Vietnam – Italy: Closer to Longstanding Partner

Italy and Vietnam have a longstanding friendship which dates back many years ago, even before our Governments established diplomatic relations. In fact, Italy organized, in the beginning of the 1970s, two ships of humanitarian assistance carrying basic goods for the population suffering the consequences of the war. At that time, Italian public opinion was very much in favor of the Vietnamese people and I think that this special relationship has lasted until today, since Italians and Vietnamese look each others with feelings of great sympathy and curiosity. In almost forty years, we have worked hard to strengthen these feelings, building a solid friendship in a framework of effective collaboration in all sectors. We opened a Trade Promotion Section in Ho Chi Minh City in 1991, when the process of economic reforms had just started and few countries were ready to make a bet on the potential of the Vietnamese economy. We were among the first partners to open in Hanoi an ODA Office which, in the last 15 years, has realized a great number of assistance programs aimed at improving the living conditions of the poor layers of the population and the most disadvantaged communities. In the last years, we have seen also a relevant increase of the economic cooperation between private companies: an increasing number of Italian enterprises have come to Vietnam, with some outstanding examples of investments in the manufacturing sector which has brought modern machineries, technology and updated production procedures to this country, contributing through this way to the strengthening of our bilateral relationship. All this framework of friendship and cooperation found its highest point during the State visit that former President Triet paid to Italy in 2009. It was a visit of great success and allowed my country to feel closer to a longstanding partner. 

 

As a matter of facts, in the past Italy has made wide use of the instrument of PPP for the development of certain key infrastructural sectors, such as transport (roads and railways) and public services (hospitals), with good success. We are now following very closely and with great interest the new PPP model which has been studied by the Ministry of Planning and Investments and which should be implemented in Vietnam in the next years. The financial requirements for the projects that the country needs are around 70-80 billion US dollars in 10 years, according to estimates. We understand that the Government of Vietnam expects to implement the PPP investment policy to attract not only financing, but also advanced technology and effective management skills from the private sector and foreign companies. We very much appreciate this approach and we think that such a PPP scheme, where the investing foreign company has a clear vision of the benefits and costs of its involvement in a single infrastructural project since the assessment phase could be potentially very attractive for Italian companies, especially those active in the building sector, that are among the best in the world for what concerns road construction capabilities. A working group has been established in Rome in the framework of Italian industrialist association to monitor the developments in infrastructures in Vietnam and we are confident that, as soon as a project fit for the features of our companies will be singled out, there will be an active Italian engagement in this field, with mutual advantages for our two Countries. 

 

In the last 20 years, Vietnam has made giant steps forward to improve its business environment, opening up Vietnam for integration with the global economy. This is one of the main reasons why there are so many FDI and foreign companies working here (and, among them, an increasing number of Italian investors), whose presence contributes every day to sustain the economic growth of the country. According to “Doing Business” survey published in 2010, Vietnam ranks 78 in the world scale, a very good result compared to previous editions (Vietnam jumped 10 positions), which marks how dynamic this country has proved out to be in the last decade. Nevertheless, I have to notice that a number of new regulations issued in the last months by the Vietnamese Government seem not to confirm this attitude, open to free trade and foreign investments. I would like to make a special reference in particular to the last one of these measures, Decree 46/2011, which sets new rules for the issuing and extension of working permits in favor of foreign workers. My opinion is that the implementation of this Decree could hinder the capacity of foreign companies to hire the people they need to run their business, adding a considerable burden of costs and uncertainty to their operations. Of course, we are still waiting for the guidelines for the implementation of the new Decree and we hope that a solution safeguarding the legitimate interests of foreign investors will be found. Otherwise, I think that, in the medium term, this decree could contribute to discourage foreign companies to start a business here, a consequence which will not be limited to Italian enterprises but will apply to all foreign entities in Vietnam.

 

Of course, the target of achieving industrial economy status by 2020 is really ambitious. Nevertheless, I have to remind that, in the past, most of the economic targets which were set by the Government have been reached: entering MIC status seems something natural now, but it was not the same 10-15 years ago, when Vietnam was still one of the poorest countries in the world. Of course, there is still a lot of work which has to be done and I do not see another way Vietnam will hit the target but continuing on the same path followed in the last years. The country should therefore accelerate its efforts to improve the investment climate, opening more and more the local market and economy to modern technologies and procedures coming from experienced and developed countries. And I know that this is also the objective of the new Government, as stated by Prime Minister Dung in many articles he has published in the last months, where he stressed the need for Vietnam to create an equal competition environment, to improve the formation of human resources and to develop a modern system of infrastructural facilities. The challenge is to change the current growth model based on cheap labour and intensive capital investments moving to productivity and competitiveness as core of the growth. It’s a difficult challenge but I am confident that the people of Vietnam will win it.