Overall, services exports will likely remain concentrated in tourism and, to a lesser extent, transportation, which will benefit both from steadily increasing visitor numbers and healthy growth in merchandise trade.
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Despite its importance for total service exports, tourism in Vietnam is still dwarfed by regional competitors Thailand, Malaysia and Indonesia. Given its tourist attractions and favorable climate, improvements in marketing and tourism infrastructure could unlock substantially faster growth in travel-related services exports for Vietnam.
While Japan, China and the US are currently Vietnam's most important markets and will remain so until 2030, services are much more diversified across destination markets than goods exports. The top three markets only have a combined share of 22%, and this will fall to 21% by 2030 as other destinations in Asia and the Middle East gain more share, reflecting increasing incomes therefore opportunities for Vietnam's tourism industry.
Cross-border services flows to India are projected to be the fastest growing in our forecast, expanding at 11% per year to 2030, followed by China which will see imports from Vietnam growing at 10% in the long term.
This reflects the growing share of regional markets in Vietnamese merchandise trade, which is often bundled with transport and business services. And new trade deals could provide an extra boost - exporting firms seem particularly optimistic about growth in services revenue when it comes to participation in new trade deals.
The World Bank now ranks Vietnam 68th out of 190 countries in business climate improvement, an increase of 14 from the previous year - and rising incomes in key markets like China and ASEAN.
In 2017, Vietnam achieved a 10-year high growth rate at 6.81%, exceeding the target of 6.7% set by the National Assembly. The uptick in growth reflects a strong rebound of the agriculture sector, rising global and domestic demand that boosted manufacturing and trade, coupled with robust foreign investment inflows, said World Bank.
Growth is partly picked up in the services sector, according to the General Statistics Office, expanding at 7.4% due to strong tourism receipts and buoyant private consumption, which lifted retail sales by 9.5%.
The growth model is gradually shifting toward sustainability, from mining natural resources to manufacturing, processing and services. In 2018, the government target growth target at 6.7%, along with average inflation rate of 4%.
