Workers forced to work more jobs, Vietnam's exports shrink: government relaxes visa policies and promotes tourism to Vietnam | year-on-year | government

Introduction: Vietnam's exports have fallen for the longest time in 14 years.

Author | Qian Xiaoyan of first Finance and Economics

Affected by the global economic downturn, according to data released by the Vietnam Bureau of Statistics, Vietnam's exports have been declining for five consecutive months, marking the longest consecutive decline in 14 years. As an export-oriented economy, Vietnam is also seeking other breakthroughs today.

On August 15th, the Vietnamese government announced a significant reform of the entry and exit system, issuing electronic visas to citizens of countries and regions around the world, and significantly increasing the unilateral visa exemption period for Japan, South Korea, and many European countries from 15 days to 45 days.

Zhou Shixin, Associate Researcher at the Asia Pacific Research Center of the Shanghai Institute of International Studies, told a reporter from First Financial that this reflects Vietnam's urgent desire to develop its economy and hopes to stimulate its growth. Promoting electronic visas not only provides convenience for tourists, but also promotes personnel exchanges for commercial purposes.

Zhou Shixin also stated that promoting electronic visas is conducive to improving the transparency of Vietnam's border inspection and customs, reducing the breeding of corruption, further aligning with international standards, and enhancing openness.

The tourism industry shoulders the banner of recovery

According to the resolution released by the Vietnamese government, Vietnam has decided to issue electronic visas to citizens of all countries and regions. The resolution also expands the list of international ports that allow foreigners to enter and exit Vietnam with electronic visas, covering most of Vietnam's air, land, and sea ports. The resolution will come into effect on the day of its publication.

Previously, Vietnam's visa system was quite conservative, unlike many Southeast Asian countries that offer convenience measures such as visa waivers, landing visas, or electronic visas to attract tourists. Vietnamese travel agencies often complain that many international tour groups have to cancel their Vietnam trips at the last minute due to not obtaining visas in a timely manner.

Vietnamese Minister of Culture, Sports and Tourism Nguyen Van Hsiung also acknowledges that many countries have attracted a large number of tourists through visa free policies, and Vietnam lacks competitiveness in this area. For this reason, Vietnamese Prime Minister Pham Myung sung stated earlier this year that due to inconvenient visa policies, the growth of Vietnam's tourism industry in 2022 was hindered. He has requested relevant departments to review, modify, and supplement visa related policies.

Regarding the extension of the unilateral visa free period from 15 days to 45 days, Feng Guangsheng, Vice Chairman of the Vietnam Travel Agency Association, stated that this change is aimed at tourists using Vietnam as a transit hub for tourism in Southeast Asia. After traveling to Vietnam, you can then go to other Southeast Asian countries and finally return to Vietnam to transfer back to your home country without the need to apply for a visa.

In fact, compared to the overall economic trend, Vietnam's tourism industry has achieved a good recovery this year. According to Vietnamese statistics, in the first seven months of 2023, Vietnam received nearly 6.6 million international tourists, with tourism revenue reaching approximately 416.6 trillion Vietnamese dong.

Vietnam set a goal of receiving 8 million international tourists annually at the beginning of this year, and based on this calculation, it has now achieved 83%. After the easing of the epidemic, Vietnam fully opened its doors on March 15, 2022, attracting 3.5 million international tourists and over 101 million domestic tourists that year. The tourism industry has gradually become a pillar industry of Vietnam's economy.

According to statistics from the Vietnam Tourism Administration, in the first half of this year, South Korea became Vietnam's largest international tourist market with 1.6 million visitors, equivalent to 80% of the same period in 2019. After South Korea, China, the United States, Malaysia, and Japan are also important international customer markets for Vietnam.

On March 10th, the Ministry of Culture and Tourism of China announced the second batch of pilot countries for outbound team tours, among which Vietnam was included. At that time, Nguyen Van Hoe, Director of the International Cooperation Bureau of the Vietnamese Ministry of Culture, Sports and Tourism, stated that this was great news for the Vietnamese tourism industry and the Vietnamese people. Both sides will continue to engage in closer cooperation and jointly promote the healthy development of the tourism industry between the two countries.

Before the pandemic, China was Vietnam's largest inbound tourist market. In 2019, Vietnam received 5.8 million Chinese tourists, accounting for approximately one-third of the total number of foreign tourists in Vietnam. Between 2015 and 2019, the average annual growth rate of Chinese tourists to Vietnam reached 34.4%.

With the growth of the Indian economy, the number of Indian tourists entering Vietnam has grown strongly, exceeding 141000 in the first half of this year, becoming Vietnam's tenth largest source market. The National Tourism Administration of Vietnam has identified India as one of the largest potential markets and plans to increase publicity efforts to attract more tourists, connect with the aviation services of the two countries, and provide convenience for promoting tourist exchanges between India and Vietnam.

However, the Vietnamese government also understands that relaxing visa policies is only a necessary condition now. To make Vietnamese tourism more competitive and attractive, follow-up measures are needed. The Chairman of the Hanoi Tourism Association, Nguyen Mong Tan, stated that it is necessary to optimize existing tourism products and explore new ones to meet the curiosity of tourists and enhance the attractiveness of Vietnamese tourism destinations.

With the rapid development of the industry, Vietnam's tourism industry has begun to face a shortage of personnel. According to the estimation of the National Tourism Administration of Vietnam, at the current growth rate, the tourism industry in Vietnam will require 40000 new employees annually and require retraining of 25000 employees. However, relevant schools in Vietnam can only train 20000 students annually, and the proportion of tourism professionals who have received professional training is still relatively low, and nearly half of them do not know foreign languages.

Workers and businesses are also figuring out ways

In fact, in order to stimulate the economy, the Vietnamese government has introduced many conventional measures, such as Fan Mingzheng's request on July 15 for the Central Bank of Vietnam to implement an active, flexible, and moderately loose monetary policy regulation plan to alleviate production and operation difficulties. Since the beginning of this year, the Central Bank of Vietnam has lowered its benchmark interest rate four times in a row.

The export oriented development characteristics of Vietnam's economy are obvious. In terms of the proportion of trade to GDP, Vietnam's indicator exceeds 90%, ranking 7th globally and second only to Hong Kong and Singapore in East Asia.

But the European and American markets are weak, consumption is weak, and Vietnam's own adjustments cannot change the pressure of the external environment. According to the latest released data, Vietnam's exports contracted by 3.5% in July; In the first seven months of 2023, exports decreased by 10.6% year-on-year, to $194.73 billion. Among them, the export value of smartphones, Vietnam's largest foreign exchange earning product, decreased by 18.3% from January to July 2023, to 27.8 billion US dollars.

In this context, many factories are forced to lay off employees. According to data from the Vietnam General Bureau of Statistics, over 200000 workers in Vietnam were unemployed in the second quarter. The areas with the most severe unemployment are Ho Chi Minh City and Pyeongyang Province in southern Vietnam. The unemployment rate in Ho Chi Minh City has reached 3.7%. Unemployed individuals are mainly concentrated in the textile, wood products, and electronics industries, with many attempting to transfer to the service industry for re employment.

Even if there are no unemployed industrial workers, due to reduced orders, not only have they lost their previous overtime pay, but now even their basic salary needs to be discounted. According to the 2023 Manufacturing Human Resources Report released by Vietnamese human resources company Navigos in August, 60% of manufacturing workers reported a decrease of over 30% in wages.

The report also states that in order to cope with current difficulties, 60% of workers choose to live frugally and frugally; And 37% of people choose to work more jobs and strive to increase some extra income to support their families.

The economy is slowing down, and the future of Vietnam's real estate business is also uncertain. Pan Riwang, known as the "real estate king of Vietnam", is the richest man in Vietnam. Now he has also taken a different path to enter the popular electric vehicle field. On August 15th, his Vinfast electric vehicle successfully landed on the NASDAQ stock market in the United States through a backdoor listing, achieving a 254.64% increase on the same day.

However, VinFast is a low flow company with very few tradable shares, approximately less than 1% of its total share capital, making it more susceptible to market speculation. VinFast began exporting electric vehicles to North America at the end of last year, but due to a lack of car manufacturing technology and heritage, many problems were quickly exposed, and the US National Highway Traffic Safety Administration issued a safety warning for it. As of June this year, only 137 Vinfast electric vehicles were registered in the United States.

Although there are many difficulties at present, China has accelerated its investment in Vietnam since the beginning of this year. According to data from the Foreign Investment Bureau of the Ministry of Planning and Investment of Vietnam, China's total registered capital in Vietnam exceeded 2.33 billion US dollars in the first seven months of this year, surpassing Japan and ranking third among countries and regions that invest in Vietnam. If calculated based on the number of new projects, China ranks first with 325 projects.

China and Vietnam are close economic and trade partners, connected by mountains and rivers, with strong economic and trade complementarity. According to Chinese customs data, the bilateral trade volume between China and Vietnam has increased from $120 billion in 2017 to $235 billion in 2022. The trade volume between China and Vietnam in 2022 even exceeded the trade volume between China and Germany, which is clearly an unprecedented change.

According to the website of the Ministry of Foreign Affairs, Vietnamese Vice Premier Chen Liuguang also stated in Kunming on August 16 that China's importance and uniqueness towards Vietnam are unparalleled, and it is the only country that combines all the priority directions of Vietnamese diplomacy. Developing relations with China has always been the top priority of Vietnamese foreign policy.