HANOI (eTN) – Over the last two years, Vietnam has been forced to devaluate its currency three times. The latest devaluation occurred on February 11 and is so far the biggest drop experienced by local currency in over a decade. The new official rate of VND20,693 for one US dollar is 8.5% lower than the previous rate prevailing until Friday (VND18,932). Vietnam is experiencing an economic boom with an average growth rate of 7% per annum, fueling inflation and a deficit in trade. Last year, Vietnam’s inflation hit a record at over 12%, while the trade deficit rose to US$12.4 billion.
Will the new dong rate bring some good news to travelers visiting Vietnam? This is unfortunately very unlikely as the benefits will probably be limited. Most business – especially hotels or tourist services – are already quoted in US dollars. Increases are probably programmed by some companies. Vietnam Airlines is likely to increase its fares, as its fixed costs in dollars will get up. The same can be anticipated for all transport, as petrol will also be more expensive. And finally, imported products served mostly in hotels or tourist areas are likely to increase. Tourists might, however, enjoy cheaper food at street stalls and cheaper traditional handicrafts.
The dong devaluation comes at a time when the Vietnam National Tourism Administration (VNAT) looks at re-launching the country’s tourism image. VNAT is likely to select Australian-based Cowan Design Company – which just won a contest to design a new logo and slogan for Vietnam tourism – to capitalize on the reshaped image and build up the brand’s strength. The slogan, “Vietnam, a different Orient,” will be used until 2015. This is the first time that VNAT hired an outside company to map out its marketing strategy for tourism development – a welcome move as previous campaigns never had the expected impact on international markets. VNAT expects to open more representative offices in Western Europe, China, and Northeast Asia. The country targets this year a total of 5.3 to 5.5 million foreign visitors compared to 5.03 million in 2010 and some 30 million local travelers, up from 28 million in 2010.