It received around 12.9 million international visitors, up 29.1 percent from the previous year.
Other countries in the region to see a significant increase were Myanmar (18.4 percent) and Brunei (18.3 percent).
Vietnam’s revenues from tourism only increased slightly to $8.86 billion from around $8.25 billion in 2016, the World Tourism Organization's (UNWTO) newly-released report said.
Indonesia earned $12.52 billion from the same number of visitors.
Vietnam’s market share of international arrivals in the region was 4 percent while revenues were 2.3 percent.
Thailand remained the region’s largest destination with around 35.4 million international arrivals and $57.5 million in revenues.
In general, 2017 was another record year for the travel industry with international tourist numbers increasing by 6.8 percent globally, the highest rate since the 2009 global economic crisis and well above UNWTO's long-term forecast of 3.8 percent a year in 2010-2020.
The Asia-Pacific region had the second highest market share of 24.9 percent after Europe’s 48 percent. The Americas were third with 16.7 percent.
In the Asia-Pacific, the growth is significant in Southeast and South Asia.
Southeast Asia received 120.4 million visitors in 2017, with the growth rate increasing to 8.6 percent from 6.3 percent in 2016, the highest in Asia.
The growth in the region was believed to be fuelled by robust demand in Northeast Asia, according to the report.
UNWTO is the United Nations agency responsible for the promotion of responsible, sustainable and universally accessible tourism.