Italy-Vietnam, 50 years of relations

Rome and Hanoi celebrated the 50th anniversary of diplomatic relations as a rotation in the Embassy is prepared

March 23, 2023 marked the 50th anniversary of diplomatic relations between Italy and Vietnam. As announced by the Italian Embassy, a reception was held in Hanoi at the Residence, attended by Deputy Foreign Minister Le Thi Thu Hang and representatives of Vietnamese authorities and the Italian and international community. In Ho Chi Minh City, on the other hand, a ceremony organized by the municipal authorities was held at the Opera House and attended by People's Committee Chairman Phan Van Mai. But the program of events is much broader and spans both Italy and Vietnam. "It is also the 10th anniversary of the strategic partnership that Italy entered into with Vietnam in 2013 and thanks to which relations between our two countries have expanded to the areas of trade, investment but also culture, tourism and science," Ambassador Antonio Alessandro stressed while speaking on "Casa Italia" on Rai. Alessandro pointed out that the business volume between the two countries reached 6.2 billion euros in 2022 and that today the leading sectors are obviously those related to technology and creative industries. Italy has about 150 companies active in Vietnam. Among the most interesting initiatives, the following were mentioned: the Design Day, this year dedicated to urban lighting, and an event dedicated to the manufacturing industry; for the performing arts, on the other hand, there is the annual Film Festival while scheduled for classical music is the Cavalleria Rusticana to be staged at the Hanoi Opera House. Vietnam is now a different country from the images that have come down to us in books," Alexander explained, recalling that Vietnam has gone from being one of the poorest countries in the world, as it was in the 1970s, to a middle-income country that aspires to be high-income. "Today it is a vibrant country: it has 100 million people, young and open to the rest of the world," the Ambassador added, noting how the country in question is at the center of an area, Southeast Asia, which is also a place of socio-economic expansion. Last week, among other things, the Council of Ministers appointed a new Ambassador to take Alexander's place at the end of his term. He is Marco della Seta, former Ambassador to Seoul.

Vo Van Thuong, who is Vietnam's new President

Close to Secretary Trong and the youngest member of the Politburo, his political parable is part of the broader political reshuffle of recent times

"I am flesh and blood with my people / the same sweat, the same drop of boiling blood." It is by quoting the most famous Vietnamese poet of the 20th century that Vo Van Thuong officially took office as president of the Socialist Republic of Vietnam on March 2, 2023. After the unexpected resignation of Nguyen Xuan Phuc (the first in the history of the Socialist Republic) last Jan. 17, the political elite seems ready to leave behind a period of scandals and arrests.

Before Phuc, also in January, the two deputy ministers Pham Binh Minh and Vu Duc Dam also handed in their resignations. Throughout the course of 2022, the Vietnamese Communist Party's (VPC) anti-corruption campaign was intertwined with the scandal of bribes for reparations during the pandemic and that of the scam around testing for Covid-19. Signaling the need to clean up the image of the political leadership also falls under the timeliness of electing a new president without waiting for the National Assembly in May. The new president is named Vo Van Thuong and his election was approved by a vote of 98.8 percent.

Who is Vo Van Thuong

Vo Van Thuong is a native of the southern province of Vinh Long. He was born in 1970 and is the youngest member of the current Politburo. It is no coincidence that the CPV and the National Assembly chose a South Vietnamese to serve as president. Traditionally, the "four pillars" of Vietnamese politics-that is, the PCV general secretary, head of state, prime minister, and chairman of the National Assembly-equally represent the country's two poles. As of 2021, however, no Vietnamese had yet assumed one of the four main offices. In Thuong's case, however, it is important to remember that his family had moved to North Vietnam and remained there until the end of the war.

Unlike his predecessor, who majored in economics, Thuong majored in Marxist-Leninist philosophy at Ho Chi Minh University. But like Phuc, he soon climbed the Party ranks after years of active militancy in the world of youth associationism revolving around the CPV. He joined the Party in 1993, at age 23, and was elected to the Politburo during the 12th Congress in 2016. Analysts identify him as a loyalist of current Secretary Nguyen Phu Trong, who entrusted him with the PVC Executive Secretariat at the 13th Congress. With this track record Thuong had long been considered one of Trong's possible heirs, and today he is confirmed as a reassuring choice in troubled times. Not only that, the Vietnamese economy is experiencing one of the most prosperous periods in recent years, and confidence is no longer just a matter of domestic politics.

What Thuong's election means for the Vietnamese economy

Today, Vietnam is one of the most promising countries economically: GDP growth exceeded 8 percent during 2022, and the International Monetary Fund (IMF) sees the continuation of this upward parabola with a balance +6.2 percent for 2023 (compared to the data from the National Institute of Statistics-quoted above-the IMF had estimated 2022 growth at +7 percent). Following Trong's reappointment to the Party leadership, moreover, what the leadership interprets as signs of stability to citizens and foreign investors seem to be consolidated.

Consistent with what appears to be a purely political course set in motion with the 13th Congress (2021), in his inaugural speech Thuong preferred to give space to fighting corruption and building "a clean [from corruption, ed.] and strong state apparatus." He went on to mention domestic development goals such as reaching middle income by 2030 and crowning the construction of a high-income socialist country by the centennial of the republic's founding, 2045.

Vietnam's bureaucratic moloch remains an obstacle to innovation but, analysts point out, recent upheavals even at the highest echelons of Hanoi's political elite could positively affect the country's economic attractiveness. As Le Hong Hiep, senior fellow at ISEAS - Yusof Ishak Institute, points out, the sudden handover in the past two years would be interpreted as an acceleration in the country's political transition. Trong's third (exceptional) term would, therefore, be instrumental in building a solid and reassuring lineage. Although the competence of the chosen officials is still to be tested.

A period of opportunity is opening up for Vietnam, supported by pushes from within and outside Hanoi: the shift of global value chains away from China, government incentives in high-tech development, and openness to investment in building a resilient energy apparatus. But the Party will need to balance investor enthusiasm with the country's structural problems, from infrastructure to bureaucracy. To do this, one man (or rather, four men) will not be enough to lead the nation. In the meantime, the presidency may just be an initial launching pad for Thuong, who-as a statement released by a Hanoi diplomat to the Reuters news agency claims-could then become Trong's successor to the Party leadership and thus move up to the top role in the political hierarchy.

Lego targets Vietnam as new zero-emission manufacturing hub

Lego has chosen Vietnam for the construction of its first zero-emission factory. In an effort to minimize the impact of trade competition between China and the United States, several multinationals are aiming to diversify supply chains by distancing themselves from what for decades was considered the world's factory.

Lego, the world's leading toy manufacturer by sales, has begun construction of a new plant in Vietnam's Binh Duong province, about 50 kilometers north of Ho Chi Minh City. It will be the Danish company's sixth production base and the second in Asia, after the one in Jiaxing, China, which has been in operation since 2015.

The plant, scheduled to open next year, will be 44 hectares in size, will be powered mainly by solar energy, and will rely on state-of-the-art technology to produce the iconic plastic bricks. The decision will result in the creation of 4,000 jobs over the next 15 years, as well as the injection of more than $1 billion in investment into the area, which is already home to the largest industrial complexes and boasts the title of the richest region in the country. This is the largest investment by a Danish company in Vietnam.

The decision reflects a broader trend that over the past five years has seen Vietnam stand out as a favorite destination for foreign investors fleeing the former world factory in an effort to evade U.S. tariffs on goods imported from China.

Partly spurred by the rush to relocate triggered by the outbreak of the China-U.S. trade war, Vietnamese authorities have devised a plan to proactively attract foreign investment, prioritizing high-value-added projects and promoters of advanced, clean technologies. 

According to Bruno Jaspaert, chief executive officer of Deep C Industrial Zones, one of Vietnam's largest industrial zone developers, by focusing its efforts on the pressing issues for international investors, such as sustainability as articulated by the United Nations Development Goals, the country "may have the recipe for success."

By issuing Resolution 50 in 2019, the Communist Party of Vietnam emphasized the centrality of the role that foreign economic actors and foreign investment play in the pursuit of a long-term development strategy, stressing the need to attract green and hi-tech technologies that add to the production process.

In fact, already in 2018 FDI had increased by 9.1 percent over the previous year to $19.1 billion, subsequently registering a further 6.7 percent increase to $20.38 billion in 2019. After initially stalling in 2020 due to the pandemic outbreak, they returned to significant growth in 2021, partly in the wake of the massive industrial plant closures caused by the "zero Covid" strategy pursued by Beijing, to reach $38.85 billion.

Lego Chief Operating Officer Carsten Rasmussen himself said in December 2021 that the Vietnamese government's efforts to expand renewable energy infrastructure and collaborative approach with foreign companies contributed to the Group's decision to open a new manufacturing base in the country. ha dichiarato a dicembre 2021 che l’impegno del governo vietnamita per espandere le infrastrutture per la produzione di energia rinnovabile e l’approccio collaborativo con le aziende straniere hanno contribuito alla decisione del Gruppo di aprire una nuova base produttiva nel paese.

However, according to experts, there are structural factors that make it almost impossible for these attractive new destinations for foreign investors, such as Vietnam and the broader Southeast Asian region, to become true alternatives to China's complete manufacturing ecosystem and really challenge Beijing's status as a global manufacturing hub in the short term.

Zhang Monan, deputy director of the Institute of American and European Studies at the China Center for International Economic Exchange in Beijing, said the lack of a complete industrial system and a large domestic market is a major disadvantage for Vietnam. As long as semi-finished products continue to be supplied mainly from China and finished products exported mainly to the United States, the country's industrial development can never emancipate itself from its external dependence.

In addition, Vietnam still suffers from the shortage of skilled labor, as well as the huge disparity in population scale when compared with its huge neighbor. According to official Vietnamese data, only 11 percent of the country's 51.4 million workers are considered highly skilled, compared to the more than 200 million claimed by Chinese authorities (about 26 percent of the total workforce). "With 7 per cent of China's population, [Vietnam] will not be able to displace more than a small fraction of China’s exports," said David Dapice, senior economist for the Vietnam and Myanmar programs at Harvard University's Ash Centre for Democratic Governance and Innovation.

Hanoi's race for renewables is (also) an economic development strategy

Vietnam is not only one of the most promising economies in the ASEAN bloc, but also offers a glimpse of development opportunities through renewables. An overview of Hanoi’s opting-out fossil fuels strategy

Energy transition wanted: in December 2022, Vietnam finalised a Just Energy Transition Partnership (JETP) with the International Partners Group (IPG) consisting of the European Union, United Kingdom, United States, Japan, Germany, France, Italy, Canada, Denmark and Norway. This is a funding programme dedicated to developing countries to facilitate their sustainable growth in the energy field, which in the case of Hanoi provides $15.5 billion to reduce the country's dependence on fossil fuels. With the signing of the JETP, in the words of US President Joe Biden, “Vietnam has demonstrated leadership in charting an ambitious clean energy transition that will deliver long-term energy security”.

With hydropower already covering 40% of the energy mix in 2013 and photovoltaic power generation capacity increasing 25-fold in one year, Vietnam has become one of the most promising renewable energy countries in the region. In 2010, Hanoi began formulating its first plan for the development of new “clean” energy infrastructure, a roadmap that provided the basis for the more ambitious National Strategy for Renewable Energy Development 2016-2030. The plan also aims to reduce fossil fuels by 25% by 2030 and 45% by 2050.

More growth, more demand

Vietnam's rapid economic growth, one of the most promising in the region, is the main driver of its energy ambitions. According to the latest data from the National Bureau of Statistics, 2022 was a record year, with a GDP increase of 8.02%, the highest since 1997 - the year of the Asian financial crisis. The change in economic pace implies a significant development of the domestic market, accompanied by major investments in the manufacturing sectors that contribute to making Vietnam a major manufacturing hub.

The Foreign Direct Investment (FDI) Agency of the Vietnamese Ministry of Foreign Affairs forecasts between USD 36 billion and USD 38 billion of FDI by the end of 2023, much of it directed towards high-tech and sustainability projects. This doesn't come without the cooperation of Hanoi, which since the years of the first market reforms has sought to attract more foreign capital and talent in sectors that are still under-explored and under-developed. Also reinforcing this vision is the ratification of the investment protection agreement included in the EU-Vietnam Free Trade Agreement (EVFTA)’s in 2020 and the entry into force of the Regional Comprehensive Economic Partnership (RCEP) in 2022. Meanwhile, the rising quality of life is accelerating the energy demand of Vietnamese citizens, which - together with the industrial push - will continue to grow by 10% year-on-year until 2030.

Solar boom

The Vietnamese government has advanced several strategies to incentivise companies and citizens to choose the path of “clean” energy sources. The change of pace in solar energy production, for example, has been achieved through a generous sales rate for the energy fed into the grid by the panels installed on one's home: around 0.09 euro per kilowatt hour, then set at 0.08 until 2030. It is a different story for plants that are designed to produce and sell the energy produced in full, where the so-called feed-in-tariff (FiT) is lower but still cheaper than for coal and hydro power plants.

The results were not long in coming: the scheme has taken Vietnam to the top of the list of ASEAN countries investing in PV, reaching a production capacity of 17.6 Gigawatts. Not yet at the level of the 92 Gigawatts produced by US plants, but signalling the speed with which Vietnam's energy transition process is catching up with its Western partners. A path that began only in 2014 with the first solar power plant in Ninh Thuan province.

Since 2018, new forms of experimentation have also begun to bring wind farms to where there is no shortage of land. Floating photovoltaics, for example, is now seen as an interesting option to exploit the potential of Vietnam's dams: there are over seven thousand of them of various sizes and power throughout the country, and each of them can accommodate floating panels that can be easily hooked up to the pre-existing grid.

First steps with wind power

Of all the renewable technologies adopted by Hanoi, wind power remains one of the least explored. According to experts from the Global Wind Energy Council, Vietnam is one of the countries with the highest wind power potential in South-East Asia and, with proper planning, could soon increase from the current 3.5 Gigawatts to over 30 Gigawatts of electricity generated.

Strategic areas include the coasts, where floating wind power can be attempted. But some of the region's largest power plants are under construction also in the northern and central provinces. These include, for example, the floating wind power plant in Bac Lieu Province, the first of its kind built in the Mekong Delta.

The challenges of transition

As with other countries in the region, economic growth is not enough to initiate an effective and consistent energy transition. Proposals for new projects continue to increase, but there is a lack of a solid electricity grid capable of supporting any peaks in supply and demand. Investments are still insufficient: for Vietnam Electricity (VE), the country's largest energy company, capital invested in the sector would have to reach 150 billion to reach the targets set by the Vietnamese leadership. VE still has a monopoly on the energy market, and only since 2022 has a two-year pilot project been launched to test contracts for the sale and purchase of electricity directly from power plant producers. The goal? To streamline procedures and incentivise investors with the prospect of acting more freely on the market.

In addition to administrative and financial challenges, there are structural ones, ranging from the dilemma of storing energy from renewables to the environmental impact of new projects. While floating plants offer an alternative to occupying land for other purposes, they also hinder the local population's access to water and fish resources. Just as too little attention has been paid in the past to the environmental damage caused by the excessive construction of dams and hydroelectric power plants, it is now becoming problematic to test the criticality of investments in new solar or wind farms where they could seriously impact the ecosystem.

No less important is the debt - financial or “political” - incurred with countries investing in Vietnam. Incentives to invest in renewables are just one of the many strategies adopted by Hanoi to increase the entry of foreign capital into the country and push economic growth by relieving public debt. A necessary gamble with several positive effects on the economy, but with a still uncertain future. Among the European partners' concerns during the signing of the free trade agreement remains the human rights situation in Vietnam - an element that could turn against Hanoi as happened with the freezing of the investment agreement between the EU and China. The Memorandum of Understanding with the US, on the other hand, promises important aid for Vietnam's energy transition, but at the same time binds the country to imports of American liquefied natural gas. China, South Korea, Singapore and Japan are in turn racing to maximise the benefits promised by Hanoi in this area: will there be sufficient resources to monitor the situation?

A Vietnamese start-up on the global stage

After successfully defending its domestic market of 100 million against global giants such as Facebook, VNG Corporation, Vietnam's first unicorn start-up, is looking beyond its borders

The tendency to see Vietnam as a country known mainly for textiles and agriculture may soon change thanks to the success of a Vietnamese start-up: the VNG corporation. This start-up, specialising in social networking, e-commerce, digital content and online entertainment, is Vietnam's first Unicorn start-up (the first start-up in the country to exceed the value of $1 billion US dollars).

An overview of the company's history is necessary to assess its evolution. One of the peculiarities of the company is that it was founded when only a tiny fraction of the Vietnamese population had access to the Internet. Founded in 2004 under the name Vinagame, VNG corp started its activity in the gaming sector. Despite its start in an extremely specialised industry, the company gradually managed to expand its services to music sharing, video streaming, messaging, news portals and online payments. Its messaging app Zalo is now deeply embedded in Vietnamese life, especially among young people. By 2020, the app had overtaken Facebook's messaging platform Messenger in Vietnam. According to the Vietnamese Ministry of Information and Communications data updated to February 2022, the app has 74.7 million monthly active users. This is an extraordinary figure since Messenger counts 67.8 million users in the country. Some of the app's strengths are the ability to send higher quality images and incorporate culturally relevant features such as emojis reflecting the Lunar New Year Tet. As pointed out by Le Hong Minh, co-founder of VNG, the company's greatest strength is to understand the preferences and needs of its users. 

Indeed, Le Hong Minh, co-founder of the VNG corporation, sees the start-up as a point of reference for the emerging technology start-up sector in Vietnam. In an interview at the company's headquarters in Ho Chi Minh City, Le Hong Minh made clear his aspirations of expanding VNG in the global technology industry:"In the future, Vietnam will not only be known for coffee and manufacturing". Indeed, after successfully defending its 100 million-strong domestic market against global giants such as Facebook, VNG corp is looking beyond Vietnam's borders. As co-founder Le Hong Minh reported, gaming will be the strong point of the company's international expansion. The gaming branch of VNG corp has users in more than 130 countries and expects to have 320 million customers worldwide in 2023. Despite this, Le Hong Minh pointed out that VNG is also looking to increase global sales of its artificial intelligence and cloud computing products. The main question is: given the significant expansion within Vietnam, will VMG corp be able to gain the trust of foreign investors? Alec Tseung, partner at KT Capital Group, has a specific view on the issue. On the one hand, he believes that, in theory, VNG will attract the attention of investors due to its similarity with Tencent, a multimedia company already well-known globally. On the other hand, in practice, the company does not have a favourable regulatory environment like Tencent's in China. However, it is important to highlight that according to a research conducted by the Vietnamese National Innovation Center, Vietnam attracted record venture capital investments last year. This increase in investments can create a favourable environment for VNG expansion. Moreover, according to some sources, the company is considering an initial public offering (IPO) in the US. Unfortunately, Le Hong Minh declined to confirm the validity of this news. Therefore, we have to wait and see how this company develops globally. Certainly, investors need to keep an eye on VNG corp developments.

Vietnamese electric cars on EU markets

Not only the United States. The Vietnamese giant VinFast also aims to expand into the European market. With a strategy that appears to be winning

Vietnamese electric vehicle brand VinFast aims to expand into the European market. Following the opening of the flagship store in Cologne scheduled for November 2022, the company plans to open new offices in Frankfurt, Paris, Nice, Amsterdam, Berlin, Munich and Hamburg by the end of the year. The company's expansion of EVs (electric vehicles) in EU countries will include a retail network designed to meet the specific needs of the local market, the carmaker said on Monday. As the leading economy in Southeast Asian countries, Vietnam continues to drive growth in the region. At the Paris Motor Show, which was held from 17-23 October, VinFast CEO Le Thi Thu Thuy said his company is proud to return to the Motor Show "to show that Vietnam is not only capable of producing cars, but is also making a big leap towards the electrified revolution". VinFast is the main brand of the Vietnamese conglomerate VinGroup, which is involved in technology, industry, property development, retail and services, and seems intent on expanding into global markets as much as possible. It also announced earlier this year that it will launch a $4 billion assembly plant on US soil. It is a strategy that is consistent with the great success VinFast is also acquiring in the domestic market: between cheaper cars and luxury cars, the carmaker is fully experiencing the 'golden moment' of the Vietnamese electric sector driven by demands for sustainability. The surge in sales recorded in July 2022 was only limited by the component shortage experienced the following August. But according to a report by the Vietnam Petroleum Institute, if the government acts promptly with policies aimed at supporting the sector, Hanoi can take a leading role in the EV market in South-East Asia and abroad.

Vietnam leader of the supply chain

But developing a native high-tech industry is not that simple

Apple's future could be in Vietnam. For more than ten years, the Southeast Asian country has been an absolute leader in attracting the biggest technology brands: from Samsung, to Xiaomi, to Intel. And Steve Jobs' company is also producing components for the AirPods here, as well as testing the manufacturing of smartwatches and laptops. Being able to fit into the supply chain of these more complex devices would be a great success for the manufacturing industry in Hanoi.

Vietnam has in fact recorded a growth in the export of technological goods unmatched by any other Asian country. From 13% in 2010, in just ten years, high-tech components have become 42% of the export. Moreover, in recent years the rising cost of inflation in Chinese manufacturing centers has prompted many producers to move their factories to Vietnam, where workers' wages are lower. First the trade war between Washington and Beijing and then the continuous and tight lockdowns in China, have incentivized companies, including Apple, to move to the country. But Hanoi's ability to attract foreign companies to work the components of technological devices in the country goes hand in hand with the difficulty in bringing out an industry of its own. According to reports published by the Ministry of Industry and Commerce in 2019, Vietnam has lagged behind most of its neighbors in the technology sector. 

In previous years, the so-called “Asian tigers” have shown that growing in quality, from being part of the assembly line to becoming a real producer, is possible. Examples are the economies of China, Taiwan and South Korea, which, starting from a base of low-cost products, have turned their industries towards automotive and robotics. Vietnam has similar characteristics to these countries: low production costs, available manpower and an industrial policy coordinated by the state. However, two major problems loom: the lack of adequate infrastructure and highly skilled labor. In fact, managers and skilled workers make up only 10.7% of the entire Vietnamese workforce, the lowest percentage of all the major economies of Southeast Asia. Furthermore, in China for example, entire areas are dedicated to the creation of a single product; Vietnam, on the other hand, does not have these agglomerations. Its industries are scattered throughout the country and poorly integrated.

It remains, then, to clarify whether the success achieved by the "Asian tigers" decades ago can still be replicated today, with a globalized economy transformed by the domination of the Chinese manufacturing sector. The role of Hanoi therefore still remains uncertain: in balance between continuing to be a reliable part of the production chain and, at the same time, ready to develop a strategy to enter the international market. Of course, success in high-tech would mean becoming competitive with big Asian brands, such as the Chinese Oppo or the Malaysian Silterra. But any failure, says the director of the Mekong Development Research Institute Phung Tung, would condemn the country to be "forever a component of the supply chain", with the disastrous consequences of stagnation, social inequality and debt crises.

The solution to continue to attract foreign companies to the territory and, at the same time, develop an autonomous growth strategy, places Vietnam in front of a dilemma: the training of the workforce will increase the country's chances of launching itself into the high-tech industry, but it will also lead to an increase in wages, encouraging foreign producers to relocate elsewhere, such as Cambodia.

Dong Nai, un hub manifatturiero nel sud del Vietnam

La ripartenza del Vietnam parte dagli investimenti esteri. Ecco come una delle province meridionali sta attirando l’interesse degli investitori e le risorse di Hanoi per spingere l’economia nazionale in un contesto globale

Un hub manifatturiero a vocazione sempre più internazionale si sta espandendo in Vietnam. Si tratta della provincia meridionale di Dong Nai, area a vocazione industriale localizzata a soli 100 km dal centro di Ho Chi Minh City, il principale centro urbano del sud. Un Guangdong in versione vietnamita che sta attirando tanto i fondi governativi per lo sviluppo economico quanto l’interesse degli investitori esteri.

Le riforme

The Strategia di sviluppo quinquennale di Dong Nai 2020-2025 ha posto le basi per accelerare lo spirito imprenditoriale della provincia: nel piano si prevede di puntare, tra una serie di obiettivi precisi, sull’attrazione degli investimenti esteri per innovare ed espandere le forze produttive del territorio. Tra le riforme adottate dal governo locale rientrano lo snellimento delle procedure burocratiche e una tassazione ridotta per i nuovi investitori. Ma non solo: in tutto il paese non è prevista una soglia minima di investimento per avviare un’attività, purché l’investitore sappia garantire di avere risorse sufficienti affinché l’impresa rimanga economicamente sostenibile.

Nell’area sono già presenti alcune realtà internazionali come Nestlé, che ha localizzato qui la sua più grande fabbrica nel paese per la produzione di caffè. Ma i settori di investimento sono i più vari. Le opportunità vanno dall’elettronica al tessile, dai farmaci all’industria ittica: una dinamicità favorita dalle agevolazioni per facilitare la cooperazione tra pubblico e privato, nonché tra imprese estere e società locali. Oltre alle zone industriali già presenti, il governo ha approvato e attivato la costruzione di nuovi parchi industriali nelle località di Xuân Lộc, Định Quán, Vĩnh Cửu, Thống Nhất, Tân Phú e Long Khánh. 

Perché Dong Nai?

La provincia meridionale del Vietnam non è solo l’epicentro delle riforme amministrative per facilitare l’ingresso di capitali e competenze dall’estero. La posizione geografica della provincia offre un facile punto d’appoggio sia per il mercato interno che per le rotte internazionali: nella zona sono presenti gli aeroporti di Long Thanh e Ho Chi Minh City, diversi collegamenti stradali (alcuni di nuova costruzione) ed è in corso la costruzione di due nuovi collegamenti ferroviari verso Ho Chi Minh City e la provincia costiera di Ba Ria-Vung Tau. Infine, il porto di Dong Nai è uno dei principali porti regionali del paese.

Le opportunità offerte dal governo vietnamita per attirare gli investimenti a Dong Nai rientrano in un contesto più ampio di trasferimento delle imprese offshore verso i paesi ASEAN, complici la crisi globale della supply chain, l’innalzamento dei costi operativi in Cina e le restrizioni Covid tutt’ora implementate dalla Repubblica Popolare. In questo momento storico Hanoi ha saputo negoziare il suo ingresso nei principali accordi per gli standard commerciali dell’Organizzazione Mondiale del Commercio (OMS) e rendersi parte attiva nell’evoluzione di una zona di libero scambio ASEAN. Diversi sono anche gli accordi di libero scambio bilaterali e multilaterali, come l’appena avviata Regional Comprehensive Economic Partnership (RCEP). Non ultimo, l’accordo commerciale e per la protezione degli investimenti firmato nel 2019 con l’Unione Europea eliminerà il 99% dei dazi sui beni scambiati e ridurrà le barriere normative all’ingresso dei rispettivi capitali e prodotti nei due mercati.

Un’economia in crescita

Secondo gli ultimi dati della Asian Development Bank (ADB) il Vietnam sarà il principale motore della crescita economica nel Sud-Est asiatico. Con un tasso di crescita del PIL che si aggirava intorno al +6,3% tra il 2010 e il 2019 e dopo lo stop della pandemia, ora l’economia sta ripartendo: la banca prevede che il PIL del Vietnam crescerà del +6,5% nel 2022 e del 6,7% nel 2023, più di tutti gli altri paesi della regione. 

Andando ad analizzare nel dettaglio i tassi di crescita segnalati dalle autorità vietnamite, l’area di Dong Nai si conferma tra quelle più performanti, con una crescita degli investimenti diretti esteri del +7,8% nel primo quadrimestre del 2021 rispetto al 2021, per un valore di 4,42 miliardi di dollari Usa. Il 59,5% è stato destinato all’industria manifatturiera, mentre il 30,3% si è focalizzato sul settore immobiliare.

In un incontro organizzato da Dezan Shira & Associates sulle opportunità d’investimento a Dong Nai è stato evidenziato, inoltre, come la zona di Dong Nai sia oggi il quarto polo d’investimento del Vietnam – un trend in costante crescita che sta attirando soprattutto i capitali delle imprese  di tutto il mondo. Tra queste, spiccano i nomi di grandi società di Taiwan, Giappone e Corea del Sud.

Più investimenti, migliori investimenti

I passi avanti nella gestione della sostenibilità d’impresa in termini ambientali, sociali e amministrativi (Environment, society and governance – ESG) da parte di Hanoi stanno permettendo al Vietnam di allinearsi agli standard globali, adeguandosi alle richieste dei mercati che guardano al ranking ESG. 

Le ultime direttive sul lavoro, definite da una circolare di dicembre 2021, incrementano le tutele all’interno delle aziende laddove, in passato, permanevano le zone grigie che rischiano di minare l’immagine dell’impresa. La settimana non deve superare le 72 ore e non è possibile superare le 12 ore lavorative al giorno. Viene previsto almeno un giorno di riposo, con un minimo di quattro giorni liberi ogni mese. I datori di lavoro hanno ora l’obbligo della massima trasparenza circa orari, compensi e inquadramento contrattuale.

Anche nel quadro della tutela degli ecosistemi sono aumentati gli obblighi per le aziende. Le ultime direttive vanno a implementare gli obiettivi della nuova legge per la protezione ambientale del 2020, che comprende gli standard da applicare all’industria, come il trattamento delle acque di scarico e la gestione dei rifiuti plastici.

Vietnam commercial engine and green

The Southeast Asian country speeded up even more its growth. Not only at the economic level, but also for its global status.

Hanoi is increasingly at the center of regional and global trade maps. For some time now, the distorting effects of the so-called trade war between the United States and China have led many international companies to locate in Southeast Asian countries. Particularly Vietnam, which attracts not only manufacturers that could form the new "factory of the world" but also global digital giants, won over by a steadily growing middle class and young population. The Covid-19 pandemic first and the Ukraine war then, with all the geopolitics consequences of the case, are speeding up this tendency. It also seen in the numbers. In March, Vietnam's exports grew 45.5% month-on-month and 14.8% year-on-year, reaching a record of US$34.06 billion. According to the Vietnam General Bureau of Statistics, the Vietnamese economy expanded 5.03 % in the first quarter of 2022 compared to the same period a year earlier, surpassing China, which grew 4.8%. In addition, Vietnam's foreign commerce rose to $176.35 billion in the first quarter, an increase of 14.4% year-on-year. In comparison, China's foreign commerce in the 1st quarter increased by 10.7 % in yuan terms. The uncertainty related to pandemic restrictions is also pushing different companies and expats to reconsider their permanence in the People's Republic, often turning their attention just to Vietnam. Hanoi's trade with the United States and the European Union has increased considerably in recent years, thanks in part to the free trade agreement signed with Brussels.The various platforms launched in recent months and weeks could bring other benefits to the Vietnamese economy. Indonesia and Vietnam could be the ASEAN countries to benefit the most from new funding for the clean energy transition under a global partnership for infrastructure investment formally launched by the G7 at the summit a few days ago. The G7 is working with Jakarta and Hanoi in particular on partnerships to provide financing to accelerate decarbonization and the shift to cleaner energy sources. 

Islands, rocks and bamboo: Vietnam's choppy waters

In true bamboo diplomacy style, Vietnam had a modest reaction to the invasion of Ukraine. The echo of the conflict, however, was felt in Hanoi perhaps more than in Taiwan

Article by Lucia Gragnani

1979. China launches an offensive against Vietnam in response to Hanoi's opposition to the Khmer Rouge regime and the signing of the Soviet-Vietnamese partnership treaty. More than forty years have passed, but in Vietnamese school books there is still almost no trace of the Chinese attack. With the same reticence, Vietnam refrained from condemning Russia at the UN table, and opposed Moscow's exclusion from the Human Rights Council. This kind of strategic neutrality is not just pro forma, and it is so ingrained that it has managed to earn the bespoke name of bamboo diplomacy. Planted firmly in the ground, but nimble in flexing with the wind. In the countries of the Association of Southeast Asian Nations (ASEAN), this approach has resulted in modest reactions to the invasion of Ukraine.

The ambiguity of Vietnamese policy manifests itself in multiple ways. China is fighting with the United States for the role of first trading partner, showing itself capable of providing a response to Vietnam's growing demand for investment in infrastructure. For this reason, Hanoi has, like other ASEAN members, traditionally preferred to remain moderate towards Beijing, stalling so as not to be dragged down by American advances in China's containment policies. The United States has a strong interest in building a relationship with ASEAN in the area of maritime security as a key component of the Indo-Pacific Strategy, as announced in the communication issued ahead of the U.S.-ASEAN summit in May. After mending the wounds of war, Washington and Hanoi have established a solid but cautious cooperative relationship. But, with the ban on the export of lethal weapons to Vietnam valid until 2016, still not military.

The sector is Russian expertise, as is the production of oil extraction machinery. Relations between Hanoi and Moscow have been friendly for decades, rooted in traditional ties to the former Soviet Union. The 80 percent dependence on Moscow's supply of arms from 2000 onward has provided a cement to them. In late 2021, the governments of the two countries signed a new agreement to further expand military cooperation. Looking at Vietnam's posture toward Russia and the U.S., last year was emblematic. In the span of four months starting in April, there were successive visits by Russian President Vladimir Putin, Chinese Defense Minister Wei Fenghe, and U.S. Vice President Kamala Harris.

In bamboo diplomacy style, Vietnam had a modest reaction to the invasion of Ukraine. The echo of the conflict, however, was also felt in Hanoi and perhaps more so than in Taiwan. With the outbreak of war and subsequent sanctions complicating international trade with Moscow even for those countries that remained "friendly," the opportunities for access to Russia's arsenal diminished. Without being able to rely on its main strategic partner, Vietnam is now left with a bare flank.

This flank, in particular, is near the long east coast that looks out to the South China Sea, known in Vietnam as the East Sea. Ahead, a series of atolls and rock formations dot the maritime landscape, which is also overlooked by China, Taiwan, the Philippines, Brunei, Malaysia, and Indonesia. Each country claims sovereignty over a more or less large part of the South China Sea. In addition to being a key commercial hub through which passes a third of the world's maritime trade, the South China Sea has important reserves of gas in the subsoil. In recent years, it has become a place of friction for China-U.S. relations. For smaller players like Vietnam, navigating these choppy waters while remaining moderate is a strategic issue.

In 2016, the United Nations Convention on the Law of the Sea (UNCLOS) Tribunal ruled that not all land masses are entitled to island status. According to the Tribunal, there are, in fact, no formations permanently above water level in the South China Sea capable of supporting human life. The status of island would allow to exercise an exclusive economic zone (EEZ) of 200 nautical miles and conduct underground explorations. Maritime claims, however, are not only a matter of strategy, but also of politics and sovereignty. Islands or not, the ambitions of neighbors have not changed.

Of these, Beijing is the most problematic neighbor. Indeed, China claims the entirety of the South China Sea's rock formations and their corresponding waters based on the historic U-shaped line. This imaginary line encompasses the entire sea mass, and largely overlaps with Vietnam's claims of territorial sovereignty. These disputes are still the main source of tension between Beijing and Hanoi. In 1974, China occupied the formerly Vietnamese Paracelsus Islands after a clash that left dozens dead. In 1988, another clash at Johnson Reef in the Spratlys left about 70 people dead. More recently, in 2014 the movement of the Chinese oil rig Haiyang Shiyou 981 near the Paracelsus Islands had generated protests in Hanoi, and made one imagine an early parallel to the annexation of Crimea. Vietnam reacted in a composed manner to Chinese provocations. Damaging the relationship with Beijing over rocks in the South China Sea would have more costs than benefits.

When, after February 24, Beijing announced new military exercises near the Vietnamese coast, the sound of strikes in Ukraine seemed closer. In the security sector, it is necessary to expand the portfolio of partners, but embracing Washington would expose the country to possible repercussions on relations with China. At the same time, breaking away from Moscow after decades of near-monopoly proves difficult. Russia has stated that it is planning military exercises with its ASEAN partner by the end of 2022, and Hanoi has not retracted. Vietnam's strategic ambiguity allows for multiple partners, and the centrality given to the South China Sea issue at the latest meeting between Indian Prime Minister Narendra Modi and Vietnamese Communist Party Secretary Nguyễn Phú Trọng is no accident. Getting closer to India, however, does not mean getting closer to QUAD, and while the Vietnam-India strategic partnership is strengthened and the air in the South China Sea becomes tense, Hanoi and Beijing congratulate each other on 72 years of diplomatic relations and promise to strengthen cooperation. Vietnamese bamboo also endures in salt water, but it remains to be seen how long this ambiguity will be sustainable.

New tech, how Vietnam is becoming self-sufficient

Vietnam's digital economy is steadily expanding, thanks in part to the acceleration brought on by the pandemic

Vietnam is definitely at the top of the list of Southeast Asian countries in terms of presence of cutting-edge companies in the technology and digital sectors, so much so that it is almost self-sufficient. In fact, to date it already has as many as 64,000 digital companies, and the figure continues to expand, to the point that the country ranks 25th among the 50 most digital companies in the world, according to consulting firm Tholons. Moreover, Vietnam's digital economy is growing rapidly, and is estimated to lead Southeast Asian countries in the next 10 years, according to the e-Conomy SEA 2021 report by Google, Temasek and Bain. Vietnam's digital market is thriving thanks to strong growth in the e-commerce, fintech and education technology sectors. In parallel, the population of social media users is also growing rapidly, reaching 78% of the total population in February 2022. Certainly there are important socio-demographic factors facilitating the expansion of the digital market, given that the population is young (70% of citizens are under 35 years old), educated (literacy rate in the 15-35 age group is over 98%) and accustomed to technology (more than 60% of the population uses smartphones). In any case, the phenomenon is worth keeping an eye on since, according to a report by the company Alphabeta, digital technology could potentially bring over 74 billion dollars to Vietnam by 2030, mainly in the areas of industry, agriculture and food and education.

As has happened in many countries, COVID-19 has been a significant driver of digital transformation in Vietnam. Since the pandemic broke out, Hanoi has seen a sudden acceleration in the adoption and deployment of new digitization tools in both the private and public sectors. It is estimated that as early as June 2021, about two-thirds of private enterprises in Vietnam had access to technologies related to the digital economy, a huge jump from the pre-COVID-19 period. As a result, the digital payments market is also growing, already reaching $620 billion in 2020 and is expected to reach the value of $1.2 trillion in 2025.

The digitization process is also accelerated by the proximity of the many local digital companies, which create a real industrial agglomeration that encourages the spread of skills and innovations. Among the best-known companies is the FPT Group, which stands for Corporation for Financing and Promoting Technology, the largest IT services company in Vietnam, whose core business is the provision of ICT-related services. FPT deals with technological innovations such as automation, artificial intelligence, blockchain technology, cloud computing, and other services aimed at improving the efficiency of life for citizens, businesses, and government. Many of these companies, in fact, work with the public sector with the common goal of developing a digital government and economy, but also increasing the efficiency of public services and the IT skills of officials and managers. Some ongoing projects already include the development of smart cities and traffic, as well as state-of-the-art healthcare and education, with the aim of improving the lives of millions of citizens as well as the country's competitiveness.

However, there are still many obstacles to reaping the full benefits of digital technology, for example, bureaucracy and lack of specialized human resources. In addition, some localization and data protection laws discourage foreign companies from investing in the local digital market, as they protect local businesses but undermine further profits.

However, the future looks bright, and the Deputy Director of the Department of Enterprise Management, Nguyen Trong Duong, has announced that with policies to support Vietnam's digital enterprises and tech startups, the country's digital economy could reach 26.2% of GDP in the next three years.

Vietnam: in the footsteps of Carlo Urbani

Development cooperation is one of the pillars of Italy's strategic partnership with Hanoi

Editorial by Antonio Alessandro, Italian Ambassador to Vietnam

On March 7, an Italian delegation visited the Province of Thua Thien Hue to participate in a ceremony in memoriam of Carlo Urbani and revive relations with one of the most dynamic regions in central Vietnam.

The ceremony was held in the epidemiology center named after Carlo Urbani, with the emotional participation of Italian and Vietnamese authorities and his widow, Giuliana Chiorrini. The WHO Representative in Vietnam shared the testimonies of people who had worked with the famous Italian epidemiologist. Carlo Urbani was awarded the Grand Cross of the Order of the Star of Italy by President Sergio Mattarella in recognition of his extraordinary work in containing the SARS epidemic in Vietnam in 2003.

It emerged that the work of Carlo Urbani, almost 20 years after his death, is still relevant in the face of new pandemics and wars that are shaking the world. Consul General Enrico Padula recalled the vital contribution of Carlo Urbani and the whole Italian community to the strengthening of friendship relations between Italy and Vietnam.

As a concrete sign of Italian solidarity and in the footsteps of Carlo Urbani, a new Department of Gynecology and Obstetrics is being built in the Hue University Hospital. The works are promoted by the Italian Agency for Development Cooperation (AICS) as part of a 13 million euro project for the improvement of health services in the central regions of Vietnam.

Development cooperation is one of the pillars of Italy’s strategic partnership with Vietnam. We have been active since the 1990s and we carried out many initiatives in the fields of health, training, environmental rehabilitation, among others, thus contributing significantly to the country's development. Most recently, Italy donated 2.8 million vaccine doses to Vietnam.

During the visit, a joint research project was launched between the Polytechnic University of Marche and Hue University with the aim of managing cultural heritage data. The province has a strong tourist vocation and is home to one of the best-preserved imperial citadels in the East.

The results of the visit and prospects for future collaborations were discussed with the President of the Province, Nguyen Van Phuong.

The Embassy is committed to strengthening relations with the 63 provinces of Vietnam, which are the core of the country's economic dynamism.