Foreign visitors to Vietnam skyrocket 42 pct in January

Foreign visitors to Vietnam skyrocket 42 pct in January

Overseas Vietnamese are returning for the Lunar New Year, and western visitors are arriving on their winter breaks.
Vietnam welcomed over 1.4 million foreign visitors in January, up 42 percent over the same period last year, according to the General Statistics Office.

The sharp rise has been attributed to overseas Vietnamese returning home for the Lunar New Year, which starts on February 16, and an increase in the number of visitors from Europe, the U.S and Australia.

In January, visitors from Europe increased 22.8 percent to 225,500, while the number from the U.S. rose 8 percent to 72,600, and from Australia up 13.5 percent to 50,100.

Chinese visitors topped the pile with over 418,500 arrivals this month, a year-on-year increase of 69 percent. South Korea remained in second place with 316,300 visitors touching down, up 84 percent.

Most visitors chose to fly to Vietnam, accounting for 80.5 percent of arrivals in January.

Vietnam received 12.9 million foreign tourists in 2017, a rise of 29.1 percent against 2016.

A report published in June by the United Nations World Tourism Organization ranked Vietnam’s tourism growth at seventh globally, and the country was the only destination in Southeast Asia to make the top 10.

The results appear to bode well for Vietnam’s growth, especially now that the government is backing tourism to drive its economy.

The country needs to stop relying on crude oil and focus on tourism to ensure its economic growth, Deputy Prime Minister Vuong Dinh Hue said at a meeting of the legislative National Assembly in October.

The deputy PM said that tourism has a direct impact on the service sector, so more tourists means higher growth.

“It is better to welcome 1 million tourists than trying to find 1 million tons of crude oil because tourism is more eco-friendly and safe for the economy,” he said.

The country aims to receive 15-17 million foreign arrivals this year. However, the number of foreign visitors to Vietnam is still moderate compared to Thailand.

The Thai government is targeting 37 million visitors in 2018 and 3 trillion baht ($94 billion) in revenue from domestic and foreign tourists combined. That would be worth more than a fifth of the economy — and put even greater strain on congested airports as well as Bangkok’s packed roads and metro system, according to Bloomberg.

South Korean economy grows 3.1 pct in 2017

The fourth largest economy in Asia grew at its fastest pace in three years last year.

South Korea’s economy grew at its fastest pace in three years in 2017, the central bank said Thursday, thanks to robust exports of tech products including semiconductors and growing consumer spending.

The world’s 11th-largest economy and fourth-largest in Asia expanded 3.1 percent last year, up from 2.8 percent in 2016 and the fastest since 2014’s 3.3 percent, the Bank of Korea said.

“Consumer spending showed moderate improvement while investments in construction and corporate infrastructure also rose significantly,” it said in a statement.

Production in the country’s manufacturing sector expanded by 4.2 percent last year – the highest since 2011 when it grew 6.5 percent.

Investment in corporate infrastructure jumped 14.6 percent – the fastest since 2010 – as local firms led by Samsung invested heavily to build or expand plants.

In 2016 Samsung Electronics – the world’s largest chipmaker – invested over 40 trillion won ($37.6 billion) on infrastructure, and it is reported to have invested far more last year.

Consumer spending also rose 2.6 percent in 2017 – the fastest pace since 2011.

In the fourth quarter the economy grew 3.0 percent year-on-year, the central bank added.

It earlier predicted that the country’s economy would grow 3.0 percent this year – in line with estimates by the IMF and OECD.

PM wants to transform Vietnam from ‘beautiful girl’ to ‘economic tiger’

The prime minister added that no one should be left behind as he envisions Vietnam as a happy and prosperous country.

Vietnam’s prime minister has called for more efforts to make the fast-growing economy a new Asian tiger, combining macroeconomic growth with social prosperity and environmental conservation.

“We must try to transform Vietnam from a beautiful girl into a new economic tiger in Asia,” Prime Minister Nguyen Xuan Phuc said at a meeting on Monday, referring to how Vietnam is usually associated with its natural charm.

This process does not mean Vietnam should turn its back on its natural advantages, but instead focus on securing sustainable development, he said.

The development process has to create a balance between the economy, society and the environment.

“We must develop but no one should be left behind. We will not leave anyone to suffer in this country,” he said.

“We have to be a happy country, not just a prosperous country.”

Phuc was speaking at the Vietnam Economic Forum held by the Communist Party’s Commission for Economic Affairs and attended by around 1,500 Vietnamese and foreign economic experts and scholars.

He called on investment agencies to improve the business environment and boost investor confidence and the economy’s competitiveness.

Vietnam’s economy expanded 6.81 percent last year, the highest in a decade, making it one of the fastest growing economies in Asia and the world.

Yet, the rich-poor divide remains wide.

A research paper by Oxfam released in January last year showed that the richest person in Vietnam earned more in one day than the poorest person made in 10 years.

The annual incomes of around 200 super-rich people in Vietnam could lift 3.2 million people out of poverty and basically end poverty nationwide, it said. “Super-rich” people are defined as people with investable assets of at least $30 million, while “poor” people are those who earn up to VND700,000 ($31) a month in rural areas and VND900,000 ($40) in cities.

According to the General Statistics, 8 percent of families in Vietnam were living under the poverty line last year.

The number of people living in hunger in the country dropped by 32 percent from the previous year to 746,100 in 2017, it said.

TPP countries seek to forge ahead even as Canada wavers

Vietnam resists to rules that would improve rights for its workforce but agrees to move forward with CPTPP.

As trade officials gather in Tokyo this week to try and forge ahead with a trade pact that U.S. President Donald Trump abandoned last year, the new 11-member club risks getting bogged down by resistance from Canada.

The member countries of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP), also known as TPP 11, reached a basic agreement on the pact in November, during the APEC CEO Summit in Da Nang, Vietnam.

But Canada is holding out to secure protection of its cultural industries, like movies, TV, and music, and has said it will not be rushed into signing a deal that other members hope to conclude by March.

That is casting a shadow over a meeting of trade officials from member countries this week in Tokyo and is raising questions about the economic benefits of a pact that doesn’t bring Canada into the fold.

“The overall economic impact of the CPTPP would be significantly further eroded if Canada, which is a Group of Seven nation, decides to postpone its decision about joining,” said Rajiv Biswas, Asia-Pacific chief economist at IHS Markit.

After Trump pulled the United States out of the Trans-Pacific Partnership agreement last year, Japan took a leading role in pushing for a replacement pact.

Along with Australia and Mexico, Tokyo has lobbied hard for the agreement, which aims to eliminate trading barriers and tariffs on industrial and farm products across the 11-nation bloc whose trade totaled $356 billion in 2016.

“Our strong preference is for all 11 countries to join the first wave, but our focus is on bringing a new TPP agreement into force as soon as possible with those who are ready to move,” Australian Prime Minister Malcolm Turnbull said in Tokyo last week.

The talks in Tokyo starting Monday are expected to iron out technical differences on rules for the treatment of labor and intellectual property but unlikely to yield a conclusive statement that member countries will quickly sign the pact.

Canada, which would be the second-biggest economy in the bloc after Japan, is also unhappy over the rules of origin for cars.

“Like Vietnam, one of the crucial elements we secured was what is known as a work plan, a mechanism to deal with outstanding issues, which for Canada includes ensuring the deal provides better access and terms for autos and does not affect our unique cultural sensitivities,” Joseph Pickerill, spokesman for Canadian Trade Minister Francois-Philippe Champagne, said in a statement.

Vietnam has emerged as another swing country because of its resistance to rules that would improve rights for its workforce, although Hanoi hasn’t shown resistance to sign the pact.

“Canada has taken a step back to say they cannot sign TPP 11 right away, but there are expectations that if the remaining 10 countries move ahead Canada will eventually come back,” said Junichi Sugawara, senior research officer at Mizuho Research Institute.

Vietnam’s ministry back on track with proposal to raise VAT

Its suggestion to raise the tax came out last year and faced strong opposition.
Vietnam’s Minisitry of Finance is once again looking to raise value added tax (VAT) to 11 percent from 2019 and then to 12 percent by 2020 from the current 10 percent.

In August last year, the ministry proposed raising the tax from 10 to 12 percent, starting from 2019.

This time, the reason for the tax increase is just the same: Vietnam’s public debt is rising while raising VAT is in accordance with international norms, the ministry said in a draft proposal.

The average tax rate in European Union countries was 19 percent in 2000 and 21.5 percent in 2014.

It was 18 percent in 2000, 19 percent in 2014 and 2016 in Organization for Economic Co-operation and Development (OECD) countries, the ministry said.

But if the proposal is approved, Vietnam will have the second highest VAT rate in Southeast Asia, only after the Philippines, where goods and services are levied at 18 percent.

VAT rate in Southeast Asian countries

The ministry also pointed out several countries that have the same or lower annual incomes per capita compared to Vietnam but are imposing higher VAT, such as Pakistan with 17 percent, Sri Lanka and Bangladesh 15 percent and Nepal 13 percent.

Last year, the ministry asked to increase a number of different taxes and fees, including the VAT, and its proposed 2-percent VAT hike triggered a heated debate among economists, policymakers and businesses.

The ministry said the raised tax will make up for government revenue losses when Vietnam fulfils its commitment to cut import tariffs under free trade agreements, and help tackle rising public debt, insisting that Vietnam’s VAT is still low.

The World Bank previously forecast that Vietnam’s public debt would climb to 64.4 percent in 2017 and 64.7 percent in 2018.

The final official result showed the debt at VND3,100 trillion ($136.5 billion), a rise of VND300 trillion against last year, or 62.6 percent of the country’s gross domestic product (GDP), down 1 percentage point against 2016 and lower than the target by 2.2 points.