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Vietnam is one of the countries with the fastest-growing logistics service industry in the world, achieving a growth rate of 14-16% in recent years. The rapid and sustainable growth of the logistics sector in Vietnam is noteworthy.


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Mr. Michael Kokalari, Director of Macroeconomic Analysis and Market Research at VinaCapital, recently conducted an analysis assessing the opportunities in the logistics service industry in Vietnam.

Vietnam is one of the countries with the fastest-growing logistics service industry globally, with a growth rate of 14-16% in recent years. The rapid and sustainable growth of the logistics sector in Vietnam is attributed to several factors.

Firstly, it is driven by the continuous expansion of the manufacturing sector, particularly in high-tech products. While Vietnam's manufacturing sector currently accounts for just over 20% of the country's economy, it surpasses 30%, which is considered Asia's tiger, in certain aspects. The influx of foreign direct investment (FDI) has played a significant role in building a solid foundation for Vietnam's industrial sector, which is expected to be secure for many years ahead. This is part of the strategy known as "China +1" adopted by multinational corporations.

Furthermore, Mr. Michael Kokalari notes that the continuous growth of the middle class in Vietnam presents many investment opportunities. E-commerce in Vietnam is growing at a rate of over 25% annually, and the Vietnamese government has set ambitious targets for the future of e-commerce in the country's economy. This is likely to create a particularly favorable legal environment for last-mile delivery services and other logistics companies.

According to Mr. Michael Kokalari, Vietnam's logistics industry remains fragmented and scattered, and this presents attractive opportunities for private equity funds and other investors who can help domestic businesses increase revenue and profit by applying the best international practices.

From the fund's perspective, there are very appealing opportunities for domestic companies. This stems from the fact that foreign customers are willing to pay a premium for reliable logistics services, and the demand from the middle-class customers for high-quality logistics services for products and services is growing rapidly.

Additionally, long-term investment returns generated by these companies will increase because logistics companies that are of sufficient scale and professionally managed will benefit from decreasing costs over time as Vietnam's infrastructure and other issues are improved.

VinaCapital also expects attractive investment returns for logistics companies benefiting from the increasing production of high-tech products in Vietnam and the continuous growth of the middle class in the country. The development of the high-tech manufacturing sector leads to increased demand for high-value logistics services such as inbound warehousing for relatively high-value goods (compared to textiles and footwear) before these products are exported.

Furthermore, the machinery imported for producing consumer electronics often has a high value, so customs clearance and cargo handling operations require higher technical expertise and precision compared to textile and fiber equipment used in the manufacturing of apparel.

According to Michael Kokalari, there are three potential investment strategies: Investing in leading logistics companies to develop into an integrated platform that can offer cost advantages to customers; identifying specific capital-intensive assets for upgrades or reuse and driving growth by increasing operational efficiency; and mergers and acquisitions.

Notably, an attractive segment within Vietnam's logistics industry is customs clearance services, where capable intermediaries can expedite the customs clearance of goods both domestically and internationally by ensuring compliance with complex regulations.



Cre: vneconomy

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