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Effect of Tourism on the Economy of Vietnam

Info: 1787 words (7 pages) Essay
Published: 8th Feb 2020 in Tourism

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 Tourism plays an important role in social and economic development. The success of the tourism industry in many countries has contributed positively to their economic growth. Besides, the importance of it is not only for the economy but also social, expressed in creating more jobs and foreign investment through various sectors such as transportation, accommodation, retail, catering, financial service, etc. With its well-preserved cultural diversity and intact natural habitats, Vietnam has become a well-known tourist attraction for outdoor enthusiasts. In recent years, Vietnam vacation industry is on the rise, the number of international visitors, as well as domestic tourists have increased. Each year, millions visit this country to experience the picturesque coastlines, wildlife-filled forests and tranquil mountains with breathtaking peak-top views. But in general, Vietnamese tourism has only prospered in recent years and the scale is still small and not synchronized. In that context, Vietnam is trying to synchronously implement many solutions to turn tourism into a spearhead economic sector. However, many economists have estimated that the tourism industry in Vietnam will grow in the next ten years. Therefore, researching the tourism sector and its impact on the economy is essential.

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 According to a recent article published in the South China Morning Post (Powell, 2017), in Da Nang, more than five million people were reported to visit this place in the first nine months of this year by local tourism official, thirty percent of which were international visitors. The growth in Hai Phong City is up a spectacular forty percent, while Ha Noi grew by double number in 2016 from a much larger base. At the same time, Ho Chi Minh City is experiencing similar development. A report by the World Tourism and Travel Council (2017) suggests that tourism revenue directly contributed 6.6 percent of Vietnam’s Gross Domestic Product last year. Taking into account that tourism drives other areas like spa and wellness services, dining and retail, this sector contributed around 13.9 percent of Gross Domestic Product. In accordance with a recent article published in the Jakarta Post (Huong, 2018), Vietnam tourism ranked at sixth in the top ten fastest growing tourism destinations globally and was crowned the best performer in Asia in 2017. A recent report by Hansa (2017) claims Vietnam is a country that is currently booming in the industry of tourism. This is one of the biggest opportunities in Vietnam. If being used in a right and careful way, tourism is definitely one of the business opportunities in the country. No doubt if the economy of Vietnam is fast improving and times are changing quickly, none of the cities are resting on their laurels.

In terms of the positive effect, there are three main influences of tourism which help promote the economy in Vietnam:

 Firstly, tourism raises employment opportunities. This idea is supported by (Manzo, 2018), who found that the concerns of governments are inclusive development and ensuring a future with quality jobs along with travel and tourism, which already supports one in every ten jobs on the world, is a dynamic engine of employment chance. According to the Tourism Development Program in Vietnam, approximately seventy percent to eighty percent of foreign tourists travel to Vietnam by airplane, helping the aviation industry to grow, creating jobs for thousands of workers each year. Tourism is a major contributor to employment especially for youth, rural communities, women, migrant workers, indigenous people and has numerous linkages with other sectors as well as creates diversified employment opportunities in different sectors like food, accommodation, beverage establishments, transportation services, tour operation companies, travel agencies, natural and cultural attractions sites. Over recent years, tourism creates jobs and provides direct incomes for more than 3.5 million people in Vietnam. As a consequence, it can lead to the decline of poverty as well as the promotion of socio-economic development and decent work.

 Secondly, the growth of tourism supports the development of other sectors such as retail, etc. A study carried out in Vietnam in 2018 (The World Bank, 2018) discovered that the expansion of the service sector remained robust at 6.9 percent underpinned by strong underlying retail sector growth supported by buoyant private consumption and record tourist arrivals. In 2015 particular, Vietnam welcomed over seven million foreign visitors and fifty-seven million domestic ones, raking in ten to eleven billion USD in revenue. In the first seven months of 2016, the sector served 5.55 million overseas holidaymakers, a year-on-year rise of twenty-four percent. Tourism revenue reached 235 trillion VND (10.57 billion USD), a yearly increase of 22.9 percent. According to the World Economic Forum (WEF) 2015’s report, Vietnam ranked 75th out of 141 countries in the WEF’s Travel and Tourism Competitiveness Index.

 Thirdly, tourism is a service sector which is strongly developing in Vietnam. As a result, tourism companies attract a lot of attention from investors, both domestic and international. With the development of tourism, more and more investors have invested in Vietnam, which impulses the development of the travel industry in this place. A recent report by Hoai (2017) claims that the tourism industry has attracted a lot of investment for developing products, services, and facilities, which has changed the appearance of tourism destinations and led to an increasing number of modern, high-quality hotels and services. In fact, over the past three years, the tourism industry has been growing at an annual rate of thirty percent in terms of international arrivals. By the end of 2017, the total registered Foreign Direct Investment (FDI) inflows to tourism was calculated at more than $15 billion, accounting for approximately five percent of the country’s total registered FDI amount. With the increasing investment of enterprises, in the future Vietnam tourism industry will develop and bring more profit to the economy.

 Besides the advantages that tourism brings to the economy, the considerable amount of visitors also have negative influences on Vietnam. Hotels and travel companies with high levels of water used will create the pressure and burdens on natural resources at the tourist attraction. An explosion of land prices, commodity prices, and services at tourist sites could lead to currency devaluation, putting financial pressure on residents in this region. In addition, poor planning for procurement and the use of office supplies also exacerbates pollution and waste. Moreover, overcrowding, traffic congestion, and disruptive lifestyles are beyond the reach of the community. As a result, the more hot spots for tourism, the more the poor do not enjoy the benefits of tourism.

 A report by Kreag (2001) states that some tourism-related businesses are volatile and high-risk ventures that are unsustainable and greater demand for goods, services, land, and housing may increase prices that in turn will increase the cost of living. Consequently, tourism can inflate property values and prices of goods and services. This has a negative impact on the local people as it can force first-time buyers out of the county as they can not afford the high house prices. Moreover, tourism development puts pressure on infrastructure (using electricity, water, fuel, increasing wastewater, and waste); increased costs for police operations, fire services, medical services, repairs, maintenance of traffic roads and other public services. The development of tourism types such as entertainment, golf courses, campsites … need to use land fund is many times larger than the land fund used to develop other economic sectors. Thus, unreasonable tourism development can lead to land funds for agriculture and other sectors being cut off. Local residents in many tourist centers, due to the lack of training and retraining, while their land is lost because of the development of tourism activities, can turn into seasonal workers with low wages and unstable income.

 In conclusion, not only Vietnam but also developed countries around the world, tourism has become a spearhead economic sector. Tourism industry brings a big amount of income to the economy, create jobs, develops services, infrastructure as well as promotes peace and cultural exchange. Noteworthy, in recent years, many new tourist attractions are opened and attract a significant number of visitors. As a result, the leisure industry has played an important role in the development of Vietnam’s economy. Despite the negative impacts of the tourism sector, its positive side to the economy of Vietnam cannot be denied. It is one of the largest contributors to Gross Domestic Product and employment in this place. Simultaneously, the investment in the travel industry and related taxes are also rising, which brings high profit to the economy. These increases, along with other indicators of the travel industry, are expected to continue to develop at a steady pace and tourism will be the driving force for the future economic growth of Vietnam.


(1)   Hansa. E (2017). The 3 biggest opportunities in Vietnam: Meeting industry, food, technology. Retrieved from http://www.vietnamconferencecenter.com

(2)   Hoai. C.N (2017). Tourism investment to continue in Vietnam. Retrieved from www.english.vietnamnet.vn

(3)   Huong, M. (2018). Vietnam eyes tourism reform. Retrieved from http://www.thejakartapost.com

(4)   Kreag. G (2001). The Impacts of Tourism. Retrieved from http://www.seagrant.umn.edu

(5)   Manzo, G.G (2018). World Travel and Tourism Council. Retrieved from www.wttc.org

(6)   Powell, D. (2017). Vietnam’s tourism industry surges as economy booms. Retrieved from www.scmp.com

(7)  The World Bank (2018). The World Bank in Vietnam. Retrieved from www.worldbank.org


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