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Service industry in Vietnam

Service industry in Vietnam

Monday 10, 05 2021
Service industry in Vietnam is considered one of the most important economic sectors that has been heavily invested and developed by the Government in recent years.

What defines service industry?

Service industry is defined as non-smoke industry in which products are immaterial and do not harm the environment.

The service industry in Vietnam has developed strongly in recent years due to the improved living standards of the people. However, such development has not been able to meet increasing demand and has not yet matched the country's capital potential. Therefore, there is still much room for the service industry in Vietnam to develop.

Potential service industries in Vietnam

Information technology

In the last 5 years, Vietnam has made many positive changes in its digital transformation towards a digital economy and a digital society. That is why there have been several new tech startups as well as IT projects from big companies. With the strong growth of the entire technology industry in general, it can be said Vietnam is considered as an IT country in Southeast Asia.

Information technology

Currently, the IT industry is believed to be one of the key service industries in Vietnam. There are more than 153 institutions that provide about 50,000 labor for the IT industry. Many experts said that Vietnam would be an ideal destination for leading technology companies in the world and in the region to come and set up a base for product development. Particularly, there are many startups, large and small, developing potential projects directly related to AI and Machine Learning that create many mutant values for the entire technology industry in general.

Education

It can be said that education service in Vietnam is becoming a "phenomenon" attracting many investors because of the great opportunities in the market as well as the preferential policies by the Government.

Along with the development of science and technology, the need to equip themselves with knowledge and skills of Vietnamese people is increasing. In particular, education services for children make up a large proportion. Most Vietnamese parents want to send their kids to school or educational centers from a very early age, and they are will to pay as long as their children get high score. In fact, on average, Vietnamese families spend nearly 47% of their spending on education.

Education

Contrary to the extremely high demand for education, there are not many modern education business models and educational products in the Vietnamese market.

42% of Vietnam's population is under the age of 24 - the golden age for nearly all educational programs. Therefore, Vietnam needs many quality educational models or ideas of prestigious brands in the world to meet all the needs of students and parents.

Besides, the education service in Vietnam brings a stable source of profits. With large profit margins, stable growth, and lower risks compared to other sectors, this business is always an attractive investment field.

Logistics

Logistics is an important service sector in, playing the role of supporting, connecting and promoting socio-economic development, and contributing to improving competitiveness of the economy.

Initially developed in the 1990s, Vietnam's logistics services have developed strongly in just a short time, and affirmed a particularly important role in the Vietnamese economy.

Currently, there are about 3,000 domestic logistics companies in Vietnam. Besides, there are also 30 major logistics enterprises that provide transnational logistics services including DHL, FedEx, Maersk Logistics, APL Logistics, CJ logistics, KMTC Logistics, etc. Most logistics companies in Vietnam are small and medium sized, of which 89% are Vietnamese enterprises, 10% are joint ventures and 1% are 100% foreign owned enterprises.

Logistics

Currently, logistics enterprises are providing from 2 to 17 different logistics services, focusing on: forwarding, domestic transportation, sea and airport operations, warehouse, cargo management and international transportation. In particular, transportation is the most important service sector in Vietnam's logistics system.

According to the Vietnam Logistics Business Association, the growth rate of the logistics industry in Vietnam has been relatively high in recent years, reaching about 14% - 16% with a scale of about 40-42 billion USD / year. The rate of businesses outsourcing logistics services is about 60-70%, contributing about 4-5% to Vietnam’s GDP.

The World Bank report in 2018 showed that Vietnam's logistics performance index (LPI) ranked 39 out of 60 countries participating in the study, jumping 25 places compared to 2016 and ranking 3rd among ASEAN countries. Logistics is considered as one of the industries with the greatest potentials for the economy.

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