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Interview with Tomaso Andreatta

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 stronger from the pandemic compared to other nations in the ASEAN area? Octagona asked 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 (Graduated 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 joined Intesa Sanpaolo in 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-president of VBF in 2018.

Thanks to this great experience, Tomaso Andreatta has therefore offered us an overall view on the important developments that Vietnam has been experiencing in recent years, on relations with other States and on the major opportunities for Italian exports: we report below, exclusively, the full interview.

Dr. Andreatta, who has 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 can partly be seen by eye: the skyline of Ho Chi Minh City, the economic capital of the country, has changed from horizontal to vertical; the roads have been widened and enriched with overpasses to make room for the cars which are increasingly replacing motorcycles; from a single bridge over the Saigon River, there are now four in view from my window. At the same time the country has changed levels: it has become the main receptor for productive investments in ASEAN, it has more than doubled GDP and even more so foreign trade, is accepted as a leading country and a good “citizen of the world”, as it has demonstrated by holding its seat in the UN Security Council and the ASEAN presidency. After the financial crisis of 2008 it restructured the economy, which however has been going on for over 20 years continues to grow at annual rates above 6%. Even in 2020, year of Covid, GDP grew near 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 relations with other ASEAN states?

Vietnam went from being a “young” country in the treaty to one of the economic and political leaders. It 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) of the area. Vietnam's multilateralist beliefs have informed many of its policies towards ASEAN partners and are key to managing complex issues such as territorial waters in the South China Sea. Relations with its Indochinese neighbors, traditionally excellent since in the 1980s Vietnam put the elites in power who still manage Laos and Cambodia today, suffer because Vietnam is unable to balance the resources that China invests in the area, making itself a increasingly privileged partner.

This year, the Vietnam-European Union Free Trade Agreement, EVFTA, came into force. How do you think this Treaty could influence and what are the sectors where Italian companies have greater opportunities in terms of exports to Vietnam?

In this first period there was a decline in European exports to Vietnam, particularly in the industrial machinery sector, due to logistical difficulties and the reduced propensity to invest during the crisis which also affected Vietnamese companies. We expect a strong rebound after the end of the emergency, as long as our companies make an extra commercial effort: in Asia you don't sell from far away or with a trip of a few days and you have to be present on site with a stable organization for both sales and after-sales service .

The most promising sectors are agri-food, packaging, construction machinery and materials, pharmaceuticals, but also everything related to personal care, increasingly important in Vietnamese culture, and thegoldsmith, it is enough to remember that Vietnam is the country in the world with the highest amount of gold per person. There environmental sustainability becomes increasingly important and our companies in the sector can offer machines, products and services in this sector growing strongly. Italian agricultural and livestock products could have a good market, but to open it a very long authorization process is necessary: the first container of apples from Tyrol received the green light after five years of work and also in the wine sector, every new label has a very long process.

And in terms of imports?

In the first six months of impact of the treaty Vietnamese exports increased compared to the same period in the previous year. Were issued almost 65,000 certificates of origin for all types of products. For the shrimp in particular it was a triumph. Being able to offer goods with a clear certificate of origin and gradually a quality increasingly close to that requested by European consumers will favor traditional Vietnamese products which will generate either greater margins for Italian distribution or savings for our consumers. There are currently few goods produced in Vietnam that directly compete with Italian ones, so the effect will be positive. And for the Indica variety rice that worries Lombard producers so much, we are well protected by quotas.

Vietnam is often described as a country that will emerge stronger from the Covid 19 crisis which is affecting all countries and their economies. How do you evaluate the Vietnamese government's management of the emergency and in what sense, in your opinion, will the country be able to emerge stronger from it?

The whole world envied the freedom of movement without negative consequences that Vietnam offered its inhabitants 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 starting from the summer there was a recovery which allowed it to close the year with enviable growth in all other countries. The speed of decision, perhaps inspired by Carlo Urbano's recommendations during the SARS crisis, the clear and coherent implementation of protection measures, first of all the closure of borders, were extremely effective. Of course, having not suffered directly, the Vietnamese government seems to be in less of a hurry than others in its goals of vaccinating the population, which could reduce external mobility in the near future. The XIII Congress of the Communist Party of Vietnam has chosen the leaders for the next 5 years in the name of stability: renewing some fundamental positions but reconfirming many experienced people and proposing a continuity of government that could allow rapid advancement of the reforms already set.

What would you advise right now to Italian companies looking to Vietnam?

First, to study thestrategic opportunity to open a market where they didn't have it or it was limited, to understand that in Asia you cannot do business in appreciable volumes without a local presence that gives visibility, credibility and concreteness to companies that want to enter these markets. Vietnam it should not only be seen as an outlet market in itself, but it is an amazing platform to sell in ASEAN and, with a little effort, in Japan, China and South Korea. Many Italian technology companies sell around the world because they are part of the value chain of Germany, which has unparalleled international finance and distribution in our country of SMEs. In Asia it is the same, but the value chains that matter for distribution are those of Japan and Korea. By doing so, Italian companies could also implement a defensive move which in the medium term would protect them from the risk that their products are developed in this area by local companies. The investment in a plant in Vietnam is lower than that of almost all other countries comparable in terms of productivity and it is in the part of the world that continues to grow at a faster pace than its neighbors. 

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

Intesa Sanpaolo's local presence allows unparalleled understanding and monitoring of Vietnam. Being here allows you to distinguish and choose your partners well and to judge those that Italian companies contemplate. We have some top quality local lenders as banking counterparties who take excellent care of our customers.

From here we realize which strategies work in this market and which don't. Our cooperation with the Italian Chamber of Commerce in Vietnam, with the European Chamber and with the Vietnam Business Forum, which represents all the world chambers of commerce present in Vietnam, offers us contacts, opportunities and different and complementary points of view.

From the branches in Singapore and Hong Kong we can offer financing in offshore hard currency to Italian companies and clients from the rest of the world, commercial financing with letters of credit, discounts and confirmations, guarantees for tenders and performances, project finance.

As a bank that is increasingly characterized by its sustainable and green profile in the world, we can offer advantageous products designed for companies that invest in the circular economy and energy efficiency. It is a new front of growing and significant importance, so much so that Vietnam passed a landmark environmental protection law last year. Finally, we pay the utmost attention to innovation and growing entrepreneurship in sectors such as IT and the Web.

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

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