Vietnam’s Deputy Prime Minister Le Minh Khai recently approved Resolution No. 163/NQ-CP, signaling the government’s commitment to bolstering the logistics industry and enhancing its competitiveness. This comprehensive resolution outlines key tasks and solutions to transform Vietnam into a thriving logistics hub and position the country as a vital player in the region. With a focus on high-value service provision, integrated supply chains, and digital transformation, Vietnam is poised to unlock the immense potential of its logistics sector.
The resolution aims to develop the logistics sector as a high-value service industry. In order to achieve this, the government will direct relevant ministries, agencies, and local authorities to implement synchronized measures to improve competitiveness and foster the growth of Vietnam’s logistics services.
The government envisions integrating logistics services with goods production, import-export activities, transportation infrastructure, and information technology. Efforts will be made to cultivate a thriving logistics service market while enhancing the competitiveness of logistics enterprises. By leveraging Vietnam’s geographical advantages, the government aims to establish the country as a vital logistics hub in the region, prioritizing developing sustainable supply chains. Additionally, there will be a strong focus on enhancing the quality of human resources, promoting digital transformation, and leveraging technology within the logistics sector.
Understanding Vietnam’s Logistics Market
Vietnam’s logistics ecosystem offers numerous investment prospects for companies seeking to consolidate and expand their platforms in a rapidly growing market. Companies can gain early access and control over these key intersections by strategically investing in and potentially overseeing crucial “nodes” within the multi-modal transport network, which may develop into bottlenecks.
The GDP growth rate of Vietnam (2010–2020)
The country experienced a consistent hike in its GDP, with a peak growth rate of 8.02% in 2022. However, there was a decline in the GDP growth rate in 2020, which can be attributed to the impact of the COVID-19 pandemic.
Logistics Infrastructure in Vietnam
The logistics industry plays a crucial role in Vietnam’s economic development and has grown significantly over the years. The government has played a vital role in promoting the development of the logistics industry. It focused on infrastructure development, implementing logistics-specific policies and regulations, and promoting public-private partnerships.
However, the logistics industry faced various challenges in Vietnam, including poor infrastructure, high logistics costs, and a need for more skilled workers. The COVID-19 pandemic further exacerbated these challenges, leading to disruptions in the supply chain and logistics operations.
Nevertheless, the logistics industry in Vietnam is expected to continue its growth trajectory, driven by the rising demand for logistics services and the government’s support for the sector’s development.
Market trends and challenges
Cold chain logistics
Cold chain logistics in Vietnam is still in its early stages of development but holds significant growth potential, especially in the food and pharmaceutical sectors.
Challenges within Vietnam’s cold chain logistics industry include inadequate infrastructure, a lack of regulatory standards, and a shortage of skilled workers. To address these challenges, it is essential for cold chain logistics providers to invest in the required technology and infrastructure to improve operational efficiency and cost-effectiveness.
The e-commerce market presents a lucrative opportunity for cold chain logistics providers in Vietnam. As more consumers turn to online platforms to purchase fresh and frozen food products, collaboration between cold chain logistics providers and e-commerce platforms becomes essential. By working together, innovative solutions can be developed to meet customers’ evolving demands. Moreover, collaboration between the public and private sectors is imperative to foster the growth of the cold chain logistics industry.
Green logistics development
The Ministry of Transport will be responsible for overseeing and collaborating with relevant departments to implement transportation initiatives outlined in national and regional master plans, as well as provincial plans. The objective is to ensure the seamless integration of transport infrastructure with the development goals of the logistics sector.
The resolution also emphasizes the importance of enhancing connectivity between different modes of transportation and maximizing the utilization of multimodal and cross-border transport to minimize costs and enhance the quality of transportation services.
The Ministry of Finance is entrusted with the task of reviewing and eliminating any barriers related to tax policies, fees, and service costs in order to streamline the provision of logistics services. Furthermore, the ministry is expected to collaborate with other relevant ministries and departments to promote trade facilitation activities, streamline customs procedures, reduce and simplify specialized inspection procedures, standardize documentation, and fulfill obligations outlined in the WTO Trade Facilitation Agreement.
The Ministries of Industry and Trade, Transport, Finance, and relevant agencies are tasked with closely monitoring the international and regional landscape and conducting timely analyses and assessments of economic impacts. Based on this, they are expected to proactively develop scenarios and response plans, and oversee and coordinate logistics activities to effectively support production, domestic trade, and import and export operations.
It is the responsibility of ministries, sectors, and local authorities to remain vigilant. They should promptly identify and address issues that arise in logistics activities, as these issues may have negative implications for the socio-economic situation within their respective areas of state management.
How to Enter Vietnam’s Logistics Market
For those considering establishing a logistics company in Vietnam, there are two options: setting up a logistics company with domestic investments or foreign investments.
1. Domestic-Invested Logistics Company in Vietnam:
Setting up a domestic-invested logistics company in Vietnam is a straightforward process compared to establishing a foreign-invested one. Local investors can fully own the company using local capital and obtain a business license for specific logistics services from state-level authorities.
Here are the steps involved in setting up a local logistics company in Vietnam:
a. Prepare and submit the required documents, including forms from the Department of Planning and Investment. These documents may include:
- Enterprise registration form
- Shareholders’ list (if applicable)
- Article of Association
- Identity cards/ passports of each shareholder
- Enterprise certificate
- Authorization letter
- Decision of capital contribution
b. Publish the company’s establishment information on Vietnam’s National Business Registration Portal. This information typically includes:
- Business certificate information
- Business line information
c. Create a company seal and notify Vietnam’s Business Registration Department with the sample seal.
d. Apply for specific business licenses for conditional business lines, if necessary.
2. Foreign-Invested Logistics Company in Vietnam:
a. Publish information about the investment made in the country on the National Investment Information Portal.
b. Submit the required documents to the Investment Registration Department within 15 working days from the online publication date. The dossier should include documents such as:
- Copy of passport or identity card
- Copy of establishment certificate or documents indicating investors’ legal status
- A written request for project execution permission
- Investment proposal
- Financial statements, parent company’s commitment to financial support, financial institutions’ commitment to financial support, description of financial capacity, financial capacity guarantee
- Land use demand
- Explanation of technology application
- Contract of business cooperation
c. Investors will receive an account from the Investment Registration Department, granting access to Vietnam’s National Foreign Investment Information Portal.
d. All application processes and results will be updated on the portal. If the application is approved, the agency will issue a project code to the investors.
e. Investors will receive the investment certificate.
f. Similar to the steps for a domestic logistics company, investors must publicly announce the commencement of their business.
g. Specific business licenses for conditional business lines are also required.
It is essential for investors to meticulously follow the required procedures and comply with the regulations established by the relevant authorities when establishing a logistics company in Vietnam, whether with domestic or foreign investments.
When considering doing business in Vietnam, there are several key considerations to keep in mind. These include understanding the regulatory environment, navigating cultural differences, and addressing specific challenges faced by businesses operating in the country.
Best Practices for Succeeding in Vietnam’s Logistics Market
In the process of expanding your business in Vietnam, it is essential to seek input from your Vietnamese partners and work together to define common goals and create innovative approaches. According to Andrew Hupert of North America Strategic Planning, businesses should forge strong connections through collaborative efforts to establish shared goals rather than focusing solely on overcoming challenges and resolving bottlenecks.
While it may require more time and effort, this collaborative approach can lead to better outcomes and success in the Vietnamese market. Vietnamese decision-making often involves non-linear thinking and consideration of environmental factors, which may differ from direct approaches in other cultures. Rather than perceiving these differences as weaknesses, it’s crucial to bridge the gaps and leverage the skills and intelligence of your Vietnamese partners.
Additionally, logistics companies need to promote themselves to expand their customer base actively. With well-rounded marketing approaches, you can effectively communicate your brand’s value proposition, unique offerings, and competitive advantages to your target audience. Identify your marketing goals, be specific when defining your services, and establish a strong online presence.
The logistics industry is undergoing a significant transformation driven by technological advancements. These advancements improved various aspects of the logistics industry, including trucking, international transportation via sea and air, supply chain management, and shipment tracking. Forbes has listed several notable technological advancements shaping the logistics industry:
- Cloud-based systems enable logistics businesses to streamline workflows, store and transfer information securely, and gain better control over their finances.
- Autonomous vehicles are increasingly being deployed in logistics, offering benefits such as improved efficiency, reduced costs, and enhanced safety.
- Real-time Analytics and Tracking with advanced technologies like RFID chips provide real-time analytics and tracking information, facilitating data-driven decision-making and improved operational efficiency.
- Innovations in last-mile delivery, including autonomous drones and the optimization of supply chain models, are poised to revolutionize this challenging aspect of logistics, reducing costs and improving customer satisfaction.
Advice for New and Expanding Logistics Companies in Vietnam
Vietnam’s logistics industry is poised for significant growth and transformation. With the government’s commitment, the sector is set to become a high-value service industry, integrated with key sectors of the economy.
To thrive in this dynamic environment, companies must tackle challenges such as infrastructure constraints, regulatory intricacies, talent scarcity, and sustainability issues. By embracing innovative technologies and digital solutions, businesses can improve operational efficiency and gain a competitive edge. Furthermore, conducting comprehensive research and exercising due diligence prior to market entry is crucial for success.
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