Many of us thankfully might be starting to embrace dusting off our passports now and travelling overseas, or at least thinking about it. I therefore thought is a good time to explore the potential of a rebound in Vietnam tourism.
Amongst other things, I will discuss how previous obstacles around travelling at the beginning of 2022 with all sorts of covid related rules are now gradually lifting. I shall explore how other South East Asian countries have also tried to remove such restrictions. Then take a look at where Vietnam is placed with such competition, and also changing visa rules from the pre covid times.
Do then the Vietnam prospects for a lift in tourism mean a small extra catalyst for the Vietnam stock market?
As I have personally been a regular traveller in the last decade to other countries in the region such as Thailand, Cambodia, Malaysia & Indonesia, I have found fascinating observing how they all respond to the “living with covid” environment in 2022.
Some longer term “nomad” type travellers might regard Vietnam as behind in this group in terms of welcoming back tourists, yet as I will elaborate on later, I don’t think this is a negative in terms of the Vietnam stock market.
Arguably this perception of Vietnam opening up slower is from a position of relative strength. For example compared to say Thailand, tourism represents a much lower percentage of overall GDP. There is also a bit of a shift in Vietnam’s attitudes to foreigners who wish to stay longer term that arguably comes from a position of strength. They believe they can attract the higher spending tourists. When it comes to more longer-term foreigners staying in Vietnam they believe they can better ensure they pay their required taxes and stay on the correct types of visas.
WHAT IS TOURISM AS A PERCENTAGE OF VIETNAM’S ECONOMY?
I am a little reluctant to answer the above question as often some economists might also like to lump in “indirect” added contributions to GDP that tourism brings in. I also don’t think we can look at figures from the last two years or so as any sort of meaningful guide given the pandemic.
We can say look at the 5 or so years prior to the pandemic to get a bit of a guide. This is what I shall comment on, although I do have some sympathy of the view that the post covid environment it could be difficult to sustain longer term the pre-covid appetite for global travel.
Having said that, many sources suggest tourism contributes circa 5-10% of Vietnam’s annual GDP during the 5 years pre pandemic, with significant momentum. Thailand you could probably say the tourism sector is at least twice as important as a share of their economy.
If you are thinking the tourism sector’s contribution to Vietnam GDP might look a little small, the key point to make is how the sector collapsed in 2020 & 2021. That means that any pickup will likely be huge in terms of percentage growth from these covid affected years. You would also hope 2023 will look far brighter compared to 2022.
SOUTH EAST ASIA TRAVEL RULES & PROCEDURES EVOLVE IN 2022
Thankfully things are getting easier from when we began 2022! I travelled to Vietnam late January before they had opened up for general tourism and it wasn’t that simple.
Firstly I had to be fully vaccinated and show proof. I had to have a negative PCR result within a few days of flights. To complicate things, I was going from Melbourne to HCMC but transiting through Singapore. I had to be aware of the number of hours from the PCR result to when I arrived in HCMC. I also needed to be aware of the number of hours from my PCR result to the time I was in Singapore (who had a tighter time requirement).
During the time I was flying there was a massive shortage of PCR test capabilities in Melbourne to add to the stress.
I had to fill out a health declaration on a site for Vietnam that initially I had trouble accessing. I had to download a separate app for checking in and moving around within Vietnam. At HCMC airport I had to show them such information. I also had to show them my specific covid related travel insurance. Masks at that time were obviously required during my long time at airport and on the flights. I then had to test negative on a rapid test at HCMC airport, if I did that, I would quarantine for 3 days. After 3 days if I had a negative PCR test I could then move around.
Just my luck I tested covid positive on the rapid test at the airport of course! At that point I didn’t really have a clue what was coming. Let’s just say the quarantine facilities they took me to dressed in my white PPE gear in a bus by myself with no air con were a bit less than 5 star facilities 😊.
If I understand things correctly now at the time of writing, a traveller to Vietnam does not need to produce these negative covid test results. I don’t think they distinguish now between rules for vaccinated / unvaccinated. You don’t have to quarantine but should monitor carefully any symptoms. There might be an app you still need to download although I am doubtful this lasts too much longer. Covid related insurance I think is required but it is made clear where can purchase this and is very cheap.
I heard the insurance requirement might get dropped soon if it hasn’t already but make sure you check yourself. All in all, not too bad compared to my January trip! I wouldn’t be surprised if mask rules are also relaxed soon.
Cambodia I have observed this year has been probably the simplest country to enter of the bunch I have mentioned. Earlier in the year I remember that prospective Bali tourists were required to go via Jakarta there for a while. Thailand has tried hard but copped some criticism with many changes to the “test and go” scheme and tourists getting confused registering the “Thailand pass”.
The way things look to me in the next few months, is that if you are a traveller weighing up a holiday of 30 days or less in the region, enough rules have probably relaxed so that you would just choose your preferred country as normal.
Where various rules might have more of an impact on your decision between some of these South East Asia countries is if you want to base yourself somewhere for say 30-90 days or even longer. Obviously I am referring to the visa situation and how some things are not quite the same as they used to be.
VIETNAM TOURISM VISAS 2022 SITUATION
The news stories indicate Vietnam have already gone back to the pre-covid tourism visa rules. Without stating all the details, broadly you could see that citizens of 80 plus countries can easily apply for a tourism e-visa for a stay of up to 30 days.
However at least as I am aware, in the first 6 months of 2022 I don’t think many have been able to stay for 90 days in Vietnam on a tourist visa. Whereas prior to covid many did get 90-day tourism visas.
I am an Australian resident so for me and many others, some other countries in the region are a bit easier if you want to go somewhere for 60-90 days. In the past I have personally for example organised a 2-month tourist visa for Thailand, and extended it there for an extra 30 days on top of that. I have gone to Malaysia and the exit stamp has allowed me 90 days stay. In Cambodia I have got a tourist visa on arrival for 30 days, and later extended it within the country for another 30 days.
VIETNAM 3 MONTH VISA FOR TOURISM IN 2022? – A THING OF THE PAST?
So how is Vietnam’s visa policies potentially evolving. Would any slightly stricter policies affect the prospects for their tourism sector?
I know readers who might want to holiday in Vietnam for 90 days may not like reading this, but I don’t think it will be such a big deal for the tourism sector’s prospects in Vietnam’s economy.
I think although there are some genuine tourists that might prefer longer trips and choose neighbouring countries, a high percentage of genuine tourists only go on holidays for 30 days or less.
Rightly or wrongly, I think Vietnam has thought about who are the likely foreign visitors that used to previously get 90-day visas and made some broad assumptions and generalisations. They might think many of this segment are very low budget travellers that did not spend much in the economy. They also might think that some of them were working in Vietnam (not allowed on a tourist visa obviously), and potentially not declaring income and paying taxes.
Anyway don’t shoot the messenger as I don’t have a strong view whether such generalisations are fair, I am just opining on what I think might be running through Vietnam policy maker’s minds.
My best guess is this is a temporary thing anyway, and that they will restore the 90-day tourist visas they used to hand out pre pandemic late in 2022. I think this might just be an opportunistic step to make a strong statement that they only want genuine tourists getting tourist visas. It seems like Vietnam tourism will be strong for the next few months just from pent up demand from the locals travelling anyway. Hence they probably think they can afford to wait to go back to handing out 90-day tourist visas.
They probably won’t be as relaxed handing out business visas like they were pre pandemic though, as many were rorting the system.
HOW TO RETIRE IN VIETNAM IN 2022?
With no specific retirement visa in Vietnam, that begs the question is there any way one can actually retire in Vietnam?
To me that looks quite tricky to retire in the sense that most think of the word, i.e. cease all sort of work and stay in the country full time. Those that marry to a Vietnamese partner could get a 5 year type of visa, but what about those that don’t have such relationships but still like Vietnam as a destination?
A possibility that I might expand on in a later post is not necessarily retirement in the traditional sense of the word but might be an option for foreigners to make Vietnam their home. I refer to starting a business in Vietnam as the country still seems keen to attract new capital and the process is reasonably efficient with company set ups and “ease of doing business”. Whilst not retirement, maybe it could be some middle ground for some. The business doesn’t have to be something to slave away 80 hours a week on! Could it perhaps be something closer to more of a “side hustle” instead?
CAN A FOREIGNER SET UP A COMPANY IN VIETNAM?
Yes one can, so Vietnam could be considered very open and welcome to foreigners in that regard. For instance, a foreigner can be the 100% shareholder of a new LLC they set up and in relatively quick time. Such a setup doesn’t need complex rules such as Vietnam based shareholders or directors to be involved.
This is why I don’t think any slightly tougher stance on visas in Vietnam has to be thought of as a weakness for the economy or headwind for the tourism sector.
I don’t think it signals a lack of openness of the Vietnam economy. Us stock market investors when looking at a frontier market like Vietnam to invest want to see an open attitude in many ways to see it become more developed and thrive.
I more see the changing landscape in Vietnam as the country wanting to become more sophisticated in terms of collecting a fair but still moderate amount of taxes and getting technology and systems in place to do so. They have done plenty of work in this area in regard to their VAT systems.
HOW TO START A COMPANY UP IN VIETNAM
To keep it very brief for this blog post (I may go into more detail another time), one could even set one up from offshore, or do so on the ground in Vietnam. The broad-based basic steps are to:
- Legalize your documents such as IDs etc
- Apply for an Investment Registration Certificate (IRC)
- Establish business type and get the Enterprise Registration Certificate (ERC)
- Get company seal, stamp and register for tax code etc
- Setup the company bank accounts and contribute the company capital as originally stated earlier
HOW TO STAY LONG TERM IN VIETNAM IN 2022?
Those wanting to stay in Vietnam longer term now in 2022 probably need to more think of ways they can better contribute to Vietnam’s economy. Setting up a company where you pay your taxes might be suitable for some.
Countries like Thailand, Malaysia, Cambodia and the Philippines I am aware have various forms of specific retirement visas or the like systems.
I would say however there can be uncertainty involving these. One should checkout how the goal posts shifted on Malaysia’s my second home scheme! It overnight become a system more for the very wealthy. There can also be hidden costs and issues like having large amounts tied up in bank deposits or the like in an inflationary environment to qualify.
Hence if you thought it was difficult in 2022 to stay longer term in Vietnam, some other options may not be the holy grail either. One also should be mindful how the various options treated these types of expats during stages of the pandemic. Whilst Vietnam were quite strict on its borders for sure at times, I did notice often that foreign “investors” in Vietnam were allowed to still enter.
WHAT THIS ALL MEANS FOR TOURISM SENSTIVE VIETNAM STOCKS?
In conclusion I am not concerned that Vietnam might lose any significant amount of a tourism economic rebound to neighbouring competitive countries simply because of small differences in visa policies, or post covid travel rules.
We are nearing a point in time that to travel in the region to some of these countries is thankfully getting closer to how it felt pre pandemic in terms of all the rules and regulations you had to think about.
I would be keeping an eye on the situation in China more. If they can get through this key political year and soon hint at their citizens will be able to soon explore the South East Asia region again that could be a much welcome needed boost.
Surely the world must be getting hungry to experience travel again! We must be getting a bit sick of all the excessive screen time indoors with the same people and wanting some real experiences again!
A FEW SOMEWHAT TRAVEL SENSTIVE STOCKS IN THE SOUTH EAST ASIA REGION?
I am probably biased as I have mentioned a few of my own individual stock holdings that wouldn’t mind a tourism rebound and especially the Chinese to come and open up their wallets offshore again!
Yes companies like Nagacorp, Thai Bevarage, Innature I am talking about you. Struggling a bit but having said that all global markets have struggled since I mentioned these so maybe they have even outperformed who knows.
As discussed in past blog posts, I am a shareholder in stocks like Nagacorp, Thai Beverage, Innature as just mentioned. To read more about my experiment tracking the performance of that and other Vietnam related exposures in my portfolio, check out the following link:
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