International Visitors Bring in Significant Inflow of Foreign Income

The rapid increase in international visitors to Vietnam has brought a significant net inflow of foreign income into the country. Revenues from international visitor spending have nearly doubled in absolute value from 2013 to 2017 and risen both as a share of Vietnam’s GDP and of total goods and services exports. 

Outbound tourism spending by Vietnamese residents has also grown robustly during this period, but even after accounting for these tourism “imports”, Vietnam’s travel services balance has remained positive, meaning tourism consistently provides a net inflow of external income to Vietnam. 

Moreover, travel services represent Vietnam’s single largest services export, accounting for 68 percent of total services exports in 2017. In combination with the robust spending by domestic tourists, tourism’s direct contribution to Vietnam’s economy and employment has been rising steadily. 

For each dollar of direct visitor spending on tourism-linked activities (travel, accommodation, tour services), a portion goes toward imported goods and services (also known as spending “leakage”), meaning its direct contribution to GDP is generally less than one-for-one. 

In Vietnam, this tourism leakage factor has been relatively low—around 0.27 cents per dollar compared to an average of 0.47 cents for the Southeast Asia region29 —meaning a relatively large share of recent visitor spending growth has been retained in the domestic economy, helping to drive the tourism sector’s contribution to GDP from 6 percent in 2013 to 7.9 percent in 2017.

Furthermore, VNAT estimates that the tourism sector directly employed 750,000 workers in 2017 (around 1.4 percent of Vietnam’s total employment), up from roughly 450,000 in 2013

NHAT TRUNG

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