A new boost for Vietnam-Italy cooperation

The potential for bilateral cooperation remains vast in 2024 and beyond, as remarked by Mr. Francesco Arcuri, Deputy Ambassador - Head of the Economic and Commercial Department at the Italian Embassy, in an interview with our reporter.

What are the key sectors that offer promising opportunities for bilateral trade between Vietnam and Italy in 2024?

Trade flows between Italy and Vietnam are quite diversified and involve all the main sectors of both countries’ value chain.

Machinery accounts for more than 31% of Italian exports to Vietnam, followed by chemical and pharmaceutical products, clothing, furniture and electrical components. Vietnamese export to Italy include electronic products, agricultural commodities and textiles.

These sectors form the backbone of Vietnam-Italy industrial partnership and will likely offer promising opportunities for bilateral trade in the near future, especially with regards to the domains where the demands of Vietnamese business can match at best the offer of the Italian industry. I refer, for instance, to food processing.

Apart from those listed above, there are several advance sectors which offer interesting opportunities for further expanding the economic relations, such as smart agriculture, aerospace and most of all energy transition.

Since the announcement of its climate commitments at CoP26, and more recently with the Just Energy Transition Partnership, Vietnam has embarked on a very ambitious path towards net zero. Our private sector is willing to be part of this process and intends to partner with Vietnam for strengthening the latter’s readiness for energy transition through new investment and technology sharing.

What are the current challenges and opportunities for Vietnamese businesses seeking to enter the Italian market?

Over the past few years, Italy has put in place a comprehensive strategy to encourage FDI attraction and support foreign investors. The Interministerial Committee for Attracting Foreign Investment (CAIE), chaired by the Italian Ministry of Enterprises and Made in Italy, is the coordinating body for FDI attraction policies. It oversees the activity of two dedicated agencies, the Italian Trade Agency and Invitalia.

Just to touch upon the most relevant FDI-attraction instruments, I would like to mention: the “Investor Visa”, a 2-year visa for non-EU citizens choosing to invest in strategic assets; the flat tax for high net worth individuals deciding to move their fiscal residence in Italy. As per the corporate incentive schemes, it is worth to mention the “Transition 4.0” plan and the “Patent Box”, that introduce tax incentives for R&D activities. More recently, Italy has launched its National Recovery and Resilience Plan, which combines over €200 bln in EU funds to accelerate digital and green transition.

Also thanks to these schemes, in 2022 Italy reported a 3,9% increase in GDP, putting itself at the forefront of growth within the EU. In the same year, more than 240 new FDI-driven projects landed in Italy, with an increase on value of 17% compared to 2021. I am confident that Italy will remain an attractive destination for Vietnamese businesses in the near future, being one of the largest EU markets, a diversified economy, a country with a skilled workforce and an advanced ecosystem of research and innovation.

What are the Italian government's initiatives to support and promote bilateral trade with Vietnam?

Vietnam is one of the most dynamic economies worldwide and a priority market for business internationalization policies carried out by the Italian government. Italy looks with greater interest at the opportunities arising from our trade and investment relations. Vietnam is Italy’s main commercial partner among ASEAN countries, with a turnover that peaked to 6,2 bln USD in 2022, while Italy is the second EU supplier of Vietnam. In terms of investment, more than 150 Italian companies successfully operate in Vietnam in many different sectors: from automotive to textile, from energy to manufacturing, not to mention creative industry. 

On the institutional sphere, Italy and Vietnam are bound by a Strategic Partnership Agreement, which celebrates its 10th year of signature in 2023 and establishes several mechanisms of economic cooperation. Among these, the most important one is the Joint Economic Commission. It takes place every year to assess the status of trade and investment between Italy and Vietnam whilst outlining the priorities for the next future. Italy had the honour to host the last meeting of the Commission in mid-October, during the visit of the Vice Minister of Industry and Trade of Vietnam, H.E. Mr. Nguyen Sinh Nhat Tan.

Economic relations between Vietnam and Italy are constantly advancing in solidity, depth and effectiveness also thanks to the high-level contacts between territories that regularly take place. Among the most recent ones, I would like to mention the visit to Hanoi, Ho Chi Minh City and Binh Dhuong in the beginning of October of the President of the Italian region Lombardia, who led a delegation of business associations and research institutions.

However, the interest towards Vietnam goes beyond simple trade flows and involves a broader partnership. Such partnership intends to contribute to the growth of both economies through training, capacity building and technology. This gives me the opportunity to highlight the role of science and technology, a domain that goes back-to-back with economic cooperation and that forms an important cornerstone of Vietnam-Italy relations. The two countries sign every three years an Executive Program for Scientific and Technological Cooperation and, right now, we are working on identifying joint research projects for the 2024-2026 period, with a focus on areas of common interests such as agriculture, aerospace, climate change and sustainability.

Italy is a power in terms of creative economy. What can Vietnam learn from Italy, as both countries have strengths in cultural traditions and history?

Cultural and creative sectors are significant drivers for growth and innovation. In Italy, the interconnection between industry and academia has been a crucial factor for the development of a solid creative economy, particularly in the northern part of the country. Think for instance at the design district of Milan, where universities and research institutions have played an essential role in attracting a community of creative designers who are drawn to study, live and establish their business in this fertile environment.

Nevertheless, Vietnam already has all the potential to develop a modern and solid creative economy, becoming a privileged partner of Italy in several domains. I think for instance of the fashion industry. The craftsmanship of Vietnamese tailors and artisans is well-known worldwide. At the same time, fashion industry plays a significant role in bilateral trade. In 2022, the combined value of Vietnamese exports to Italy of footwear, textile materials and garments reached more than 764 mln USD (14% of the total Vietnamese exports to Italy), while textile materials were the third largest voice of Italy’s export to Viet Nam. Fashion industry is one of the most significant domain where the potential of economic cooperation could evolve into long-term and win-win partnerships.

Heritage is another domain where the relations between Italy and Vietnam are more promising. Italy and Vietnam are known all around the world for their rich cultures and for the uniqueness of their cultural heritage. Both countries host a high number of UNESCO protected sites and values. Italy has a lot to offer to Vietnam in preservation and valorization of heritage, a field that entails not only trade opportunities, but also technological and cultural cooperation.

Sincerely thank you!