Vietnam – Italy: Vast Room for Trade and Investment Cooperation

2:21:22 PM | 4/6/2019

Establishing diplomatic relations over 46 years ago (March 23, 1973 - March 23, 2018) and enforcing the strategic partnership for five years (2013 - 2018), Vietnam and Italy have witnessed strong progress in all cooperation fields like politics - diplomacy, trade - investment, culture - education, science - technology, security - defense.

NA Chairwoman Nguyen Thi Kim Ngan receives Italian Minister of Foreign Affairs and International Cooperation Enzo Moavero Milanesi

Italy - Vietnam's major export market

In a meeting with Italian Minister of Foreign Affairs and International Cooperation Enzo Moavero Milanesi in early May, National Assembly Chairwoman Nguyen Thi Kim Ngan said that cooperation potential between Vietnam and Italy is still great, especially in trade and investment. Italy has strengths in industrial manufacturing, especially mechanical engineering, high technology, transportation infrastructure development and energy, which Vietnam needs foreign cooperation.

The latest figures from the General Department of Vietnam Customs showed that the total bilateral trade value reached nearly US$5 billion. In the first quarter of 2019 Vietnam's export turnover to Italy was quite large, accounting for nearly 1.6% of Vietnam's total export value, ranking 15th among Vietnam’s export markets and fourth in the European Union (EU).

The quarterly shipment surged 90.6% from a year earlier, many times higher than the country’s growth of 5.3%. The increased value was US$436.3 million, accounting for 14.7% of the total export increment of the country. Vietnam's export value to Italy in the last two years did not reach the record of US$3.27 billion in 2016, but it showed signs of growth (US$2.74 billion in 2017 and US$2.9 billion in 2018).

Vietnam exported many products to Italy, with major items being smartphone; coffee; computers and electronic products; machinery, equipment, tools and parts; footwear; vehicles and parts; apparels; and iron and steel.

The share of export values of many items to the overall export value exported to Italy was higher than the country’s average, like coffee (8.7%), followed by iron and steel (3.1%), smartphones, and vehicles and parts (both 2.8%). Other exports also had a higher ratio to the total export value in the period included seafood (2.2%), handbags, purses, suitcases, hats and umbrellas (1.9%), and cashew nuts (1.8%).

Vietnam always runs a surplus in trade with Italy, with US$158 million in 2010, US$1,396 million in 2015 and US$1,130 million in 2018, and US$446 million in the first three months of 2019). If this value is maintained in the remaining three quarters of the year, the value will break the previous record.

Given the above reality, the scale of Vietnam’s export value to Italy will have a big impact on Vietnam's export performance. If the Vietnam - EU Free Trade Agreement (EVFTA) is approved and put into practice, tariffs on Vietnamese products are reduced and Vietnam’s product competitiveness is increased, the size of Vietnam's exports to this market in particular and the EU generally will be higher.

Many advantages to attract investors

Italian direct investment in Vietnam totaled US$389 million, currently ranking 31st among 126 countries and territories.

According to ICHAM President Michele D’Arcole, in recent years, Vietnam has experienced positive growth both in industrial products and foreign investment. Among ASEAN countries, Vietnam has many advantages in attracting foreign direct investment.

He said that political stability is Vietnam's biggest advantage. This will help investors feel secure when carrying out their investment projects in the country. Besides, about 60% of Vietnamese population is at working age and this is a basic condition for any investor seeking young, high-quality, trained human resources.

Low labor cost is also a highly competitive advantage of Vietnam. Currently, Vietnam is fostering training and raising the quality of human resources to meet the needs of foreign investors.

In addition, Vietnam is pushing to execute measures to create competitive advantage in many different areas such as high technology, renewable energy, science and technology.

Remarking on interests of Italian enterprises in the Vietnamese market, he added that the Italian side is really interested in EVFTA which is expected to take effect in the coming time because Italian companies will have more opportunities to cooperate with Vietnam in areas where Italy is strong.

Many of Italy's main export products such as machinery, equipment, leather goods, pharmaceutical chemicals, apparels and foods will benefit greatly from the agreement. Moreover, big Italian companies are satisfied with the Vietnamese market. They have gradually increased their initial investment and identified Vietnam as a production base and a hub for regional markets.

Commercial Counselor of the Vietnamese Embassy to Italy Nguyen Duc Thanh said that in order to further promote economic cooperation, the two sides, firstly, need to strengthen high-level delegation exchanges to “warm up” the strategic partnership and relations of all levels and sectors.

Secondly, the two sides need to strengthen local economic cooperation like between Veneto region and Ba Ria - Vung Tau province, between Yen Bai province and some areas of stone production in Italy.

Thirdly, the two sides should strengthen cooperation at the micro level, between different industries and between businesses, and increase working delegations to fairs and exhibitions.

Quynh Anh