Interview with Tomaso Andreatta

Why is Vietnam the ideal destination for Italian exports? How much has the country changed, and how much will it emerge strengthened from the pandemic compared to other ASEAN nations? Octagona posed these questions to someone who has lived in Vietnam for more than 12 years: Tomaso Andreatta, Indochina Chief Representative of Intesa Sanpaolo Bank, who with his direct experience offered very interesting insights and data on business opportunities in Vietnam.

Born in Milan, Andreatta attended UWC of the Atlantic in the United Kingdom, the University of Bologna (Bachelor's degree with honors in Pure Economics) and UCLA (MBA in Finance and Strategy). From 1985 to 1998 he worked on derivative product design and in debt capital markets with various investment banks, then with M&A financial institutions in Europe, Argentina and Hong Kong. He has joined Intesa Sanpaolo since 2008; he was also the founding president of Icham, the Italian Chamber of Commerce in Vietnam; finally, he has been vice president of EuroCham since 2013 and became co-chair of VBF in 2018.

Through this great experience, Tomaso Andreatta thus offered us a comprehensive view of the important developments Vietnam has been experiencing in recent years, its relations with other states, and On the biggest opportunities for Italian exports: we report below, exclusively, the full interview.

Dr. Andreatta, you who have lived in Vietnam for many years, what do you think have been the biggest changes in the country?

I have been here since 2008, and the changes are partly visible to the eye: the skyline of Ho Chi Minh City, the country's economic capital, has changed from horizontal to vertical; roads have been widened and enriched with overpasses to make room for the cars that are increasingly replacing motorcycles; from one bridge over the Saigon River, there are now four in view from my window. At the same time, the country has changed levels: has become the leading receptor of productive investment in ASEAN, has more than doubled GDP and even more foreign trade, is accepted as a leading country and a good “citizen of the world,” as it has demonstrated by managing the UN Security Council seat and the ASEAN chairmanship. After the 2008 financial crisis, he restructured the economy, which, however, for more than 20 years Continues to grow at annual rates exceeding 6%. Even in 2020, Covid year, GDP grew almost to 3% and is expected to rebound above 6% this year.
All this while maintaining stability in the economy and society.

How would you define Vietnam's relationship with other ASEAN states?

Vietnam has gone from being a “young” country in the treaty to one of the economic and political leaders. He is increasingly involved in positive proposals for the development of the economic area and has become the main attractor of FDI (Foreign Direct Investments, ed.) in the area. Vietnam's multilateralist conviction has shaped many of its policies toward ASEAN partners and are key to managing complex problems such as territorial waters in the South China Sea. Relations with its Indochinese neighbors, traditionally excellent since Vietnam put the elites in power in the 1980s who still run Laos and Cambodia today, suffer as Vietnam fails to balance the resources China invests in the area, making itself an increasingly privileged partner.

This year the Free Trade Treaty between Vietnam and the European Union, EVFTA, came into effect. How do you think this treaty will affect and what are the sectors where Italian companies have more opportunities in terms of exporting to Vietnam?

In this early period there was a decline in European exports to Vietnam, particularly in the industrial machinery sector, due to logistical difficulties and reduced investment appetite during the crisis that also affected Vietnamese companies. We expect a strong rebound after the end of the emergency, as long as our companies make an extra sales effort: in Asia, you don't sell from afar or with a trip of a few days, and you must have a local presence with a stable organization for both sales and after-sales service.

The most promising sectors are agribusiness, packaging, construction machinery and materials, pharmaceuticals, but also everything about the personal care, increasingly important in Vietnamese culture, and the’goldsmithing, suffice it to mention that Vietnam is the country in the world with the highest gold quota per person. The environmental sustainability becomes increasingly important and our companies in the industry can offer machines, products and services in this area fast-growing. Italian agricultural and livestock products could have a good market, but a very long approval process is needed to open it up: the first container of apples from Tyrol got the green light after five years of work, and even in the wine sector, every new label has a very long process.

What about in terms of imports?

In the first six months of the treaty's impact Vietnamese exports increased compared to the same period in the previous year. Almost 65,000 certificates of origin for all kinds of products. Shrimp in particular has been a triumph. Being able to offer goods with clear certificate of origin and gradually a quality closer and closer to that demanded by European consumers will favor traditional Vietnamese products that will generate either higher margins to Italian distribution or savings for our consumers. There are few goods for now produced in Vietnam that compete directly with Italian ones, so the effect will be positive. And for the indica variety rice that so worries Lombard producers, we are well protected by quotas.

Vietnam is often described as a country that will emerge strengthened from the Covid 19-related crisis that is affecting all countries and their economies. How do you assess the Vietnamese government's handling of the emergency and in what sense do you think the country will emerge strengthened?

The whole world envied the freedom of movement without negative consequences that Vietnam offered its people as soon as the first wave of Covid 19 ended in spring 2020. In the second quarter of last year Vietnam's economy suffered like those of its neighbors, but beginning in the summer there was a recovery that allowed it to end the year with growth enviable in all other countries. The speed of decision-making, perhaps inspired by Carlo Urbano's recommendations during the SARS crisis, the clear and consistent implementation of protective measures, foremost among them border closures, have been extremely effective. Certainly, having not suffered directly, the Vietnamese government seems to be in less of a hurry than others in its population vaccination goals, which may reduce external mobility in the near future. The 13th Congress of the Communist Party of Vietnam chose leaders for the next 5 years under the banner of stability: renewing some key posts but reappointing many experienced people and proposing a continuity of government that could allow rapid advancement of reforms already set.

What would you recommend right now to Italian companies looking at Vietnam?

First, to study the’Strategic opportunity to open up a market where they did not have it or it was limited, to understand that in Asia you don't do business in appreciable volumes without a local presence that gives visibility, credibility and concreteness to companies that want to enter these markets. Vietnam should not only be seen as an outlet market per se, but Is an extraordinary platform for selling in ASEAN and, with some effort, in Japan, China and South Korea. So many Italian technology companies sell to the world because they are part of the value chain of Germany, which has international finance and distribution unmatched by our SME country. In Asia it is the same, but the value chains that count for distribution are those of Japan and Korea. By doing so, Italian companies could also implement a defensive move that in the medium term would protect them from the risk of their products being developed in this area by local companies. Investment in a plant in Vietnam is lower than in almost any other comparable country in terms of productivity, and it is in the part of the world that continues to grow at a faster rate than its neighbors. 

Let's come to the Bank you represent in Vietnam, Intesa Sanpaolo, and the activities you carry out: how can Italian companies be supported through your local presence?

Intesa Sanpaolo's local presence enables unparalleled understanding and monitoring of Vietnam. Being here allows one to distinguish and choose one's partners well and to judge those that Italian companies contemplate. We have as banking counterparts some very first-rate local banks that take excellent care of our customers.

From here we realize which strategies work in this market and which ones work less. Our cooperation with the Italian Chamber of Commerce in Vietnam, the European Chamber of Commerce in Vietnam, and the Vietnam Business Forum, which represents all the world chambers of commerce in Vietnam, provides us with different and complementary contacts, opportunities, and points of view.

From the branches in Singapore and Hong Kong we can offer financing in off-shore hard currency to Italian companies and customers in the rest of the world, trade-type financing with letters of credit, rebates and confirmations, tender and performance guarantees, and project finance.

As a bank that increasingly features a sustainable and green profile in the world, we can offer beneficial products designed for companies that invest in circular economy and energy efficiency. This is a new front of growing and relevant importance, so much so that Vietnam last year passed a historic law on environmental protection. Finally, we pay close attention to innovation and growing entrepreneurship in areas such as IT and the Web.

Octagona thanks Tomaso Andreatta for his willingness to answer our questions.