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Home » Vietnam information » Vietnam Travel News »

How do we get tourists to come back again Vietnam

06/09/2006 (GMT+7)

A meeting of representatives from the Vietnam tourism industry last week came to the conclusion that the sector could not take off unless it had a clear-cut strategy and thorough co-operation among key players.

How do we get tourists to come back againAlthough Vietnam realises that it has to develop diversified products to attract different kinds of tourists, the efforts are done piecemeal, without long-term planning and fixed objectives.

For example, according to major hotel operators in Ho Chi Minh City Vietnam, tourists visiting for Meeting, Incentives, Conference and Exhibition (MICE) are an important source of income but Ho Chi Minh City is still struggling to build a standard international conference and exhibition centre.

Tourists are interested in local traditional festivals but organisers have not been able to plan these far ahead, leaving enough time for tourist companies to promote them adequately.

Local authorities want to increase tourist arrivals to create jobs and revenues but at the same time impose a curfew on nighttime entertainment activities after midnight.

One of the factors that encourage tourists to come back is the sense that they are welcome. But first impression with immigration or customs officers at airports is usually negative.

Small things like having to bring their luggage onto screening machines at arrival halls frustrate many. Tourists nowadays rely a lot on the Internet to do their bookings, room rate checking and e-ticket purchases.

But most hotels in Vietnam cannot process these requests as efficiently as in other regional countries.

Another factor that hinders the growth of the local tourism industry is the short-term mentality of making money out of existing facilities.

Not many tourist companies plan to invest big money while most of them copy the most successful package from competitors and cut prices to compete.

Their tour guides, under the same mentality, try to make money from tourists by taking them to pre-arranged shops, restaurants or other entertainment places regardless of product quality.

The obvious result is the declining service quality and the low rate of returning travellers. Vietnam can learn immediate lessons from neighbouring Singapore, Thailand and Malaysia.

These countries know how to make good use of the abolishment of visas among ASEAN countries and have attracted a large number of Vietnamese tourists with attractive sale-off campaigns.

During the first six months of the year, Vietnam received 1.85 million international tourists, an increase of just 7.2per cent over the same period last year. The more worrisome trend is the drop over the months (350,000 in January and 274,000 in June).

Investment Law confusion

Although the Ministry of Planning and Investment (MPI) has issued a temporary guidance for the enforcement of the new Investment Law, foreign investors are holding their breath, waiting for something more concrete.

Late last month, pending the issuance of the formal decree after the law became effective on July 1, the ministry wrote to provincial and industrial park authorities, providing general instructions on how to proceed with foreign investment licensing.

For the time being, provinces and cities can license foreign investment projects of up to US$20 million while industrial park authorities can approve projects of up to $40 million. Available preferential treatments and incentives remain the same as before.

But according to initial reports from major investment destinations, foreign investors are adopting a wait-and-see attitude. Scheduled meetings were held, field trips were carried out and questions and answer sessions were full of attendants but many just do not want to apply at the moment.

For some projects that want to go ahead, local authorities do not know how to proceed if they are not covered in the temporary guidance document, especially joint ventures with local companies.

They do not know how to deal with ambiguous requirements in the document like "financial capacity reports filed by the investors".

In some cases, investors do not know how to write down the name of the legal representative of the investing firm – whether it is the mother company’s CEO or its legal representative in Vietnam.

Now the question is why the new law has become effective since July 1 but its guiding decree is not ready, despite repeated requests from local authorities. First and foremost, the main responsibility rests with the Government and a stern order from the Government asking the MPI to hasten the drafting of decrees is not enough.

It is also the responsibility of the National Assembly when it seems that delegates discussed and passed the law in such a way that remaining controversial issues were left for the decree to deal with.

If drafters adopt the thinking that the decree is just a detailed interpretation of the law, things might be easier and quicker. But now it seems they are thinking of ways to make it easier for them to enforce the law, and so remaining issues would be passed down to local level administration and investors to work them out.

Lift foreign shareholding cap?

As the local stock market fluctuates, a financial association suggested the Government widen the percentage of shares foreign investors can hold in listed companies.

Foreign ownership of local shares used to be capped at 30 per cent and has recently increased to 49 per cent.

The Vietnam Association of Financial Investors suggested that the percentage be widened to 100 per cent, except in certain sectors.

The reason the association relied on this is that the new Investment Law has made it possible for foreign investors to invest 100 per cent in local companies so such a widening is legally possible.

At first glance, the proposal seems to be the panacea that the stock market needs right now. After a long period of slugging prices, the stock market soared to its height when "blue chip" companies like Vinamilk began their listing.

But then, other bigger listed companies like Sacombank overwhelmed the market, causing supply to far exceed demand. Prices plummeted, much to the chagrin of inexperienced local small-time investors.

Allowing more room for foreign investors will push up demand and bring equilibrium to the market.

But in fact, foreign investors are having a good time here. As shell-shocked local investors fled the market, the foreigners slowly and steadily bought up good shares.

With more room to manoeuvre, foreign investors will soon own quality shares for long-term benefit while junk shares will be left for domestic investors.

Then the economy will be completely at the mercy of international financial investors like Southeast Asia was in 1997. Then market might collapse and not just fluctuate as it does now.

(Source: vnagency)

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