Vietnam’s Phu Quoc Island: A Key Investment Destination for the Tourism Industry
HCMC – The heart-shaped Phu Quoc Island (PQI), located in the south of Vietnam, is quickly becoming the most attractive investment area for the country’s tourism sector. In 2014, QPI’s tourism sector earned VND2, 228 billion (US$102,531,063) in revenue, an increase of 84 percent over 2013. The year 2014 also saw a 37.6 percent increase in the number of visitors to the island, totaling 586,000 tourists.
Also known as “Pearl Paradise Island” (“đảo ngọc”) by the Vietnamese, PQI is located in the southern province of Kien Giang – a one-hour flight from Ho Chi Minh City (HCMC). PQI is the largest island in Vietnam, with a total area of 593 km2. The island is famous for its beautiful beaches where warm, turquoise waters lap against beautiful white sand. In 2014, PQI was ranked by National Geographic as the third best destination for winter trips, after Paris (France) and Whitefish, Montana (USA).
Tourism is by far the largest contributor to the island’s economy, accounting for 66 percent of the region’s GDP – growing by an average yearly rate of 26.17 percent from 2011-13. However, as the number of tourists to PQI continues to rise, the island is finding that it is lacking in the infrastructure needed to handle this influx. Therefore, investors are rushing in to help build up entertainment areas, luxury hotels, and commercial malls.
Most of the island’s hotels are located in the Bãi Dài area in the west. In total, PQI has about 150 hotels (2,900 rooms), of which three-star and four-star hotels account for 30 percent. There are only two five-star hotels on the island, the Salinda and the Vinpearl Phu Quoc.
In 2004, Vietnam’s Prime Minister (PM) issued a formal decision ordering the transformation of PQI into the largest tourism center in the Mekong Delta region. On September 17, 2014, the PM also formally declared Phu Quoc as an economic zone. Looking to the future, the Kien Giang provincial government is planning to continue upgrading the province so that it will be able to qualify as a special economic zone – so far, this designation has only been granted to economic heavyweights HCMC and Hanoi.
In January of this year, in what is expected to be a significant boost to the island’s economy, casino investment in the region was finally approved. The minimum required capital for a casino project is US$4 billion. Despite this high price tag, investors are eager to get in on the action, a 30,000 square-meter casino has already been approved for construction, however, the details of the investor have not yet been released. The new casino will reportedly have between 200 and 400 gambling tables as well as 2,000 gambling machines. In anticipation of the attraction the casinos will have for the local populace, the Vietnam government has announced that it will allow Vietnamese above age 21 to gamble, this was previously illegal.
In order to attract investors and create a competitive business environment, Phu Quoc Island is providing a range of financial incentives, these include:
- Investors working in the tourism industry will have their land rentals waived for the first three years of construction
- Subsequently, when the project is in operation, investors will receive a further land rental waiver of 11 years, 15 years, or permanently depending on their business category. There are three categories:
- Incentive-granted industries (such as agriculture, forestry, fishery, etc.)
- Non-incentive-granted industries
- Social industries
- Corporate income tax (CIT) will be ten percent (reduced from 22 percent) for the first 15 years, 30 years, or during the period of operation, depending on the category
- A 50 percent reduction in Personal income tax (PIT) for both local and foreign nationals working in PQI
- Zero tax on fixed assets imported to PQI for business purposes
- Foreign passport holders visiting the island will be granted a 30-day visa exemption
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