The logistics industry plays a key role in the global supply chain, supporting the efficient transportation, distribution and storage of goods. With the rapid development of international trade and domestic consumer demand, Vietnam is emerging as a potential logistics hub in Southeast Asia. This presents a favorable opportunity for foreign investors seeking to enter this market. However, establishing a logistics business in Vietnam requires a thorough understanding of the legal framework and specific conditions.

This article will provide detailed information on the legal requirements and elements needed to start a business in this industry, helping investors best prepare for the process of entering the Vietnamese market.

1. Conditions for establishing a logistics company

General conditions Logistics enterprises, including foreign-invested enterprises, need to meet several general requirements to operate in Vietnam:

• Register appropriate business lines: Enterprises must register industries related to logistics services according to the Vietnam Economic Sector System (VSIC).
• Compliance with investment and business laws: Investors must meet the regulations on foreign investment under the Law on Investment and the Law on Enterprises in Vietnam.
• Capital and infrastructure requirements: Depending on the type of logistics service, businesses need to prove their financial capabilities, and ensure minimum investment capital and infrastructure suitable for the scale of their operations.
• Human Resources and Information Technology: Businesses need a well-trained workforce and a modern information technology system to support operations.
• International commitments and limits on capital contribution: For foreign-invested enterprises, it is necessary to comply with commitments in free trade agreements (FTAs) to which Vietnam is a party, including limits on the percentage of capital contribution and the scope of permitted activities.

2. Specific conditions for each type of logistics service

• Container handling services (except airports): Foreign investors are only allowed to invest in the form of joint ventures with a capital contribution rate of not more than 50%.
• Warehousing and storage services: There are no restrictions for foreign investors.
• Delivery service: Must apply for a postal license if providing mail services with a receiving address. Meet financial, human resources, and information security requirements. Mail service providers with receiving addresses with a unit weight of up to 02 kilograms (kg) must have postal service business licenses (hereinafter referred to as postal licenses) issued by competent state agencies in charge of post.
• Customs brokerage agent services (including customs clearance services): Joint ventures must be established without restricting the ownership capital of the foreign party. To establish an enterprise or contribute capital, purchase shares or contributed capital in the enterprise, including capital contributed by domestic investors.
• Freight transport services belonging to sea transport services: To establish companies operating fleets flying the Vietnamese flag or contribute capital, purchase shares or contributed capital in enterprises, in which the proportion of capital contributed by foreign investors does not exceed 49%. The total number of foreign seafarers working on Vietnamese-flagged vessels (or registered in Vietnam) owned by these companies in Vietnam shall not exceed 1/3 of the ship’s margin. The captain or first mate must be a Vietnamese citizen.

Foreign shipping companies may establish enterprises or contribute capital, purchase shares or contribute capital in enterprises. The general condition is that the shipping business enterprise or cooperative is established in accordance with the provisions of law (hereinafter referred to as the enterprise). The financial condition is that there must be a guarantee in accordance with the provisions of law with a minimum of VND 5 (five) billion or buy insurance to ensure the ship-owner’s obligations to the crew as prescribed.

• Container loading and unloading of shipping support services: To establish an enterprise or contribute capital, purchase shares or contributed capital in the enterprise, in which the proportion of capital contributed by foreign investors does not exceed 50%. Foreign investors are allowed to establish a commercial presence in Vietnam in the form of business cooperation contracts.
• Freight transport services belonging to inland waterway transport services: To establish an enterprise or contribute capital, purchase shares or contributed capital in the enterprise, in which the proportion of contributed capital by foreign investors does not exceed 49%.
• Freight transport services belonging to road transport services: Implemented through business cooperation contracts or the establishment of enterprises or capital contribution, purchase of shares, or contributed capital in enterprises, in which the proportion of contributed capital of foreign investors does not exceed 51%. And 100% of the drivers of the enterprise must be Vietnamese citizens.

3. Advantages and disadvantages of the logistics industry in Vietnam

Advantageous

Vietnam is facing many opportunities for strong development in the logistics sector thanks to the boom of e-commerce and the expansion of global supply chains. With a strategic location on the world maritime map, Vietnam plays an important role in connecting major economies, creating a competitive advantage in the development of logistics services.

In addition, supportive policies from the government such as tax incentives and financial support have helped create a favorable business environment. Vietnam also benefits from the free trade agreements (FTAs) that the country has signed, opening up many trade opportunities and creating conditions for logistics to develop strongly.

Extensive international integration, through FTAs such as CPTPP and EVFTA, helps Vietnam become an attractive destination for foreign investment inflows. This not only brings financial resources but also promotes the transfer of modern technology and advanced management skills from international partners. At the same time, improvements in transport infrastructure, seaports and warehousing, along with the application of information technology to management and operation, have helped to strengthen transportation capacity and improve the operational efficiency of the logistics industry.

Disadvantages

Despite many advantages, the logistics industry in Vietnam still faces significant challenges. The first is a complicated legal issue. This industry is governed by many different regulations and legal documents, requiring businesses to have a knowledgeable legal team to handle administrative procedures. The process of applying for licenses for specific services such as air transport or delivery is often time-consuming and costly, affecting the progress of project implementation.

In addition, limiting the maximum proportion of capital contribution for foreign investors in some services also reduces the ability to expand and attract capital from the international market. This makes domestic businesses have to make efforts to find other solutions to maintain growth and compete in the market.

Fierce competition in the logistics industry is also a major obstacle. The market is currently dominated by large corporations with strong financial potential and a lot of experience, making new businesses face many difficulties. Pressure on price and service quality forces businesses to constantly innovate and optimize costs to survive.

Another challenge is the high demand for quality human resources. The logistics industry requires staff with deep expertise in supply chain management and modern system operation. However, training and retaining good talent is a difficult problem, especially when the demand for recruitment is increasing rapidly and fierce competition between businesses in the same industry.

Overall, although Vietnam’s logistics industry has a lot of potential for strong development thanks to support from the government and international trade agreements, there are still many challenges that need to be addressed to ensure sustainable growth.

Thus, it can be seen that establishing a logistics company in Vietnam is a great opportunity but also poses many challenges for businesses. Understanding legal regulations, specific business conditions and preparing resources well will help businesses operate effectively and sustainably. To develop the logistics industry, businesses not only need to meet legal requirements but also take advantage of supporting policies and trends in international integration. By methodical investment and long-term development strategies, businesses will be able to exploit the full potential of Vietnam’s logistics market.

Time of writing: 08/01/2025

The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer  at  info@cdlaf.vn

You can refer for more information:

• Procedures for Foreign Direct Investment (FDI) in the Energy and Waste Management Sectors in Vietnam
• Business conditions in the field of waste and wastewater treatment in Vietnam: Legal regulations and solutions for sustainable development