecting the local cultures, which are deeply rooted in diverse traditions and customs, is key for anyone looking to “unlock growth potential” in this vibrant archipelago. Getting the cultural nuances right is a game changer.

For Investors: Culture Shapes Regulation, Negotiation and RelationshipsWhen you’re looking at investment opportunities, remember Indonesian business culture is quite different.

• Family owned business norms and hierarchy: Many businesses are family run and decisions flow from the top. Knowing who holds the real power is key. Seniority and titles are highly respected.
• How religion impacts scheduling and governance: With the world’s largest Muslim population, Islamic principles influence daily life and business. Prayer times may affect meeting schedules and religious holidays are widely observed, impacting business operations. Events in the Islamic calendar, like Eid al-Fitr and Eid al-Adha, play a big role and can impact business activities. This is noted in the S-GE cultural guide for Indonesia (2019) too, highlighting the importance of being aware of prayer times.
• Communal decision making and consensus driven delays: Decisions often involve seeking consensus (musyawarah untuk mufakat). This means processes take longer than you might expect but ensures buy-in. Patience is more than a virtue here; it’s a strategy.

For Tourists: Culture Adds Safety, Access and Authenticity

For travelers, cultural awareness enriches the experience and fosters positive interactions. Indonesian traditional music often evokes feelings of love and the natural beauty of the region, deeply connecting visitors to its cultural and scenic elements.

• Hospitality customs and local perception of respect: Indonesians are generally very hospitable. Showing respect through polite greetings and genuine interest in their culture can lead to warmer receptions and more authentic experiences.
• Navigating religious boundaries in sacred areas: When visiting temples, mosques or other sacred sites, dressing modestly is essential. For instance, The Times travel guide for Indonesia mentions to cover up when visiting religious sites, reflecting the broader societal norms on modesty. Always ask for permission before taking photos.
• Why certain greetings can open or close doors: A gentle handshake or a slight nod is common. Using your right hand for giving or receiving is crucial, as the left hand is considered unclean.

Indonesia’s Cultural Diversity and Identity Layers

Transformative Insight: Indonesia is not one culture—but over 1,300 ethnic identities under one nation. Various regional dialects like Javanese, Balinese and Minangkabau are spoken alongside the standardized Bahasa Indonesian. Its motto, “Bhinneka Tunggal Ika” (Unity in Diversity) is a daily reality.### Ethnic and Language

Unity in Diversity in daily life: You’ll see a patchwork of traditions, clothes and customs from island to island, even village to village. Java and Bali are important cultural pillars of Indonesia, with Javanese and Madurese ethnic groups contributing to the country’s diversity.

Bahasa Indonesia vs. local dialects: What to know: Bahasa Indonesia is the official language and the glue that holds the country together, used in education, government and media. It’s a standardised dialect of the Malay language, established in 1945 during Indonesia’s independence. However, hundreds of local languages and dialects are spoken at home and in local communities. English is spoken in tourist areas and major business hubs, but learning a few basic phrases in Bahasa Indonesia will be appreciated.

Business language cues in urban vs. rural areas: In cities like Jakarta or Surabaya, you’ll find more English proficiency and Western business practices. In rural areas, you’ll find more local customs and languages.

Regional Archetypes

• Java’s syncretic mix of Islam, Hinduism and animism: The most populous island, Java, is a unique blend where Islamic practices are often interwoven with older Hindu-Buddhist traditions and indigenous animist beliefs. Hindu influence in Indonesia’s history is significant, particularly during the Majapahit Empire and the Mataram kingdom where cultural exchange blended Hindu teachings with new Islamic practices. East Java is home to the Sundanese ethnic group and its traditional music, Gamelan, which reflects the region’s rich cultural heritage.
• Bali’s ceremonial economy and what it means for tourists: Bali is mostly Hindu and its culture is deeply embedded in religious ceremonies that are a constant, vibrant part of life, influencing everything from daily schedules to tourism.
• Sumatra, Kalimantan, Papua—differences in culture and commerce: These big islands have different ethnic groups, resource-based economies and unique cultural expressions that are far from Java or Bali, requiring tailored approaches for business and travel. Western Sumatra is known for the Minangkabau dialect, highlighting the language diversity of Indonesia.

Core Indonesian

Values Every Tourist or Executive Must KnowTransformative Insight: Harmony trumps individualism—always. Indonesia’s rich culture and unique attractions make it a big player in the world. This is a fundamental principle that applies at all levels.

(Visual Suggestion: Infographic comparing Western directness vs. Indonesian indirect communication styles focusing on group harmony vs. individual assertiveness.)

Social Harmony (Rukun) and Conflict Avoidance

• How indirect communication saves relationships: Confrontation is generally avoided. Messages are often conveyed subtly to maintain harmony and not to offend.

Learning the local language, Bahasa Indonesia, will help you communicate better and connect with locals.

• Dealing with disagreements in high-context situations: If disagreements arise, they are usually handled quietly and politely. Learning to read non-verbal cues and what’s not said is crucial.
• Saving face in meetings and negotiations: Causing someone to lose face can be harmful to relationships. Always provide a way for others (and yourself) to save face even when delivering bad news.

Respect for Hierarchy and Elders

• Language levels and speech etiquette (Bahasa Indonesia honorifics): Bahasa Indonesia has different ways of addressing people based on age and status. Using terms like 'Bapak' (Mr./Sir, or to an older man) and 'Ibu' (Mrs./Madam, or to an older woman) shows respect.
• Business card protocol and seating order: Present and receive business cards with your right hand or both hands, and take a moment to read it. In formal meetings, seating arrangements may reflect hierarchy.
• Age, job title and how it affects outcomes: Seniority, both in age and position, commands respect and often carries more weight in decision-making.

Language

Language is important in Indonesian culture, with Bahasa Indonesia as the official language. It’s a standardized dialect of the Malay language and used in business, tourism and daily life. Understanding Bahasa Indonesia is crucial for effective communication and connecting with the local community. In business, speaking the local language can build trust and credibility, in tourism it can enhance the experience and allow visitors to fully immerse in the local culture. Whether you’re negotiating a business deal or exploring a market, a few words in Bahasa Indonesia can go a long way in creating positive interactions and deeper connections.

Communication Strategies

Effective communication in Indonesia requires understanding of the local language and cultural practices. Body language and non-verbal cues also play a big role in communication, direct eye contact and physical touch is part of Indonesian culture. When communicating with Indonesians, be respectful and polite, use formal titles and avoid confrontational language. In business meetings, exchange business cards and small talk before discussing formal matters. By using these communication strategies, you can build relationships and navigate Indonesian society. Remember, patience and attentiveness is key; understanding the subtleties of Indonesian communication can make all the difference.

Role of Religion in Daily and Business Life

Transformative Insight: Religion shapes not only beliefs but market rhythms and legal frameworks. It’s deeply embedded in Indonesian society. The historical significance of Indonesian independence on August 17, 1945, marked a turning point when Indonesia declared itself independent from Dutch colonial rule, shaping its national identity and political evolution.

The Big Five Religions in Practice

Indonesia officially recognizes six religions: Islam, Protestantism, Catholicism, Hinduism, Buddhism and Confucianism.

• Islam’s impact on timing, contracts and food etiquette: As the majority religion, Islam’s teachings influence many aspects of life, prayer breaks during the workday, Halal food and business ethics.
• Balinese Hinduism and ritual economies: In Bali, daily life is a complex web of rituals and offerings that are part of its unique Hindu traditions and even affects its tourism driven economy.* Christianity, Buddhism, Confucianism—minority insights: While smaller in numbers, these communities are part of Indonesia’s religious landscape, with their own holidays and cultural practices respected and accommodated.

Religious Sensitivities for Tourists and Investors

• Dress codes in mosques, temples and offices: Modest dress is generally expected. When visiting places of worship, women may need to cover their heads, and both men and women should cover their shoulders and knees. Business attire is generally conservative.
• Halal compliance in F&B and hospitality: Halal food is widely available. If you’re in the food and beverage or hospitality industry, understanding Halal certification can be a big advantage.
• Public holidays and business shutdowns: Major religious holidays for all recognized religions often result in public holidays and business closures. Plan your schedule accordingly.

Culture and Performing Arts

Indonesian culture is famous for its performing arts, including traditional music, dance and theater. Balinese dance dramas are significant as they are deeply connected to Buddhist and Hindu mythology, drawing from epic stories like the Ramayana and Mahabharata. The country has various traditional dances, such as the elegant Legong dance from Bali and the energetic Jaipongan dance from West Java. Indonesian music is characterized by the use of traditional instruments, including gamelan, a set of percussive instruments and angklung, a bamboo wind instrument that produces beautiful sounds. These art forms are not only entertainment but also a reflection of the country’s rich cultural heritage. Traditional ceremonies and festivals are part of Indonesian society, a glimpse into the many cultural practices that make up the nation.

Traditional and Contemporary Arts

Traditional Indonesian arts such as batik, woodcarvings and Wayang Kulit puppet performances are highly valued and part of daily life. Puppet theatre, especially wayang puppet theatre is crucial in preserving Indonesia’s many indigenous cultures and is recognized by UNESCO’s Intangible Cultural Heritage. These art forms are deeply rooted in Indonesian culture, used to tell stories, celebrate events and preserve history. Contemporary Indonesian art is a fusion of traditional and modern, many artists incorporate elements of Western culture into their work. Martial arts such as Pencak Silat are also part of Indonesian culture, practiced by people of all ages and often featured in cultural performances and competitions.

Festivals and Celebrations

Indonesia is famous for its many festivals and celebrations that are part of the country’s cultural life. Kroncong music, a traditional music genre in Indonesia that originated in the 16th century introduced by Portuguese sailors is often featured in these celebrations. The country’s Independence Day on August 17 is a big event that commemorates Indonesia’s independence from Dutch colonial rule. Other notable festivals are the Baliem Valley Festival which showcases the traditional culture of the Papuan people and the Java Jazz Festival which features a mix of traditional and contemporary music. Indonesian festivals often feature traditional dance performances, music and local food, a great way to experience the country’s rich cultural heritage.

Food and Cuisine

Regional Cuisine Indonesian cuisine is a mix of many flavors and influences, each region has its own local dish. From spicy food in West Java to fresh seafood in East Java, Indonesian culinary diversity is a reflection of its rich history and cultural practices. Nasi Padang from Western Sumatra is an example of the country’s culinary diversity with its rich flavors and aromas. Other popular dishes like Gulai Kambing and Sate are also influenced by Islamic culture and traditional medicine. By trying the local dish of each region, visitors can gain more understanding of Indonesian culture and its many ethnic groups. Each meal tells a story, a delicious insight into the traditions and history that shape this country. Whether you’re having street food or dining in a fine restaurant, the culinary journey in Indonesia will be an unforgettable one.

Local Experiences and Community Life

Indonesian culture is very communal, mutual assistance and cooperation is highly valued. Historical and cultural sites like Borobudur temple complex with its intricate architecture and spiritual significance also reflect this communal spirit. The concept of “gotong royong” (mutual assistance) is deeply rooted in Indonesian society and community life is part of daily life. Visitors to Indonesia can experience the local culture by engaging with local communities, trying traditional food and attending cultural events. This communal spirit is evident in the way Indonesian people come together to support each other, whether in daily activities or special occasions.

Engaging with Local Communities

Engaging with local communities is the best way to experience Indonesian culture firsthand. The many Indonesian dishes shaped by various cultural influences offer a variety of flavors and ingredients. Visitors can join traditional ceremonies, learn about indigenous customs and try local food. Indonesian local communities are known for their hospitality and visitors are often welcomed with open arms. By engaging with local communities, visitors can gain more understanding of Indonesian culture and way of life and make meaningful connections with the people they meet. Whether it’s trying traditional food, learning about local customs or attending a cultural event, engaging with local communities is an essential part of any trip to Indonesia.## Etiquette and Communication for Investors and Tourists

While the provided sources (URL 1 and 2) give general cultural awareness, they don’t cover specific behavioral protocols in real time. Respecting local cultures in Indonesia is crucial as people’s identity is closely tied to their local traditions and customs. My experience has shown that the “how-to” is where strategic advantage lies.

Interpersonal Etiquette

• Greetings and physical contact rules: A light handshake is common, often accompanied by placing your hand on your heart afterward. Understanding regional dialects is key, many Indonesians communicate using dialects specific to their islands or communities, such as Javanese, Balinese and Minangkabau. Public displays of affection are generally frowned upon. Use your right hand for greetings and exchanges. Using the right hand for such interactions is part of Indonesian culture, reflecting deep rooted customs and respect.
• Gift-giving in professional settings: If giving a gift, make sure it’s not too extravagant as this could be misinterpreted. Gifts are not opened in front of the giver. Avoid alcohol or pork products unless you’re certain of the recipient’s preferences.
• Dining manners and hosting expectations: If invited to someone’s home, it’s polite to bring a small gift. Wait to be invited to eat before starting. It’s often customary to leave a small amount of food on your plate to indicate you’ve had enough.

Business Communication

How to email or WhatsApp like a local: Initial communications may be more formal. Indonesia’s communication style is unique, shaped by its rich cultural identity and historical significance. WhatsApp is widely used for quick follow-ups, but always start with a polite greeting. Responses will be less direct than in some Western cultures. Indonesia’s communication style is influenced by many cultures, reflecting a mix of diverse customs and religious beliefs.

Reading between the lines in Indonesian replies: Indonesians prioritize politeness and harmony over bluntness. A “yes” might mean “I understand” rather than “I agree”. Look for enthusiasm and follow-up actions to gauge true commitment.

Why “yes” may mean “maybe”: To avoid confrontation or disappointment, a direct “no” is rare. Phrases like “I’ll try” (saya usahakan) or “maybe later” (nanti saja) often mean polite refusal or need more time.## Cultural Dos and Don’ts to Avoid Common Pitfalls

The ResearchGate article on “Cultural Tourism in Indonesia” (2023) gives general overview of cultural tourism but doesn’t cover specific dealbreakers for interpersonal or business interactions. Indonesia is globally recognized for its rich cultural heritage, iconic landmarks and biodiversity, making it important in the world. Based on my field experience here are some key points.

Common Misunderstanding

Preferred Behavior / Understanding

• “Yes” always means agreement.
• “Yes” can mean “I hear you” or “maybe”. Look for confirming actions.
• Silence means lack of interest or disagreement.
• Silence means thought, respect or polite disagreement.
• Getting straight to business is efficient.
• Build rapport first; small talk is key to trust.
• Pointing with index finger is okay.
• Point with thumb of right hand, with fingers folded.
• Deadlines are rigid.
• While important, relationships and consensus may take precedence.

For Tourists: Situational Awareness

Avoiding offense in sacred spaces: Always dress modestly, speak softly and ask before taking photos of people or ceremonies. Never touch anyone on the head as it’s considered sacred. When visiting religious buildings such as temples, respect local customs and dress code, especially during religious ceremonies. August 17, 1945 is Indonesian independence day from Dutch colonial rule, a significant historical event that shapes national identity and cultural practices.

How to behave at local markets and villages: Bargaining is common in markets but do so with a smile and good humor. When visiting villages, a polite greeting to elders or village head is appreciated.

When to tip—and when it’s rude: Tipping is becoming more common in tourist areas, especially for good service in restaurants and hotels. However, it’s not part of the culture in many local settings and may be refused. Service charge is often included in the bill.

For Investors: Business Etiquette

Never rush a decision—even with deadlines: The Indonesian concept of ‘jam karet’ (rubber time) reflects a more flexible approach to punctuality and deadlines. The influence of Hindu culture in Indonesia’s historical narrative, particularly during the Majapahit Empire and the Mataram kingdom, has also shaped this flexible approach. While you should be punctual, build in buffers for decision-making processes.Respecting non-verbal negotiation pauses: Silence during negotiations is common. It allows time for reflection and shouldn’t be interpreted as a negative sign or a need to fill the void.

Humor and storytelling in boardrooms: Appropriate humor and sharing relatable stories can help build rapport but be mindful of cultural sensitivities. Avoid sarcasm or overly critical humor.

How Cultural Knowledge Impacts Investment and Partnership Success

While historical context is valuable, applying cultural knowledge practically is what makes the difference.

Indonesian dishes like Nasi Padang and rendang play a big role in building relationships and understanding cultural nuances which are key to successful investments and partnerships.

Building Long-term Partnerships

• Trust-building timelines in Indonesian business: Trust (kepercayaan) is the foundation of business relationships and is built over time through consistent and respectful interaction and by showing long-term commitment. Indonesia’s business culture places strong emphasis on personal relationships and mutual respect which are crucial for partnerships. Don’t expect to close deals quickly on first visit. Learning the local language, Bahasa Indonesia, can significantly enhance trust and deeper connections.
• How cultural alignment helps deal closing: When your Indonesian counterparts feel understood and respected and see you’ve made an effort to align with their values and communication style, the path to agreement becomes much smoother.
• Examples of Western firms adapting successfully: Companies that invest in cross-cultural training for their teams, adapt their business practices to local norms (e.g. scheduling, communication) and show genuine interest in contributing to Indonesian society tend to do better. One of my clients in sustainable manufacturing sector saw significant improvement in local supplier relations after implementing more relationship-focused engagement strategy.

Navigating Local Bureaucracy with Cultural Awareness

Who really makes the decisions: Official titles may not always reflect the full picture of influence. Understanding the informal networks and key influencers within an organization or government department is key. Historical and cultural sites like Borobudur temple complex also play a role in shaping local dynamics and influence.

Cultural expectations from government liaisons: Patience, politeness and persistence are key. Building personal relationships with officials can be helpful. Make sure all paperwork is well-prepared. Compared to other countries, Indonesia’s bureaucracy may require more personal engagement and relationship-building.Legal context is social context: While there’s a formal legal system, social harmony and consensus can sometimes override how regulations are applied or enforced. Having good local legal counsel who understands these dynamics is key.

Conclusion

Indonesia is a land of great opportunities but rewards the culturally fluent. It’s a market where relationships, respect and understanding of nuances are as important as a solid business plan. Your ability to adapt and appreciate the cultural fabric is the direct route to “unprecedented growth”.

With over a decade of ASEAN experience, my focus has always been to help investors and global organizations succeed in complex high-context markets like Indonesia. This isn’t just about FDI statistics; it’s about understanding the human factor that drives economic growth. “Strategic insight that turns challenges into opportunity” is what I deliver.

Partner with us to turn challenges into wins—because when it comes to your next breakthrough, the only way is forward! Ready to “navigate the dynamic FDI landscape with confidence”? Contact us for cultural onboarding, market-entry consulting or just to ask the right first question. Let’s “invest in tomorrow’s breakthrough, today”.

Vietnam's vibrant hotel industry has been experiencing a resurgence, closely tied to the recovery of the tourism sector. Projections indicate that revenue in the hotel market is set to soar to US$1.49 billion in 2023. Anticipated figures signal a healthy annual growth rate of 7.37%, culminating in an estimated market volume of US$1.98 billion by 2027. 

This resurgence, driven by both domestic and international tourists, presents promising opportunities for foreign investors looking to expand their operations in Vietnam's hotel market. Join us as we explore the current state, prospects, and essential steps for establishing a hotel in this dynamic Southeast Asian nation.

An overview of hotel industry in Vietnam

The current situation of hotel market in Vietnam

The Vietnamese hotel industry's development is closely tied to the recovery of tourism. According to Savills Vietnam's report, in H1 2023, hotel occupancy rates reached 64%, showing a strong rebound to 92% compared to H1 2019. The average room price stood at 1.9 million VND per night, equivalent to 97% of 2019 rates.

In Ho Chi Minh City, hotel room supply increased by 3% year-on-year, totaling 15,662 rooms from 110 projects. Meanwhile, Savills Vietnam reported in Hanoi, a 10% year-on-year increase in hotel room supply for Q2 2023, reaching 10,962 rooms. The average annual room rent price reached 2.5 million VND per room, a 26% year-on-year increase.

However, in Q2 2023, hotel room occupancy was at 62%, significantly lower than the 73% recorded in the same period in 2019. The slow recovery in international tourists visiting Vietnam has impacted this trend.

Domestic tourists are a ray of hope for the hotel market. In the first seven months of this year, domestic overnight tourists reached 46.7 million, surpassing the 2019 pre-pandemic figure of 43.5 million.

Vietnam's hotel market is projected to reach $1.49 billion USD this year. In reality, Hanoi saw hotel room utilization rates exceed 57%, a 25.5% increase from the previous year. Some tourism-strong localities experienced accommodation revenue growing over 70%.

The long-term sustainability of hotel room occupancy is mostly connected to international tourists. In the first seven months of 2023, the number of new international visitors was only 67.5% compared to pre-pandemic levels (6.6 million arrivals compared to 9.8 million).

Nonetheless, a promising signal for international tourist growth is Vietnam's relaxed visa policy introduced on August 15, 2023, allowing visa-free entry for citizens of certain nations for 15 to 45 days and extending e-visa validity from 30 to 90 days.

Industry experts predict that Vietnam's hotel industry will benefit from the new visa policy, with favorable conditions for developing the international tourist segment. In July 2023, Vietnam welcomed over 1 million international tourists in a single month.

The opportunities and potential sectors in hotel market in Vietnam

The Hanoi hotel market has shown positive developments alongside the tourism sector's recovery, and it is expected to continue attracting foreign investors looking to expand their operations. According to Mr. Matthew Powell, Director of Savills Hanoi, the market still holds significant growth potential. However, it will take more time to fully recover and reach or even surpass pre-pandemic levels.

Savills predicted that Hanoi's hotel supply will see the addition of 2 new projects with a total of 471 rooms in 2023. From 2024 onwards, an estimated 66 new projects with 11,123 rooms are expected to emerge, featuring international operators like Four Seasons, Lotte, Dusit, Wink, Accor, The Shilla, Hyatt, Marriott, and Hilton. Among these 68 new projects, 61% will be 5-star hotels. The 5-star Hilton Hanoi Opera will also temporarily close for upgrades and relaunch under the Waldorf Astoria brand.

Mr. Matthew Powell believes that this will be a positive addition to the hotel supply, especially in the luxury segment in Hanoi. Additionally, the emergence of high-end apartment products and 3-4-star hotels in the city center and surrounding areas, adding diversity to the existing tourism products in the market.

Overall, Vietnam's hotel market has seen positive shifts in recent times, aligning with the recovery of the tourism sector, and it is expected to continue playing a role in attracting foreign investors looking to expand their operations. While there is still ample room for growth, additional time will be required for a full recovery to reach or even surpass pre-pandemic levels.

How to set up a hotel in Vietnam

Embarking on the journey of establishing a hotel in Vietnam involves several crucial steps. As the process is intricate with various legal requirements, foreign investors are advised to consult with a local expert on navigating through the company incorporation. 

Step 1: Land Leasing Procedures

First of all, foreign investors need to find out the location of the investment project as well as carry out initial land lease procedures. Foreign investors can use land through leasing arrangements with the State or Vietnamese economic organizations. 

Step 2: Apply for an Investment Registration Certificate

Regarding the ownership ratio of foreign investors: According to Vietnam's commitments in WTO, hotel services are considered hotel accommodation services (CPC 64110). Foreign investors are allowed to establish 100% foreign-owned enterprises or joint ventures, and there are no restrictions on foreign capital contribution.

Foreign investors seeking to establish a hotel in Vietnam must obtain an Investment Registration Certificate, which can be done through the help of a seasoned local expert in legal compliance. This is considered the initial step in carrying out a hotel construction project in Vietnam. 

In some cases, foreign investors may need to follow the procedures for obtaining approval of investment under Articles 31, 32, and 33 of the Law on Investment 2020 and Section 2, Chapter IV of Decree 31/2021-ND-CP (depends on the scale of land use of the investment project). The process of applying for the approval of investment must be completed before applying for an Investment Registration Certificate. 

Step 3: Obtain the Enterprise Registration Certificate 

To proceed with a hotel construction project in Vietnam after obtaining the Investment Registration Certificate, foreign investors must proceed obtaining the Enterprise Registration Certificate in accordance with the Law on Enterprise 2020 and relevant regulations. 

This step is also a prerequisite for operating a hotel business. Foreign investors can choose from various types of enterprises in Vietnam, including Joint-Stock Company, Single-Member Limited Liability Company, multiple-member limited liability company, Partnerships, and Sole Proprietorships. Each type of enterprise has different registration requirements and documents.

Step 4: Complete land use rights registration procedures

After the Company establishes, it needs to complete the registration procedures with the competent state authority in accordance with land laws in order to construct hotels on land that is legally owned.

Step 5: Obtain a domestic and international travel service business license

Foreign investors seeking to obtain a license for a domestic and international travel services business should compile the necessary documentation in accordance with provisions of the Law on Tourism 2017. Investors are required to submit one complete set of documents to the Vietnam National Administration of Tourism. Upon receiving a valid application, the Vietnam National Administration of Tourism will assess the documents and issue the domestic and international travel service business license for the foreign investors' companies within 10 days. Simultaneously, the tourism authority of the province where the companies are situated will be informed. If the application is declined, the reasons for refusal will be conveyed in writing with clarity.

Step 6: Obtaining the Building Permit

Before commencing hotel construction, foreign investors are required to obtain a Building Permit. The competent authority for issuing this permit is the Department of Construction.

Note: Operating a hotel is a conditional line of business for foreigners in Vietnam. Therefore, foreign investors will need to complete additional licensing procedures before the hotel can start its operations.

Final Thoughts

Vietnam's hotel industry is on an upward trajectory, with growing opportunities for foreign investors seeking to capitalize on its resurgence. As the nation continues to attract domestic and international tourists, the demand for accommodations remains strong, and the market is poised for further growth.

If you're considering entering the Vietnamese hotel market or expanding your hospitality business in the country, Viettonkin Consulting is here to guide you every step of the way. Our team of experts specializes in facilitating investment and ensuring a smooth establishment process. Don't miss out on the exciting prospects in Vietnam's hotel industry. Contact Viettonkin Consulting today to start your journey towards success in this thriving market.

Vietnam's travel industry is a vibrant and rapidly growing sector that has been capturing the attention of foreign investors. In recent years, the travel business in Vietnam has witnessed remarkable growth, driven by favorable tourism policies, an array of breathtaking attractions, and significant infrastructure development. The country's unique blend of rich cultural heritage and natural beauty makes it an irresistible destination for tourists worldwide.

As the interest of foreign investors in establishing their presence in the Vietnamese travel industry continues to surge, it becomes imperative to delve into the details of setting up a travel agency in this dynamic market. This article serves as a comprehensive guide for those looking to explore the potential of the travel agency in Vietnam. We'll analyze market trends, outline essential legal requirements, provide insights into business planning, and offer valuable advice on navigating the unique challenges and opportunities presented by Vietnam's travel industry.

Market Analysis of the Travel Business in Vietnam

The travel industry in Vietnam is experiencing remarkable growth, making it an enticing prospect for investors looking to set up a travel agency in Vietnam. Recent statistics indicate a substantial increase in tourist arrivals, with over 18 million international visitors welcomed in 2019, showcasing the sector's resilience and potential. This surge is attributed to progressive tourism policies, an array of captivating tourist attractions, and substantial investments in infrastructure development.

Exploring the Growth Trends in the Travel Industry in Vietnam

Examining recent statistics reveals a compelling narrative of the remarkable expansion within Vietnam's travel industry. Preceding the advent of the COVID-19 pandemic, Vietnam basked in a record influx of international visitors in 2019, marking an uninterrupted growth trend in visitor numbers since 2016. However, the pandemic and the ensuing travel constraints cast a shadow over this thriving sector, causing a precipitous drop in international arrivals in 2020 and 2021. In a bid to rejuvenate the tourism sector, Vietnam lifted its travel restrictions by March 2022. The year 2022 witnessed the return of approximately 3.66 million international visitors to Vietnam, signifying the industry's revival.

Several key factors contribute to this exponential growth. Vietnam's open and welcoming tourism policies, including visa exemptions and streamlined visa procedures, have significantly eased the process of entering the country. In the initial 15 days following the implementation of the new visa policy, there has been a significant surge in electronic visa applications, with a total of 112,058 submissions. This represents a remarkable increase of more than 70% compared to the period prior to the policy's enactment. 

Furthermore, Vietnam's diverse range of attractions plays a pivotal role in enticing tourists. From the bustling streets of Hanoi's Old Quarter to the serene beauty of Halong Bay and the vibrant Mekong Delta, the country offers something for every traveler. Rich cultural heritage, historical landmarks, and pristine natural landscapes create an irresistible allure for those seeking unique and authentic experiences. As a result, over the past five years, Vietnam received recognition as the top global heritage destination on three occasions, earned the title of Asia's leading destination four times, and was named the leading golf tourism destination in Asia for the sixth time.

Infrastructure development has also been a driving force behind the growth of the travel industry. Investments in modern airports, highways, and accommodation options have made it easier for travelers to explore Vietnam's diverse regions. For example, by the end of June 2022, Vietnam had about 33,330 tourist accommodation establishments with 667,000 rooms. This increased accessibility enhances the overall tourism experience and encourages tourists to explore beyond the traditional tourist hubs.

Target Demographics for Tour Operation in Vietnam

To successfully establish a travel agency in Vietnam, it's crucial to have a deep understanding of the primary target audience for travel services in the country. Vietnam's appeal extends to a broad spectrum of tourists, but several key demographics stand out.

• Culture Enthusiasts: Vietnam's rich history and diverse cultural heritage attract travelers with a keen interest in exploring ancient temples, historical sites, and traditional customs. These tourists often seek immersive experiences that allow them to engage with local communities and traditions.
• Adventure Seekers: The country's varied landscapes, from towering mountain ranges to pristine coastlines, make Vietnam a haven for adventure enthusiasts. Activities like trekking, water sports, and motorbike tours draw travelers seeking adrenaline-pumping experiences.
• Food Connoisseurs: Vietnamese cuisine is renowned worldwide for its flavors and freshness. Food-focused tourists flock to Vietnam to savor authentic dishes and explore bustling street food scenes. Culinary tours and cooking classes are highly popular among this demographic.
• Nature Lovers: Vietnam's natural beauty, including lush jungles, serene rice terraces, and exotic wildlife, appeals to nature enthusiasts. Eco-tourism and wildlife safaris are favorite choices for these travelers.
• Backpackers: Vietnam's affordability and well-established backpacker culture make it a hotspot for budget-conscious tourists. Hostels, street food, and inexpensive transport options cater to this demographic.

Understanding the preferences and behaviors of tourists visiting Vietnam is equally essential. Travelers often value experiences that provide insights into local culture, interactions with friendly locals, and opportunities to explore off-the-beaten-path destinations. Tailoring travel services to align with these preferences can lead to success in the vibrant Vietnamese travel industry.

Step-by-Step Guide to Establishing a Travel Agency in Vietnam

When embarking on the journey to establish a travel agency in Vietnam, it's essential to navigate through a series of critical steps diligently. Understanding these steps in detail is crucial for a successful venture into the travel services industry within Vietnam.

Legal Requirements and Licensing for Travel Agencies in Vietnam

Prior to establishing your travel agency, it's paramount to ensure complete adherence to Vietnam's legal regulations. This encompasses the acquisition of the essential licenses and permits that are mandatory for conducting business operations within the country. The Vietnam National Administration of Tourism (VNAT) is the governing body responsible for overseeing tourism-related licensing. To successfully initiate your travel agency, it is essential to acquaint yourself with the precise licensing prerequisites and procedures stipulated by the VNAT. This crucial step forms the bedrock for the smooth, legal operation of your business.

The procedures for setting up a travel agency necessitate specific documentation, including a formal request for business establishment registration and a travel business license. In terms of charter capital, a mandatory deposit must be made in a designated bank. The deposit amounts are as follows:

• For providing travel services to inbound tourists: 50,000,000 VND.
• For providing travel services to outbound tourists: 100,000,000 VND.
• For offering travel services to both inbound and outbound tourists: 100,000,000 VND.

These regulations are established under Decree 94/2021/ND-CP, emphasizing the importance of strict compliance in your pursuit of establishing a legally operating travel agency in Vietnam.

Business Planning and Registration for Travel Services in Vietnam

Crafting a comprehensive business plan is the foundational cornerstone for a successful travel agency. Your business plan should intricately outline your agency's objectives, target market, an exhaustive list of services you intend to offer, and detailed financial projections. Beyond conceptualization, registering your travel agency as a legal entity is pivotal for both liability protection and establishing your business's credibility. Consider legal structures such as a Limited Liability Company (LLC) or a Joint-Stock Company to initiate your operations with a strong legal foothold.

Location and Infrastructure for Travel Agencies in Vietnam

Selecting the right location for your travel agency plays a pivotal role in your business's success. Optimal locations include areas with high foot traffic, proximity to tourist hubs, or places with easy accessibility for your target customers. Furthermore, the establishment of an inviting office space is crucial. This encompasses essential infrastructure such as advanced booking systems, effective communication tools, and a welcoming ambiance. This holistic approach ensures that your travel agency operates seamlessly while enhancing customer service, ultimately leading to customer satisfaction and business growth.

Staffing and Training for Tour Operation in Vietnam

Your travel agency's staff plays a central role in shaping your business's reputation and customer satisfaction levels. To ensure a successful operation, it's essential to hire qualified and experienced staff who are well-versed in the intricacies of the tourism industry and exceptional customer service. Additionally, providing ongoing training to your team is vital. This keeps them updated on the latest industry trends and customer expectations, enabling them to provide exceptional service consistently. Exceptional staff can elevate your agency's reputation, foster customer loyalty, and contribute significantly to your business's success.

Mindful Notes When Establishing a Travel Agencies in Vietnam

While embarking on your journey to establish a travel agency in Vietnam, understanding and embracing the local culture is paramount. Cultural sensitivity is more than just a courtesy; it's a core aspect of providing exceptional service in the travel industry. In Vietnam, respecting customs, traditions, and social norms is key to forging meaningful connections with both your clients and local partners. For instance, understanding the significance of traditional Vietnamese holidays, greetings, and gestures can go a long way in building rapport. To further illustrate, addressing elders with proper titles like "ông" and "bà" shows respect for age and experience.

Competitor Analysis plays a pivotal role in ensuring your travel agency thrives in the dynamic Vietnamese market. As the tourism industry continues to grow, the landscape becomes increasingly competitive. Statistical data reveals that in 2019 Vietnam is home to 2,67 thousand travel agencies. Hence, conducting a comprehensive analysis of the local travel market helps you identify gaps, opportunities, and areas where your agency can stand out. Strategies to differentiate your services could include curated tours that showcase unique cultural experiences, partnerships with local businesses, or innovative marketing campaigns that resonate with your target audience.

Sustainable Tourism Practices are not just a global trend but a necessity in the travel business. In Vietnam, eco-friendly and responsible tourism practices are gaining traction. Travelers increasingly seek experiences that minimize environmental impact and promote the well-being of local communities. By adopting sustainable tourism practices, such as reducing single-use plastics, supporting local artisans, and contributing to conservation efforts, your travel agency can align with evolving customer preferences while contributing positively to the destinations you serve.

Final Thoughts

In conclusion, venturing into the thriving travel industry in Vietnam offers immense potential for foreign investors. The robust growth trends, diverse demographics of tourists, and the increasing focus on sustainable practices make it an attractive destination for establishing a travel agency in Vietnam. The opportunities are abundant, but so are the challenges. Navigating these waters requires in-depth market knowledge, cultural sensitivity, and a commitment to sustainability. At Viettonkin, we understand the intricacies of the Vietnamese market and possess the expertise to assist you in every step of your journey to set up a travel agency in Vietnam. Whether it's legal requirements, market analysis, or fostering local partnerships, we have the resources and experience to ensure your success. Don't miss out on the vibrant travel landscape of Vietnam. Contact Viettonkin today and let us be your trusted partner in realizing your travel agency dreams in Vietnam.

Vietnam has emerged as an attractive destination thanks to its charming landscapes, hospitable local people and diverse cuisine. The country aims to become one of the leading tourist attractions in the world. Before the pandemic, Vietnam recorded annual tourism growth of 22.7% during the 2015-2019 period. This sector made up 9.2 percent of its gross domestic product.

Vietnam tourism is now making concerted efforts to recover after a stagnant stage, focusing on promoting domestic travel while also welcoming foreign visitors. One of the solutions that the Government is giving priority to is the association among domestic firms nationwide and the joint venture with foreign investors.

The impact of Covid-19 on Vietnam tourism

After many years of continuous growth, the year 2020 saw heavy losses due to the Covid-19 pandemic. The number of domestic and international tourists declined sharply.  

In 2019, the total revenue of tourism was VND755,000 billion. However, by 2020, the number fell to VND312,000 billion, down 58.7%. By 2021, it continued to fall to VND180.000 billion, down 42,3% compared to 2020.

The pandemic demonstrated the profound impact of the Vietnam tourism sector to the whole economy. Thousands of businesses in the aviation sector, accomodation, food and beverage suspended operations or even went bankrupt as a result of tourism “freezing”. The total number of tourists served by accommodation, food and beverage service establishments in 2020 reached 97.3 million VND, a decrease of 44% over the previous year.

During the pandemic, the tourism industry made great efforts to mitigate the heavy losses and remove difficulties for businesses and workers, such as lowering land tax, electricity prices, reducing or making sightseeing free at many destinations.

From May 15 this year, the Vietnamese Government no longer required a Covid-19 test prior to tourists’ entry into Vietnam. This is one of the moves to boost the recovery of Vietnam tourism post-pandemic. Since then, according to Vietravel Holdings, regular flights and holiday packages as well as charter flights have been booked with an occupancy rate of more than 90%.

Joint venture as a solution for tourism recovery

The resumption of international tourists has stirred hopes of a strong recovery in the Vietnam tourism industry. However, experts said it will take a long time for the industry to return to its pre-pandemic performance.

Since the outbreak of the pandemic, Vietnam tourism hasn’t reached its full potential as there are still a lot of lucrative landscapes for businesses to flourish. However, the local travel businesses suffered heavy losses during the past 2 years, which made it hard for them to further exploit their local tourism potential.

Local businesses are seeking new directions to attract tourists in order to recover most quickly and effectively. They are giving priority to innovate tourism services such as creating experiential and sustainable products and services imbued with local and national identity. However, the lack of capital prevented them from achieving that goal.

These difficulties raised high demand for business joint ventures as a solution. A great way to innovate products and services is to form a strategic partnership with other businesses. While one business has the expertise in the local culture and environment, the partner business can facilitate the innovation process with operation and marketing funds.

The partnership makes it possible for the local business to revive or expand their tourism products plus create memorable and unique experiences for visitors. In return, the partner business can benefit from the prosperity of local tourism. 

Tourism associations and joint ventures are given priority in Vietnam

Joint ventures in tourism have become a crucial trend these days. Especially in the post-pandemic period, the joint venture is said to boost the recovery of Vietnam’s tourism industry.

Firstly, tourism associations between provinces and cities nationwide have gained importance in promoting local tourism. Five major tourism associations were formed in 2020 to stimulate demand for local tourism and attract more domestic investment

In fact, the tourism association aims to develop the link of the tourism product chain among provinces, from product design, value-added services, to advertising and promotion. Meanwhile, cooperation between travel agencies, accommodation establishments and tourism business units plays a crucial role in the product link mentioned above. Therefore, in addition to strengthening tourism associations among provinces and cities; the Government also promotes the cooperation between local tourism enterprises with enterprises of other industries or with large domestic corporations. 

For example, Hung Thinh Group, a major real estate developer in Viet Nam, has formed a strategic partnership with Vietravel to promote tourism in Quy Nhon City. The two companies will optimize the strengths of their ecosystems for the development of resort real estate, travel, aviation services, tour packages and new travel routes. They will also jointly support the promotion of their images, actively applying digital technology in resource management and service implementation to bring experiences and enhance the enjoyment of visitors.

Foreign investors have several chances to enter and participate in the Vietnamese tourist industry. Specifically, the National Assembly of Vietnam has introduced the Tourism Law of 2017 (taking effect from January 1, 2018). The law contains several amendments aimed at simplifying investment requirements and making it simpler for foreign investors to invest in the Vietnam tourism industry.

Importantly, foreign investors can establish joint ventures in Vietnam to promote international travel services (inbound). Unlike the Tourism Law of 2005, the Law on Tourism in 2017 doesn’t require a Vietnamese partner in a joint venture to have an international travel business license. This means any Vietnamese individual or company can participate in a joint venture with foreign investors. In this way, the Government aims to welcome more international investors to participate in the development of travel services in Vietnam.

The joint venture with foreign firms enables Vietnamese enterprises to upgrade their tourism products and services, developing new and distinctive products to serve each market segment and hop on the tourism trends of the world. These products are based on the cultural resources such as history, landscapes and local cuisine.

Through the expansion of international cooperation, Vietnam's tourism has attracted major investment from foreign capital (FDI). This will make an important contribution to solving the problem of human resources and technical facilities for the industry’s further development in the near future. The strategic cooperation can give both firms the opportunity to exploit the full potential of Vietnam tourism and create better momentum for this sector to reach regional and international levels.

In conclusion

Tourism associations and joint ventures have gained in both popularity and importance in recent years. With many potentials that have yet to be fully exploited, Vietnam tourism is expected to develop more tremendously in the near future and become an important pillar in the country’s economy. 

Vietnam is now focusing on making a quick recovery for tourism, and we consider this is a golden time for investors to enter this market. With insightful knowledge and acclaimed experts, Viettonkin can provide you with valuable advice and guidance to establish joint ventures in the Vietnam tourism market. Let us walk side by side with you on your journey to success!

Data from the General Statistics Office shows that the number of international tourists visiting Vietnam in May 2022 increased by 70.6 percent compared to the previous month and 12.8 times over the same period in 2021. This is the result of safe reopening measures, creating opportunities for Vietnam’s tourism revival. 

The current situation in Vietnam's tourism sector 

Moreover, thanks to the 31st SEA Games and international flight routes restoration, Vietnam’s tourism has completely opened up. As a result, in the first five months of 2022, the number of international visitors traveling to Vietnam increased by 4.5 times compared to the same period in 2021, nearly reaching that of the period before COVID-19. 

With this growth rate, Vietnam is considered one of the countries with the highest development capacity for tourism. As reported by the Vietnam National Administration of Tourism (including the Ministry of Culture, Sports, and Tourism), the index of development capacity of the Vietnamese tourism industry in 2021 ranked 52nd worldwide compared to its 44th place in 2019. This progress has placed Vietnam among the top 3 fastest-growing countries in the world. 

Collaboration and investment opportunities

In the context that Vietnam’s tourism industry has revived, the initiation of new products that can meet the changing demand of customers is considered of great importance. By doing so, tourism will step by step overcome difficulties to recover and develop steadily. 

To gradually generate tourism into a spearhead economic sector, many localities pay special attention to planning and improving infrastructure, attracting investment in this field. According to Chairman of the Ho Chi Minh City People’s Committee Phan Van Mai, over the past few years, Ho Chi Minh City’s tourism industry has experienced significant growth in terms of product quality, revenue, number of tourists, and the number of businesses operating in the city. As a consequence, this rising economic sector contributed 10 to 12 percent of GDP in the period before the global pandemic. 

The city focuses on attracting investors to continue building and improving malls, trade centers, and convenience stores interspersed with traditional markets on main streets such as Nguyen Hue, Le Loi, and Dong Khoi. If the goals are successfully achieved, the city will be able to meet the entertainment and consumption needs of diverse types of customers

However, the plan stagnated due to COVID-19. In 2022, according to the leaders of the Department of Culture, local governments are making efforts to revitalize the tourism industry on the basis of “adapting safely, flexibly, and effectively.” Vietnam will focus on domestic tourism and the innovation of existing products, combined with the development of more new products and services to attract tourists. 

At the same time, the state is also gradually reopening tourism, moving toward a full recovery in the context of the new normal. Notably, for Tien Giang, the province is expected to welcome 1,100,000 visitors this year, doubling that of 2021. Furthermore, of the total number of tourists, 940,000 will be domestic visitors, and the rest will be international travelers. 

After the pandemic, it is increasingly apparent that tourism has a huge role and impact on the general economic sector. A tourism freeze can lead to tens of thousands of businesses in the aviation, accommodation, and catering industries going bankrupt and having to close down. Accordingly, millions of workers will lose their jobs. Hence, it is critical that tourism businesses cooperate to fully recover as soon as possible and maximize the sector’s potential. 

Vietnamese government’s supportive policies 

The steady recovery of Vietnam’s tourism industry has reflected the government’s achievements in preventing and controlling the COVID-19. The state has also made timely decisions to restore both domestic and international tourism after the epidemic is well-contained 

From April 27, 2022, Vietnam has suspended regulations on medical declaration when entering this country. From May 15, the state continued to remove COVID-19 testing requirements for visitors. These measures have created favorable conditions to attract a large number of tourists, preparing for the peak season for international visitors from September annually. 

Moreover, in May 2022, during the visit of Ambassador Pham Sanh Chau to Kolkata, the history of a good relationship between Vietnam and India was mentioned. On that basis, the two countries have great potential to promote tourism services, especially when both have numerous scenic, historical, and cultural attractions. 

Meanwhile, the number of tourists between Vietnam and India is still far below its capacity. However, with the resumption of direct flights from Kolkata to Hanoi and Ho Chi Minh City, leaders of the two countries believe that tourism will be strongly boosted in the upcoming time. 

Another reliable partner of Vietnam today is the United States. During the recent conference on trade, investment, and tourism promotion between Vietnam and the U.S in San Francisco, U.S ambassador to Vietnam Marc E.Knapper emphasized that tourism is among the top important fields in the two countries' relations. 

For instance, in terms of the tourism market in Vietnam, the U.S continuously ranks at the top in terms of the number of visitors. Before COVID-19, the number of tourists from the states reached more than 746,000 arrivals in 2019, with the average growth rate in the 2014-2019 period of 11 percent. 

During the pandemic, thanks to the support from international friends, including the U.S, Vietnam successfully controlled the epidemic. Moreover, the first foreign group of tourists to visit Vietnam after the reopening of tourism activities was from the U.S .

Additionally, before the pandemic, 30,00 Vietnamese students were studying in the states. Marc pledged to apply measures to further promote this number to double in the future, and at the same time bringing more American students to study in Vietnam. To achieve this, flights between the two nations will be increasingly exploited to connect tourism, commerce, and education between Vietnam and the United States. What’s more, Vietnam Airlines has also introduced a direct route between the two countries, furtherly encouraging visitors from the U.S. 

Challenges concerning the workforce

Vietnam’s reopening efforts present many opportunities for the entire tourism supply chain. Nonetheless, it will take longer than anticipated time for firms to fully recover due to an unstable workforce. The biggest change in the labor market in the second quarter is that there will be “mass recruitment” in the tourism industry.

After 2 years of being affected by COVID-19, the company only has about 30 percent of its staff remaining as the core workforce. Hence, the need to recruit more is increasingly high, preparing for the summer season. 

Mr. Nguyen Van Tai, Director of VietSense Travel

Not only is there a shortage of personnel for the travel department but destinations, restaurants, and hotels are also thirsty for human resources. Therefore, this will be a chance for the tourism industry to review and refine labor, connecting businesses and workers. 

Evidently, in the context of the new normal, tourism is one of the most promising sectors in Vietnam, attracting new investors interested in the Vietnamese market. To learn more about opportunities in this field and what strategic plan to make, contact Viettonkin Consulting team now via our website to get connected with dedicated experts. 

Cambodia Angkor Air was founded in 2009 from the cooperation of Vietnam Airlines and Cambodian Royal Government. Vietnam Airlines contributed 49% of the fund under the joint venture contract.

 On May 27, Vietnam Airlines Corporation (stock code: HVN) announced that they have completed the transfer of 35% of Vietnam Airlines Corporation's shares in Cambodia Angkor Air (K6) to the transferee according to the agreement between the two parties in the share transfer contract. After the transfer, K6 is no longer an associate company of Vietnam Airlines Corporation.

According to the 2021 audited consolidated financial statements, January 3 and March 29 this year, HVN received USD 30 million and USD 4 million respectively from the investor who redeemed Vietnam Airlines Corporation's share in K6 and that HVN also received a deposit of USD 1 million in 2019. The amount of USD 35 million above corresponds to 35% of K6 shares.

Although the money will not be received until 2022, the transfer of share title was taken place from 2021, HVN's report showed that K6 was no longer an associate company and revenue from the financial activities contributed more than VND 647.7 billion from the interest of contributed capital transfer.

The above income has helped HVN reduce their loss in 2021 and their equity is still more than zero, escaping the delisting judgment.

Cambodia Angkor Air was founded in 2009 under the cooperation of Vietnam Airlines and Cambodian Royal Government. According to the joint venture contract, Vietnam Airlines contributed 49% of capital in Cambodia Angkor Air with the historical price of VND 868.5 billion.

By the end of the year, after divesting 35% of shares, the balance 14% of K6 shares was transferred by HVN to the investment portfolio to contribute the funds to other entities with the historical costs of VND 248 billion.

 In 2021, like other airlines in the region and the world, K6's production and business activities continue to be seriously affected by the epidemic. To minimize losses, K6 has implemented the solutions of restructure, downsizing, maintaining the operation of a few main flight lines with minimal frequency, completely cost cutting, negotiating on payment reduction, delay, taking the advantage of every opportunity to increase the exploitation of charter flights and cargo flights to help adding the cash flow to maintain the operations. However, K6’s 2021 loss is USD 17.7 million, the loss is increased by 37.2% against 2020.

Source : Cafebiz

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.  

Government action 

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.

Mobility

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. 

Province action

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!