Entering Vietnam’s logistics market offers a plethora of opportunities for businesses looking to expand their presence in Southeast Asia. With its strategic location and growing economy, Vietnam has become an attractive destination for logistics companies and investors. The country’s robust manufacturing sector, supported by a young and dynamic workforce, creates a high demand for efficient and reliable transportation and supply chain solutions. Additionally, Vietnam’s rapid urbanization and increasing consumer spending drive the need for advanced logistics services to meet the growing demand for goods and services. As a result, entering Vietnam’s logistics market not only provides a gateway to a population of over 95 million people but also access to an emerging market with immense growth potential.
Classification of Logistics Services
Logistics service, as defined in Article 233 of the Commercial Law 2005, is a commercial activity whereby a trader organizes the performance of one or several goods-related jobs such as: receiving goods, transporting, storing, etc. warehousing, storage, customs clearance, other paperwork, customer consultation, packaging, marking, delivery or other services related to goods as agreed with customers goods for remuneration.
According to Article 3 of Decree 163/2017/ND-CP, logistics services are classified as follows:
+ Container handling services, except services provided at airports.
+ Container warehousing service belongs to sea transport support services.
+ Warehousing service is a service that supports all modes of transport.
+ Delivery service.
+ Cargo agency services.
+ Customs clearance agency services (including customs clearance services).
+ Other services, including the following: Bill of lading checking, freight brokerage services, cargo inspection, sampling and weighing services; receiving and accepting services; Transport document preparation service.
+ Wholesale and retail support services including inventory management, collection, collection, sorting and delivery.
+ Sea transport services include cargo transportation services.
+ Inland waterway transport services encompass cargo transportation services.
+ Railway transport services involve cargo transportation services.
+ Road transport services consist of cargo transportation services.
+ Air freight services.
+ Multimodal transport services.
+ Technical analysis and verification services.
+ Other transportation support services.
+ Other services shall be agreed upon by the logistics service trader and the customer in accordance with the basic principles of the Commercial Law.
Conditions for foreign investors to provide logistics services
a. Formal conditions and rate of ownership of charter capital of foreign investors in economic organizations
According to the Schedule of Specific Commitments on Services of Vietnam upon joining the WTO and Decree 163/2017/ND-Cp, depending on each logistics activity, the limit on the percentage of foreign capital contribution is different.
Foreign investors can invest 100% of capital in logistics activities such as:
+ Warehousing service
+ Cargo agency service
+ Delivery service
If the investor intends to provide many logistics services, the foreign capital contribution rate will be the lowest in the planned activities. For example, if an investor intends to provide container handling services, warehousing services and freight services (by road), the maximum foreign capital contribution is 50%.
b. Regarding logistics activities that foreign-invested companies are not allowed to perform
There are a number of logistics activities that a foreign-owned logistics company cannot perform:
+ Pipeline transportation;
+ For technical inspection and analysis, it is not allowed to provide inspection and certification services for means of transport.
c. Conditions for business licenses according to specialized laws
After issuing the Investment Registration Certificate, the Business Registration Certificate, the foreign-invested company performing some logistics services needs to be granted a business license in accordance with specialized laws such as: Postal; Transport business license;…
How to enter Vietnam’s market
Establishing a logistics company in Vietnam can be approached in two ways: setting up a domestic-invested company or establishing a foreign-invested company.
For a domestic-invested logistics company, the process is relatively straightforward. Local investors can utilize local capital to fully own the company and obtain a business license for specific logistics services from state-level authorities. The steps involved in setting up this type of company include preparing and submitting required documents to the Department of Planning and Investment, publishing establishment information on Vietnam’s National Business Registration Portal, creating a company seal, and applying for any necessary business licenses for conditional lines of business.
On the other hand, establishing a foreign-invested logistics company involves additional steps. Additionally, investors are required to provide information about their investment on Vietnam’s National Investment Information Portal. Moreover, they must submit the necessary documents to the Investment Registration Department within a specified timeframe. Some of the documents that may be required include a copy of passports or identity cards, establishment certificates, or documents indicating their legal status, an investment proposal, financial statements, and details about land use requirements. Furthermore, the application process and outcomes are regularly updated on the portal. Once approved, investors are provided with a project code and an investment certificate. They are also required to publicly announce the commencement of their business and obtain specific business licenses for conditional lines of business.
Regardless of the type of investment made, it is crucial for investors to meticulously follow the procedures and comply with regulations established by authorities in Vietnam. When doing business in the country, it is also important to consider the regulatory environment, cultural aspects, and potential challenges specific to operating in Vietnam.
For succeed in Vietnam’s Logistics Market
To succeed in Vietnam’s logistics market, it is important to actively seek input from Vietnamese partners and work together to define common goals and create innovative approaches. Businesses forge strong connections through collaboration and establish shared goals, rather than solely focusing on overcoming challenges and resolving bottlenecks.
Taking this collaborative approach may require more time and effort, but it 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. Instead of viewing these differences as weaknesses, it is crucial to bridge the gaps and leverage the skills and intelligence of Vietnamese partners.
In addition, logistics companies should actively promote themselves to expand their customer base. Additionally, businesses can utilize various marketing channels such as social media platforms, search engine optimization, and email marketing to further enhance their brand communication. Furthermore, by conducting market research and analyzing customer feedback, businesses can continuously modify and improve their marketing strategies. Moreover, businesses should also allocate sufficient resources, monitor key performance indicators, and constantly assess the effectiveness of their marketing efforts.
Notable advancements that shaping the logistics industry
The logistics industry is currently undergoing a significant transformation driven by technological advancements. Here are some notable advancements that are shaping the industry:
– Cloud-based systems enable logistics businesses to streamline workflows, securely store and transfer information, and gain better control over their finances.
– Autonomous vehicles are increasingly being utilized in logistics, offering benefits such as improved efficiency, reduced costs, and enhanced safety.
– Real-time Analytics and Tracking, powered by advanced technologies like RFID chips, provide up-to-date analytics and tracking information, facilitating data-driven decision-making and improved operational efficiency.
– Innovations in last-mile delivery, such as autonomous drones and optimized supply chain models, have the potential to revolutionize this challenging aspect of logistics by reducing costs and improving customer satisfaction.
Conclusion
In conclusion, entering Vietnam’s logistics market presents immense opportunities and potential for growth. Additionally, there are several other factors that contribute to Vietnam’s appeal for logistics businesses. Firstly, its young and dynamic workforce provides a valuable resource for companies operating in this sector. Moreover, the government’s commitment to improving infrastructure, such as the construction of new ports and highways, further enhances the country’s logistics capabilities. In addition to these advantages, Vietnam’s strategic alliances with neighboring countries create opportunities for cross-border trade and collaboration. Overall, by leveraging these various strengths and seizing opportunities for growth, businesses can thrive in Vietnam’s flourishing logistics market.
HMLF is always available to offer assistance in understanding the procedures with authorities.
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn