The logistics industry in Vietnam is emerging as an attractive sector for foreign investors. With its strategic geographical location, stable economic growth rate, and the boom of e-commerce, Vietnam offers many opportunities for international businesses in this sector. This article will analyze the current situation, development trends, potentials, and opportunities for Japanese investors in the logistics sector in Vietnam.

Current situation of Vietnam’s logistics industry

Vietnam currently has more than 34,000 enterprises operating in the logistics sector. According to the World Bank (WB) Report, Vietnam’s national logistics capacity index (LPI) in 2023 ranked 43rd out of 139 countries and territories, up 21 places compared to 2016. The growth rate of the logistics industry in Vietnam in recent years has reached about 14-16%, with a scale of about 40-42 billion USD/year, accounting for about 4.5% of GDP[1]. However, logistics costs remain high, equivalent to about 17% of GDP in 2022, although down from 21% of GDP in 2018[2]

Sea transport in Vietnam

Source: Tapchitaichinh.vn

This increase reflects Vietnam’s efforts to improve transport infrastructure, enhance service quality, and create a favorable environment for logistics enterprises. However, Vietnam’s logistics costs are still quite high compared to developed countries in the world, which poses a challenge to improving the industry’s competitiveness. Regarding types of logistics, Vietnam uses a variety of transport modes such as road, rail, sea, and air. Of which, road transport is the most popular, using trucks, containers, and passenger cars to transport goods by road, suitable for both long-distance and intra-city transport. In addition, services such as warehousing, delivery, and express delivery also play an important role in the logistics supply chain in Vietnam[3]

Trends in attracting foreign investment in Vietnam logistics

In the period of 2013-2023, the trend of foreign direct investment (FDI) in the logistics sector in Vietnam is increasing. The number of foreign investment projects in this sector has increased sharply, especially in the period of 2020-2022 with 203 projects, 1.5 – 2 times higher than in previous periods. Among the 48 countries and territories that have invested in logistics projects in Vietnam since 1991, Japan accounts for 12.5% ​​of the total number of projects, ranking fourth after Korea, Singapore, and Hong Kong. According to the Vietnam Statistical Yearbook, the logistics sector has attracted significant attention from foreign investors. By the end of 2021, there were nearly 35,000 enterprises with a total of more than 563,300 employees working. FDI attraction in the logistics sector increased sharply, with 365 projects in the 2015-2019 period and 203 projects in the 2020-2022 period[4].

Currently, foreign investors are focusing on the following areas in the logistics sector:

– Modern warehouse development: Meeting the growing storage needs of e-commerce companies, manufacturers, and outsourced logistics service providers[5]

– Cold Chain: Catering to the export of goods such as fruits, vegetables, seafood,d and pharmaceuticals, this sector is attracting particular attention due to the growing demand for storage facilities and cold transport services

– Smart warehouse solutions: Applying high technology to optimize warehouse and supply chain management, helping to increase efficiency and reduce operating costs

Some important foreign investment deals in the logistics sector in Vietnam

Source: BC synthesis

Foreign investors mainly choose joint ventures (50.4% of projects) and 100% foreign capital (48.7% of projects) when investing in the logistics sector in Vietnam. This shows the flexibility and diversity in investment strategies of international enterprises.

Development potential of Vietnam’s logistics industry

Vietnam has a favorable geographical position located in a dynamically developing region of the world, where the flow of goods is concentrated and the economy is highly open. Along with 17 free trade agreements signed and implemented with nearly 70 countries and territories, Vietnam’s import-export turnover and e-commerce have always grown at double-digit rates every year, creating favorable conditions for logistics development[6].

In addition, road infrastructure, airports, seaports, warehouses, etc. are constantly being expanded on a large scale, widely, and promptly meeting diverse market demands. However, Vietnam’s logistics industry still faces a number of challenges such as high logistics costs, low competitiveness, shortage of high-quality human resources, and lack of infrastructure connectivity.

In addition, the Government is developing a Strategy for the development of Vietnam’s logistics industry for the period 2025-2035, with a vision to 2050, including solutions for building free trade zones to realize the policy of making Vietnam a strong country in logistics[7]. The Vietnamese government encourages joint ventures with foreign enterprises to develop global logistics, attract FDI, transfer technology, improve competitiveness, and create conditions for international companies to set up headquarters in Vietnam[8]

Market entry opportunities for Japanese investors

Japan is currently the third largest foreign investor in Vietnam, with more than 5,000 projects and a total investment capital of nearly 70 billion USD, accounting for 15.7% of total FDI capital in Vietnam. Japanese enterprises have been actively participating in the logistics sector in Vietnam through investment and M&A activities. Typically, Sumitomo Corporation purchased a 10% stake in Gemadept Joint Stock Company in 2019, aiming to build a logistics system connecting factories with ports to serve the export of products manufactured in Vietnam[9].

In addition, in 2023, Vietnam Yokorei Co., Ltd. started construction of the Vietnam Yokorei Cold Storage Project in Phu An Thanh Industrial Park (Long An Province) with an initial estimated total investment of about 52 million USD. Mitsui O.S.K Lines (MOL) Group has also made moves to explore opportunities at Vinh Tan International Port, showing the interest of Japanese enterprises in logistics infrastructure in Vietnam in 2019.

Delegates and investors conduct a groundbreaking ceremony for Yokorei Vietnam Cold Storage Project

Source: Bqlkkt.longan.gov.vn

In addition to large corporations, small and medium-sized enterprises from Japan are also gradually shifting their investment and expanding their business scale in Vietnam. They are interested in the warehousing and transportation sectors and see great potential in exploiting the Vietnamese market.

Conclusion

Vietnam’s logistics industry is growing strongly, creating many opportunities for foreign investors, especially from Japan. With a favorable geographical location, located on an important freight route in Southeast Asia, along with the development of the economy and the Government’s open-door policy, Vietnam is becoming a potential logistics center in the region.

Japanese companies can take advantage of this development by investing in warehouse centers, transportation services, seaport systems, and advanced logistics management technologies. Developing an efficient logistics system will not only help reduce transportation costs but also enhance the competitiveness of manufacturing enterprises in Vietnam.

[1] https://baochinhphu.vn/tim-giai-phap-de-logistics-viet-nam-phat-trien-102241031153326973.htm

[2] https://www.qdnd.vn/kinh-te/cac-van-de/giam-chi-phi-logistics-tang-suc-canh-tranh-cho-nen-kinh-te-747573

[3] https://thuvienphapluat.vn/banan/tin-tuc/logistics-la-gi-co-bao-nhieu-loai-hinh-logistics-hien-nay-8656

[4] https://trungtamwto.vn/chuyen-de/25096-chi-phi-logistics-cua-viet-nam-cao-hon-nhieu-so-voi-the-gioi

[5] https://baodautu.vn/logistics-viet-nam-hap-dan-nha-dau-tu-nuoc-ngoai-d228688.html

[6] https://nhandan.vn/tan-dung-co-hoi-but-pha-cho-nganh-logistics-post855629.html

[7] https://dangcongsan.vn/lanh-dao-dang-nha-nuoc/thu-tuong-neu-3-muc-tieu-7-giai-phap-dot-pha-phat-trien-nganh-logistics-684979.html

[8] https://tapchitaichinh.vn/thu-hut-dau-tu-nuoc-ngoai-vao-linh-vuc-logistics-tai-viet-nam.html

[9] https://atmglobaltrans.com.vn/vi/tin-tuc/tin-tuc-su-kien/nha-dau-tu-nhat-ban-va-han-quoc-quan-tam-toi-nganh-logistics-viet-1147.html

Read other articles