Is Vietnam a Good Place for Aviation Businesses?

Dearest Friends and Associates, I take this opportunity to wish all of you a Happy New Year as well as a prosperous Chinese New Year ahead filled with happiness and good health always. Before I begin – if you’ve missed out on the articles on the Malaysian and Indonesian aviation market, you can find them on my profile. This instalment is on the booming aviation market in beautiful Vietnam.

 Why Vietnam?

 In the World Airport Traffic Report 2018, which is released annually by Airports Council International, Vietnam was predicted to be the fastest growing country in terms of passengers within the 2017 to 2040 timeframe. In the same report, Hanoi and Ho Chi Minh City were also named in the top 10 fastest-growing airports in the world. To add to this, the route between Hanoi and Ho Chi Minh were also ranked among the top 10 busiest routes in the world.

 Unlike fellow ASEAN member countries such as Singapore and Malaysia, Vietnam’s economic growth started from further behind, as noted by Clark in a 2019 report on Vietnam’s aviation market (https://livinginasia.co/vietnam-aviation-market/). This could be a possible contributing factor to Vietnam’s current booming market. However, do not let this fool you – despite playing catch-up economics, the national flag carrier, Vietnam Airlines, were the second airline in the world to fly the Boeing 787 and Airbus A350!

 With the increasing popularity of tourism in Vietnam – to locations including Da Lat, Da Nang, and Phu Quoc – air traffic is sure to continue growing. Also contributing to the expanding air travel is Vietnam’s strategic location, neighbouring China, which we all know is one of the largest players in the world industry. Furthermore, booming levels of investment from China continues to add to the growth of Vietnam, both within and beyond the aviation industry.

 Besides the expansion in tourism and investment, the Vietnamese government has been supportive of the growth in the aviation market. the Ministry of Transport plans to spend US$15.4 billion to develop the aviation sector by 2030, with US$ 3.7 billion to be invested by this year alone. Additionally, with policies to propel Vietnam towards their national development goals, the Ministry of Transport has passed regulations in hopes to grow the number of aircraft in the country by more than 220 by 2020, and up to 400 by 2030. As is expected, the larger number of aircraft would call for more ancillary aviation businesses and supporting industries – great news for all aviation businesses who aim to tap into the Vietnamese market!

 Vietnam Briefing, a valuable source for business insights in Vietnam, has identified the following sectors with numerous opportunities: engineering and construction services, ground support equipment, air traffic management systems, aviation management software, aircraft parts, training and MRO.

Issues and Limitations in Vietnam

 A rise in number of aircraft is likely to result in manpower shortage, if the skilled personnel pool is unable to grow as quickly. This could push prices up, resulting in detrimental ripple effects. At present, training facilities are not in abundance in the Vietnamese market.

 Another limitation for aviation businesses in Vietnam are the regulations. It could take up to several years to set up an aviation company in the country, due to various administrative procedures and restrictions on foreign investment. Vietnam Briefing has revealed that the investment plans of a prospective business needs to be compatible with the State’s master plan on the industry. Plans to set up a business in Vietnam also has to be reviewed by the Ministry of Trade, as well as the Ministry of Planning Investment.

 How Can We Address These Issues?

I can’t stress enough how crucial quality training is. In a booming market such as Vietnam, there is bound to be labour shortage especially now, with a number of new airlines mushrooming. Seeing the need for intensive human capital development, we have since established our local subsidiary, Dviation Vietnam in 2014.  To date, Dviation has carried out numerous technical training programs in collaboration with local stakeholders, to play our part in developing skilled personnel in the market.

 For investors looking to enter the Vietnam market, citing Vietnam Briefing, “divestments also offer opportunities for investors. Airports Corporation of Vietnam (ACV), which has a monopoly on trading, managing and operating international and domestic airports will be selling a 20 percent stake in 2018 and 10.4 percent by 2020, while Vietnam Airlines plans on selling a 35.16 percent stake in 2019”.

 Till my next instalment, I look forward to hearing your thoughts and welcome the opportunity to collaborate in growing this exciting market together.