Vietnam’s service sector is likely to hit rock bottom

According to the Ministry of Culture, Sports and Tourism, during Tet’s holiday (Jan 29 to Feb 6), domestic tourists reached 5.5 million visitors. Photo: Tourists in Da Nang city

Vietnam’s service sector kicked off the new year quite positively, with gross retail sales of consumer goods and services in Jan 2022 reaching VND470 trillion, up 6.7% over that in the previous month and up 1.3% over that in the same period last year, thus improving from a 2.7% YoY decline seen in Dec 2021. If excluding the price factor, this indicator slid 0.3% YoY (that in December 2021 fell by 6.5% YoY).

To be specific, retail sales continued to strengthen, increasing 7.0% MoM and 4.3% YoY, while revenue from accommodation and catering services rose 8.0% mom (-11.9% YoY). Meanwhile, travel revenue rose 2.7% mom (-35.6% YoY) and revenue from other services inched up 1.1% MoM (-8.1% yoy).

The recovery of the service sector was more clearly observed during the Tet holiday. According to the Ministry of Culture, Sports and Tourism, during Tet’s holiday (Jan 29 to Feb 6), domestic tourists reached 5.5 million visitors, surpassing the total number of domestic tourists for the whole of Dec 2021 (5.2 million visitors). Many tourist destinations witnessed a sharp increase in domestic tourists compared to the same period last year.

In Da Nang, the total number of tourists during the Lunar New Year is estimated at 35,939 (16.7% YoY), of which domestic tourists account for 35,204 visitors (guests staying: 25,500 visitors, an increase of 6 times over the same period last year). Quang Ninh province welcomed more than 200,000 tourists, more than tripled compared to the same period last year. Thua Thien Hue province welcomed about 58,300 visitors, an increase of 286% over the same period last year. Kien Giang province welcomes over 100,000 visitors, mainly to visit Phu Quoc island (more than 75,000 visitors). These positive numbers will be recorded and contribute to improving accommodation and catering service revenue in February 2022.

Moreover, international tourists were recorded at 467 during the Tet holiday (from the Russian Federation under the pilot program of COVID-19 vaccine passports). This is the premise for Vietnam to move towards the goal of fully opening up to international tourists on March 15, 2022.

In 2022, Vietnam's tourism aims to welcome 65 million tourists, of which international visitors make up 5 million (from near zero in 2021) and domestic visitors make up 60 million (50% YoY). According to the Vietnam National Administration of Tourism, total revenue from tourists in 2022 is estimated at VND400,000bn (122.2% YoY).

Mr. Nguyen Viet Phong, Director of Trade and Services Statistics Department – GSO, said despite the COVID-19 pandemic, the service sector looks positive in 2022, namely:

Firstly, amid the COVID-19 pandemic, Vietnam has had a safe, adaptive approach to economic development. In particular, provinces and cities around the country have implemented the smallest zoning, thoroughly handling the outbreaks, so business activities in the service sector would certainly have good growth as compared to 2021.

Second, from January 1, 2022, international air routes were reopened and will be opened more from March 15. International tourists can come to Vietnam and Vietnamese people can travel abroad. This is also an opportunity for the tourism industry to have a strong recovery, thereby stimulating other service industries such as accommodation, catering, wholesale and retail... At the same time, with the expansion of transport forms (road and rail), Vietnam's connection to international trade will be more flexible for both goods and passengers, and the transport sector will certainly have high growth again.

Third, Vietnam's vaccination rate has also reached a very high level; At the same time, there will be drugs to treat COVID-19. This is the biggest catalyst for the world economy in general and Vietnam's economy in particular to recover from the pandemic.