THE POTENTIAL AND OPPORTUNITIES OF LOGISTICS BUSINESS IN VIETNAM
As one of the fastest-growing economies in Southeast Asia, Vietnam is experiencing a surge in demand for logistics services, driven by the country’s robust manufacturing sector, burgeoning e-commerce market, and increasing trade volumes. The government is also making significant investments in infrastructure, such as highways, seaports, and airports, which are expected to further boost logistics capabilities and increase the flow of goods throughout the country.
Moreover, Vietnam’s strategic location at the crossroads of major shipping routes and its network of free trade agreements with other countries make it an attractive destination for foreign investors looking to establish a foothold in the ASEAN market.
In the logistics industry, there are many business models with different specific requirements and conditions. The good thing is, there is one business type that does not have any special requirements and conditions is the Freight Forwarding Agency. In this blog, we will give you a comprehensive guide on how to open a Freight Forwarding Agency in Vietnam.
WHY YOU SHOULD CHOOSE TO OPEN A FREIGHT FORWARDING AGENCY IN VIETNAM?
1. WHAT IS A FREIGHT FORWARDING AGENCY?
A Freight Forwarding Agency in Vietnam is a type of logistics company that arranges the shipment of goods from one place to another. These agencies act as intermediaries between shippers and carriers and facilitate the transportation of goods. They are not directly involved in shipping goods themselves. Instead, they communicate with a range of carriers, negotiate rates, and manage the logistics and coordination of the shipment, such as documentation, customs clearance, insurance, and warehousing, among other things.
In the following section, we will be discussing the primary advantages of setting up a Freight Forwarding Agency in Vietnam.
2. THE ADVANTAGES OF A FREIGHT FORWARDING AGENCY
The first advantage of establishing a Freight Forwarding Agency is the ease of opening the entity without many of the conditions. The business requirements are standard and less complex than other logistics business models. For instance, if you wish to set up a sea transport business, you must form a joint venture and contribute no more than 49% of the initial investment capital. Additionally, there are personnel requirements, the total number of foreign seafarers working on ships flying the flag of Vietnamese nationality cannot exceed 1/3 of the ship’s marginalization, and the captain or first deputy must be a Vietnamese citizen. For Freight Forwarding Agency, you can own the company up to 100% and do not have to meet requirements regarding human resources.
On a side note, if you want to start a delivery business, you can establish a 100% foreign-owned company, but you must obtain a sub-license, which is the Postal License and notification of Postal Activities. Both documents require a processing time of approximately many months (or even years). Furthermore, you need to set up offices, and warehouses, and hire delivery personnel, which requires significant investment capital.
On the other hand, a Freight Forwarding Agency has a high demand due to the inadequate resources of businesses to reach multiple delivery companies by themselves. Hence, they rely on Freight Forwarding Agencies to book delivery slots to save time and money. This creates a high demand and enormous potential for the business to grow as the nation’s economy grow.
In summary, if you want to save time and money and focus on entering the market, the Freight Forwarding Agency is an ideal business model to start with. Once your business becomes profitable, you can change your business model to enter more areas of business.
HOW TO ESTABLISH A FREIGHT FORWARDING AGENCY IN VIETNAM?
You should note that before starting a Freight Forwarding Agency, two licenses must be obtained: the Investment Registration Certificate (IRC) and the Business Registration Certificate (BRC), with the business code CPC-748 included in the IRC. Fortunately, this business is covered by the WTO’s Commitment and allows for 100% international investment.
To fulfill the requirements of opening a Freight Forwarding Agency, a Business Address is necessary, which can be physical or virtual, but not a residential address. Additionally, a Legal Representative must be appointed, who can be Vietnamese or foreign with a permanent address. Lastly, while there is no minimum Investment Capital required by law, a “fair” amount should be considered to cover operational expenses until the business becomes profitable.
The registration process takes approximately 3-4 weeks from the submission of the necessary paperwork.
For detailed information about the 10 steps to open your company in Vietnam.
HOW CAN VNBG SUPPORT YOU?
VNBG is the top consulting firm for business operations in Vietnam, offering you valuable assistance in the business registration process. Whether you need a physical or virtual address for your registration or require support in quickly establishing your business, our team can help.
In the event that you do not have a legal representative in Vietnam, VNBG provides director nominee services for a period of six months until you find the right candidate. Additionally, our EOR services can help you manage and recruit a team of any size and level, including the provision of benefits and tax payments.
With years of experience serving countless enterprises, VNBG is proud to be the most efficient and cost-effective business solution in the Vietnam market. Join us and experience the best support for your business operations.
We are looking forward to bringing our services to you as well.
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