Visa Waiver for Citizens of France, Germany, Italy, Spain, and the UK – The Real Impact

For the most up to date information on Vietnam’s visa program see: Vietnam’s Visas and Work Permit Procedures 2022

By Charles Small, Senior Associate, Dezan Shira & Associates

Vietnam appears to be opening up to foreign tourists by waiving visa requirements for citizens of the five EU countries France, Germany, Italy, Spain and the UK from July 1, 2015.

However, it is worth taking a closer look at what this means to the tourism industry in Vietnam, which the World Travel and Tourism Council found contributed 4.6 percent of total GDP in 2014, and forecast to reach 4.8 percent of Vietnam’s total GDP by 2025.

Incentive for a shorter visit

At first glance, it may seem that as Vietnam relaxes visa restrictions, more tourists will come, and Vietnam’s tourism industry will benefit financially.

Certainly, removing requirements for visas makes visiting Vietnam easier. Visitors would no longer have to go through the arduous visa on arrival system, which in reality can take more time than trips to a Consulate or Embassy of Vietnam to apply for a tourist visa in person. Additionally, a financial obstacle is also out of the way – tourists no longer need to pay up to US$125 in government fees for a tourist visa on arrival, and more if an agent is used.

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However, reality is never as simple as that. The restriction of the visa waiver period to only 15 days may have negative knock-on effects, as it incentivizes visitors to come to Vietnam for 15 days or under.

The Vietnam National Administration of Tourism (VNAT) found in its latest survey that tourists spend on average approximately US$126 per day in Vietnam, of which a third is spent on accommodation and almost a quarter on food and beverages. As applying for the visa necessary for a 16-day trip could cost as much as the average tourist spends in a single day, the cost of coming to Vietnam for the 16th day would be double that for the 15th, encouraging shorter visits. When considering that VNAT found foreign visitors to spend an average of 9.73 days in Vietnam, the goal should be to bring that number up.

Under the 2014 Law on Entry, Exit, Transit and Residence of Foreigners in Vietnam, the 15 day visa may not be extended in Vietnam, so those who arrive in Vietnam and realize they would prefer an extended stay are not permitted to do so. According to the law, foreigners must wait for at least 30 days from the date of exiting Vietnam before they are permitted to re-enter the country under the visa waiver scheme. By that time, the tourist may no longer even be in ASEAN.

If not Vietnam, where else?

For Italian citizens, other options are:

30 days visa-free: Indonesia, the Philippines, Thailand and Singapore

Three months visa-free: Malaysia

90 days visa-free: Hong Kong, Japan, Singapore, South Korea, Taiwan

Cambodia, Indonesia and Laos offer 30 day visas on arrival, with simpler and cheaper procedures than Vietnam’s visa on arrival. Myanmar offers a 28-day e-visa for tourists.

For UK citizens, other options are:

30 days visa-free: Indonesia, the Philippines, Thailand and Singapore

Three months visa-free: Malaysia

90 days visa-free: Brunei, Japan, and South Korea

180 days visa-free: Hong Kong and Taiwan (extended within Taiwan)

As with Italian citizens, Cambodia, Indonesia and Laos offer UK citizens 30 day visas on arrival, with simpler and cheaper procedures than Vietnam’s visa on arrival. Myanmar also offers the 28-day e-visa for tourists.

What has the scheme done so far?

Vietnam applied the 15 day visa waiver program to citizens of Belarus, Denmark, Finland, Japan, Norway, Russia, South Korea and Sweden on January 1, 2015.

RELATED: Vietnam Updates Visa Categories, Expands Visa-Free Access

In the first five months of 2014 to May, there were a total of 46,001 visitors recorded entering Vietnam with a passport from Denmark, Finland, Norway and Sweden. In the same period in 2015, this has reached 49,016.

The situation is more nuanced than the numbers suggest. There was in fact a 2.4 percent decrease of registered Danish citizens and a 7.3 percent decrease in Norwegian citizens visiting visiting Vietnam over the five months to May 2014 when compared to the same period in 2015. Tellingly, Denmark will not allow dual citizenship until September 1, 2015 and dual citizenship is not permitted in Norway in all cases.

Dual citizenship is possible in both Finland and Sweden, which saw 26.5 and 14.6 percent increases respectively. There is for now correlation between opening up the visa waiver programme to European countries permitting dual citizenship and increased visitor numbers.

As the scheme is applied to UK passport holders, it is worth bearing in mind that according to the UK’s Office of National Statistics, 45.6 percent of non-UK born residents of the country, being 3.4 million people, held a UK passport in 2011. As the UK permits dual citizenship, many of these people will hold a second passport, and will prefer to use the UK passport to visit Vietnam.

The real increase in visitors came from South Korean passport holders – up from 354,984 in January-May 2014 to 480,300 in January-May 2015. This reflects the position of South Korea as Vietnam’s top investor. In Ho Chi Minh City alone, South Korean investment has entered 1,019 projects with US$4 billion of total investment capital.

RELATED: Dezan Shira & Associates’ Pre-Investment, Market Entry Strategy Advisory

Considering the amount of time it takes to travel around Vietnam, for logistical reasons tourists on the visa waiver scheme may just stick to the core tourist hubs. Businesses in hotspots like Sapa – an eight hour train journey from Hanoi – may find tourists from countries benefiting from the visa waiver programme staying for a shorter time.

Those in the tourism industry must develop their strategy to suit the needs of the changing market. If you are involved in or considering entering Vietnam’s tourism industry, get in touch with Dezan Shira & Associates Vietnam for expert advice at: vietnam@dezshira.com

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