HCMC – International Finance Corporation (IFC) is providing a financing package of US$70 million for Vietnam’s Indo Trans Logistics Corporation (ITL Corp) to support the development of the logistics sector, thus facilitating trade and enhancing the competitiveness of the country’s economy during Covid-19.
This funding is the first investment of the IFC, a member of the World Bank Group, in the Vietnamese logistics sector. It is especially timely when long-term funding is not readily available due to the Covid-19 pandemic.
“Despite uncertainties amid the ongoing pandemic, the IFC is steadfast in its commitment to supporting essential investments in Vietnam’s logistics supply chain to help facilitate more efficient and competitive trade,” stated Kyle Kelhofer, IFC country manager for Vietnam, Cambodia and Laos.
The financing package will help ITL Corp transform and grow by acquiring new assets, developing new warehouses and facilities and deploying advanced information technology systems.
It will also enable the Vietnamese logistics firm to provide higher quality and sophisticated logistics services to its customers including local manufacturers and small- and medium-sized enterprises.
“The IFC’s long-term funding and international expertise, especially in the context of the current pandemic, is a highly valuable support which will certainly enable us to improve the efficiency of the ITL Corp’s existing logistic assets and expand our network and business portfolio to better serve our customers,” said Ben Anh, CEO of ITL Corp.
Additionally, the IFC will help the company improve its environmental, social and corporate governance standards for sustainable development.
According to the IFC, the Vietnamese logistics sector has seen strong growth over the past few years. This can be attributed to the record-high foreign investment, mainly in the manufacturing and processing industries, both of which require a strong logistics function, and booming local consumption.
However, the logistics sector is fragmented with more than 95% of service providers being local small- and medium-sized enterprises with modest operations and lower competitiveness. Consequently, a few players with foreign investment lead the market, providing high value-added services.
Moreover, high logistics costs impact the overall cost of doing business and negatively affect Vietnam’s competitiveness both globally and domestically.
“The IFC’s investment in companies such as ITL Corp aims to support the growth of domestic private logistics firms capable of providing comprehensive and efficient logistics services. This will help improve the sector’s capacity to serve the growing higher value-added manufacturing and processing industries, which require a more sophisticated, efficient and lower-cost logistics function,” noted Kelhofer.