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 by the pandemic compared to the other nations of the ASEAN area? Octagona asked those who have lived in Vietnam for more than 12 years these questions: Tomaso Andreatta, Indochina Chief Representative of Intesa Sanpaolo Bank, who with his direct experience has offered very interesting insights and data on business opportunities in Vietnam.

Born in Milan, Andreatta attended UWC of the Atlantic in the UK, the University of Bologna (Graduated with Honors in Pure Economics) and UCLA (MBA in Finance and Strategy). From 1985 to 1998 he worked on the design of derivative products 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, since 2013 he has been vice president of EuroCham 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 complete interview.

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

I've been here since 2008 and the changes can be seen in part: the skyline of Ho Chi Minh City, the country's economic capital, has changed from horizontal to vertical; the roads have been widened and enriched with overpasses to make room for cars that increasingly replace motorcycles; from just one bridge over the Saigon River, there are now four in view from my window. At the same time, the country has changed levels: became the main recipient of productive investment in ASEAN, more than doubled GDP and even more foreign trade, is accepted as a leading country and a good "citizen of the world", as demonstrated by managing the seat on the UN Security Council and the ASEAN presidency. After the financial crisis of 2008 he restructured the economy, which has been going on for over 20 years anyway continues to grow at annual rates above 6%. Even in 2020, year of Covid, GDP grew at nearly 3% and is expected to rebound above 6% this year.
All this while maintaining stability in the economy and in society.

How would you define Vietnam's relations with the other states of the ASEAN area?

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, Direct Investments Abroad, ed) of the area. Vietnam's multilateralist conviction has informed many of its policies towards ASEAN partners and are key to managing complex problems such as that of territorial waters in the South China Sea. Relations with the Indochinese neighbors, traditionally excellent since in the 80s Vietnam put in power the elites 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 Free Trade Agreement between Vietnam and the European Union, EVFTA, entered into force. How do you think this treaty could affect and which are the sectors where Italian companies have more opportunities in terms of exports to Vietnam?

In this first period there was a drop in European exports to Vietnam, especially 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 emergencyprovided that our companies make an extra commercial effort: in Asia you don't sell from afar or with a trip of a few days and you must be present on site with a stable organization both for the sale and for the after-sales service .

The most promising sectors are agro-food, packaging, construction machinery and materials, pharmaceuticals, but also everything related to the personal care, increasingly important in Vietnamese culture, and thegoldsmith, just remember that Vietnam is the country in the world with the highest share of gold per person. There environmental sustainability becomes more and more 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 a very long authorization process is required to open it: the first container of Tyrolean apples got the go-ahead 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. The shrimp in particular was a triumph. Being able to offer goods with a clear certificate of origin and gradually a quality closer to that required 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 compete directly with those in Italy, so the effect will be positive. And for rice, the indica variety that worries Lombardy producers so much, we are well protected by the quotas.

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

The whole world envied the freedom of movement without negative consequences that Vietnam offered to 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 neighbours, but there was a recovery starting in the summer which made it possible to close the year with enviable growth in all other countries. The speed of decision, perhaps inspired by the recommendations of Carlo Urbano during the SARS crisis, the clear and coherent implementation of the protective measures, first of all the closure of the borders, have been extremely effective. Of course, having not suffered directly, the Vietnamese government appears to be in less haste 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 leaders for the next 5 years in the name of stability: renewing some key positions but reconfirming many experienced people and proposing a continuity of government which could allow a 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 up a market where they didn't have it or it was limited, to understand that in Asia no business is done 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 be seen only as an outlet market per se, 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 worldwide because they are part of the German value chain, which has international finance and distribution unmatched in our country of SMEs. It's the same in Asia, but the value chains that matter for distribution are those of Japan and Korea. In 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. Investment in a plant in Vietnam is lower than that of almost all other comparable countries for productivity and it is in the part of the world that continues to grow at a faster rate than its neighbours. 

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 as banking counterparties some top notch local lenders 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 one and with the Vietnam Business Forum, which represents all the world chambers of commerce present in Vietnam, offers us different and complementary contacts, opportunities and points of view.

From the branches in Singapore and Hong Kong we can offer financing in offshore hard currency to Italian companies and customers 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 a 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 relevant 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.