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According to a report by Cushman & Wakefield, Vietnam is emerging as the top destination for global investors in the logistics industry in the Asia-Pacific region. With the strong development of infrastructure and a stable business environment, Vietnam continues to attract significant investment, particularly in the logistics sector.
As of September 30, 2024, foreign direct investment (FDI) in Vietnam has reached over USD 24.78 billion, an 11.6% increase compared to the same period last year. The realized capital of investment projects is estimated to be USD 17.3 billion, up 8.9%. This demonstrates that Vietnam is not only an attractive destination for regional investors but also solidifying its growing role in the global economy.
E-Commerce Growth Boosts Demand for Logistics
Along with the rapid growth of the e-commerce market in Vietnam, the demand for high-quality logistics real estate has surged. According to data, Vietnam’s e-commerce revenue in the first nine months of 2024 reached approximately VND 227.7 trillion, a remarkable figure reflecting the strong growth of the industry.
Vietnam is becoming an ideal destination for businesses in manufacturing and logistics, which corresponds with an increased demand for modern warehouses and factories, especially as major e-commerce players such as Temu and Shein enter the Vietnamese market.
Vietnam’s Logistics Market: Opportunities and Challenges
While Vietnam currently has over 30,000 companies operating in the logistics sector, domestic companies account for only about 30% of the market share. In contrast, joint-venture companies and foreign-invested businesses hold 70% of the market share. This highlights the market’s potential but also underscores the challenges domestic companies face, particularly in terms of resources, investment capital, and competitiveness.
With the increasing demand for warehouses, logistics infrastructure, and the rise of large e-commerce platforms, the current supply is unable to meet the rapidly growing demand, resulting in intense competition within the sector.
M&A: A Shortcut for Domestic Companies
As domestic companies struggle to expand and compete, M&A (mergers and acquisitions) is becoming an inevitable option. M&A in the logistics sector consistently attracts significant interest from foreign investors. Local companies, with untapped potential, are becoming ideal targets for M&A deals.
Despite their large numbers, domestic logistics companies often lack experience in negotiation and deal-making, especially when it comes to assessing equity stakes and voting rights in M&A transactions. This makes them vulnerable to being acquired by foreign companies before they have the chance to grow.
Additionally, domestic companies face challenges in developing integrated infrastructure, a shortage of skilled labor, and limited investment capital. Therefore, M&A is a quick route for companies to grow stronger and expand their operations.
Forecasting the Development Potential of Vietnam’s Logistics Sector
Although facing several challenges, Vietnam, with its solid infrastructure, stable growth rate in the logistics sector (14-16% annually), and strong government support, is well-positioned to compete with larger countries such as Singapore, Dubai, and Shanghai. The Vietnamese government aims that by 2030, the logistics sector will meet the demand for import-export goods and develop a synchronized transport system, establishing Vietnam as a leading logistics hub in Asia.
With these attractive factors, Vietnam will continue to draw foreign investors in the logistics sector, expanding this market not only nationally but also regionally.
Recently, following ASL LAW’s success at the Vietnam Mergers & Acquisitions (M&A) Forum 2023, where ASL LAW was recognized as the Outstanding M&A Advisor for the period 2009-2023, ASL LAW was once again honored as the Outstanding M&A Advisor of 2023-2024 at the 16th Vietnam M&A Forum.
ASL Law is a leading full-service and independent Vietnamese law firm made up of experienced and talented lawyers. ASL Law is ranked as the top tier Law Firm in Vietnam by Legal500, Asia Law, WTR, and Asia Business Law Journal. Based in both Hanoi and Ho Chi Minh City in Vietnam, the firm’s main purpose is to provide the most practical, efficient and lawful advice to its domestic and international clients. If we can be of assistance, please email to [email protected].
ASL LAW is the top tier M&A law firm in Vietnam. If you need any advice, please contact us for further information or collaboration.
