All types of logistics companies are lining up to invest in Vietnam as its economic growth continues and it becomes an increasingly popular location for remote out-sourcing of production. The latest company to announce its investment is Japanese shipping line NYK Lines which has committed to sinking US$200 million over the next five years into a number of shipping and logistics projects. These will include port and shipbuilding initiatives. It joins a long list of companies expanding in the market. TNT is extending its Asia road network to Vietnam, scheduled for the first half of this year, and in the last few months APL, Aramex, Kintetsu, DHL have all announced initiatives.

Vietnam?s place in the world economy is likely to be confirmed later this year if, as expected, it is admitted into the World Trade Organisation. The latest round of multilateral trade talks on the road to full accession is expected to start later this month. Although the country is likely to become a major player in the region, many analysts believe that it will adopt a more conservative approach to growth than its larger rival China. It has already come under a lot of pressure to open up its economy at a faster rate, which so far it has resisted. However becoming a member of the WTO will commit it to market reforms in much the same way as China and if the economy does take off it may be difficult to restrict its growth to less than 10%.

Vietnam?s industrial growth is already being seen as a threat by the developed world. Protectionist elements within the European Union, led by Commissioner Peter Mandelson, have already achieved the raising of trade barriers to the import of Vietnamese shoes. WTO membership will hopefully reduce levels of volatility in trade relations, creating a more stable environment in which manufacturers and retailers can produce and source goods.

International retailers are also being attracted to the domestic market. The increase in living standards and disposable capital has resulted in Carrefour, Tesco, Metro and Wal-Mart investing in the country and growing faster than expected. Vietnam has a young population which will be ideally suited to adopt modern consumer life styles. No doubt logistics companies will be keen to ?piggyback? on the operations of their international clients as a way of increasing their penetration of this up and coming market.

Source: Transport Intelligence

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