Compared to other countries in the European Union, Italian business community in Vietnam is still small but active. The efforts made by Italian Institute for Foreign Trade Italian Trade (ICE) in HCMC in the last few years has facilitated trade and investment cooperation between Vietnam and Italy, Vietnam Business Forum interviewed Mrs Bruno Santarelli – Director of ICE in HCMC. Duy Khang reports.
What is your assessment on bilateral trade relations between Vietnam and Italia in the last 5 years since Vietnam’s membership in WTO?
Trade relations between Italy and Vietnam have been good and growing at a satisfactory pace, especially considering how far the two countries are from each other and how small many of the companies involved in this bilateral trade are.
In 2006, the exchange between Italy and Vietnam amounted to about 900 millions of Euro. This amount grew significantly, to over 1200 millions in 2007 (+33%) and withstood even the crisis year with a small growth in 2008, to slightly over 1250 millions and a modest decline in 2009 with about 1183 millions. Then it recovered brilliantly in 2010 with the record value, for Italian-Vietnamese trade, of over 1480 millions of Euro (+25%).
If we compare it with the relative stability of the years preceding the entry of Vietnam in WTO (amounts were 720+ millions for 2003, 686+ millions for 2004 and 690 millions for 2005), we can see both a marked increase in bilateral trade and a trend to faster development, which enabled our trade to withstand even the financial crisis of 2008-2009.
I would also like to stress how, though this increase in trade benefited both countries, Vietnam has had a constant trade surplus, which increased from 70 to 120 millions Euros per year before 2005 to 190 to 350 millions Euros per year from 2005 onwards, so we should not underestimate the beneficial influence of the WTO accession for Vietnam.
Italia is now ranked 31st in direct investment in Vietnam, according to you, is it matched with available potential?
It is hard to say whether Italian investment in Vietnam matches or does not match its potential. In order to invest in any foreign country, investors have to take into consideration many issues.
First of all, the Italian economy is driven by small and medium size enterprises which are very dynamic but not always ready to invest abroad. Secondly, long distance and culture differences are obstacles that not all Italian businessmen can overcome. Finally, although Vietnam has strongly developed in recent years, some Italian companies are still worried about the supply of raw materials, parts and components and also skillful workers.
In addition to the usual activities that we have been carrying out to promote trade and investment between Italy and Vietnam (trade shows, seminars, B2B matching missions), we have also established an Investment Desk in our office, focusing on gathering, processing and providing necessary information for any Italian company that would like to know about Vietnam’s investment environment and conditions.
Thanks to the above-mentioned efforts, we have received more and more investment inquiries from Italy and are pleased to see that some of them have established representative offices or companies in Vietnam. At the moment, we are working on a feasibility study for a leading Italian company in the stationary sector. As you may know the number of Italian companies in Vietnam is nearly double compared to five years ago (58 against 30).
We do understand the importance of Italian presence in Vietnam and continue to provide our full support to any Italian investor in this potential market.
Infrastructure is one of Vietnam’s prioritized investment projects in its process of becoming an industrialized economy status by 2020, how will Italian firms get involved in?
Italian firms begin to recognize the importance of Vietnamese market. They are interested in participating in tenders for design and consultancy services in construction (as main contractor or sub contractor) and equipment supply for infrastructure projects. They also look for local partners to cooperate, especially in projects concerning railways, highways, metro, water treatment and waste treatment.
However, the Italian firms still play a marginal role in this sector.
In 2009 ICE launched a project to promote the participation of Italian firms to the development of infrastructures in Vietnam. The project aims to help Italian firms to get up to date with the Vietnamese Government plans, new projects, regulations and tenders as well as to link Italian companies to the local counterparts.
The implementation of some PPP pilot projects in 2009-2010 has helped Italian companies to analyze the opportunities offered and to understand the way to join in a project as an investor. As most Italian companies are small and medium, the cooperation between them in order to approach to foreign markets can be very effective. The support of the Italian bank association and the organization of Italian industry as well as the region chamber of commerce is also very important.
How do you evaluate the success of Italian business community in Vietnam?
The Italian business community in Vietnam has done well overall. It is a small community (almost 60 resident companies) but a very active one, with companies of highly varying size. We have both SME and large companies. Most of our companies are quite satisfied with the results up to now, even though the linguistical and cultural differences have not always made it easy to deal with local partners.
Italian investments have grown in the past few years in a significant manner with the arrival of Carvico, Curvatura friulana, Datalogic, Piaggio and the increase of commitment to Vietnam by companies like Medexport and others.
Furthermore in November 2008 an Italian Chamber of Commerce was established in Vietnam, in place of the previous Italian business association with upgraded potential and capabilities.
Some of the Italian companies sell in the local market where they are leaders, the other companies produce here in Vietnam in order to export to other countries, mostly in the area or Asia but sometimes even to Europe or America. Recently there have been many inquiries from potential investors, some of these asking for the services of the Italian Trade Commission to explore the market, its details (financial, legal, etc) and its opportunities.
Do you see any opportunity prospects for Italian businesses in Vietnam?
Should the growth of the Vietnamese economy continue and should also the FDI-friendly environment continue there are no reasons to doubt that the Italian companies will find opportunities in the Vietnamese market. Still it is necessary to stress how relevant it is to have a business environment, which is friendly to foreign companies and investments.
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