Vingroup, a success story from Vietnam

Vingroup is a Vietnamese corporation specializing in technology, industry, real estate development, retail and services, ranging from healthcare to hospitality.  

The history of Vingroup begins with the founding of Technocom Corporation in 1993 in Ukraine, thanks to an ambitious group of young Vietnamese. Technocom started with food production, achieving great success with the Mivina brand. In 2000 it moved to Vietnam with two strategic brands, Vincom and Vinpearl, and the ambition to contribute to the development of the country. In January 2012, Vinpearl JSC merged with Vincom JSC to form Vingroup Joint Stock Company, becoming - with a market capitalization of approximately $ 3 billion - the largest privately held company in the nation. Pham Nhat Vuong, the first billionaire in Vietnam's history, is the Group's president, founder and largest shareholder.

A multi-sector company with 19 member brands, Vingroup is recognized as one of the most dynamic, successful, and well-capitalized companies in Vietnam. The main axes of its business are technology and industry; trade and services; social enterprise. In 2013, Vingroup raised approximately $ 200 million from the US investment fund Warburg Pincus to invest in four areas: commercial facilities, tourism, hospitals, and schools. The Vietnamese giant is currently concentrating resources on automobiles and real estate businesses. At the end of 2019, Vingroup announced its intention to stop retail operations - the largest in Vietnam - and last May it decided to stop the production of smartphones and televisions as well. 

Vingroup entered the automotive industry in 2019, founding the subsidiary VinFast and its automotive plant in Haiphong with an annual capacity of approximately 250,000 vehicles. Profitability is still an issue. The company sold around 30,000 vehicles last year, enough to satisfy only around 10% of the Vietnamese market. Vingroup's automotive-focused manufacturing segment posted a pre-tax loss of 11.3 trillion dong in the first half of 2021, more than double the previous year. Pham Nhat Vuong recently told local media that further losses in the automotive sector are expected in the near term.

The company's future is currently focused on the electric vehicle business, launched in late 2021. Le Thi Thuy, Vingroup Vice President and CEO of VinFast Global, recently said that Vinfast will officially become a 100% electric car company by the end of 2022, definitively ceasing the production of petrol vehicles. Around 35,000 electric vehicles were ordered at the beginning of January, including orders from Western markets. The goal is raising $ 1.5 billion through bonds and strengthen its electric vehicle business with a new lithium-ion battery plant. The five-year dollar-denominated bonds will help finance the automotive unit that Vingroup hopes to list in the United States. It has already invested $ 5 billion in this sector. The issue of international bonds is expected in the first quarter of this year. VinFast has just unveiled five electric vehicles at CES 2022 in Las Vegas, an important debut that intends to develop a sales network in the United States and Europe. Delivery of the first two electric vehicles, the VF 8, and the VF 9, is expected by the end of the year. In December, VinFast began sales of its electric vehicles in Vietnam, becoming the first national car company to sell EVs in the country. The Vietnamese giant is thus preparing to face an increasingly competitive market. By entering the electric vehicle market before the pecking order is firmly established, Vingroup aims to carve out a strategic position that will drive its future actions.

Nguyen Thi Phuong Thao, the richest businesswoman in Vietnam

Among the “100 Most Powerful Women in the World”, Nguyen Thi Phuong Thao revolutionized the air travel industry in Vietnam.

Nguyen Thi Phuong Thao is Chairwoman of Sovico Group, Standing Vice Chairwoman of HD Bank, Founder and CEO of VietJet Air. She made history in a traditional male-dominated business, becoming the only Vietnamese woman to have started and run a low-cost airline.

VietJet – selling flights for under $ 50 – is the reason why millions of Vietnamese have boarded a plane for the first time in the past decade, forever revolutionizing the aviation industry in Vietnam. With this success, she became Vietnam's first billionaire and Southeast Asia's richest self-made woman. Forbes sets her wealth at $ 2.5 billion, which originates from real estate, beach resorts, energy projects and other Sovico holdings, in addition to the banking sector.

Thao was born in 1970 in Hanoi into a wealthy family. She grew up in the Cold War social context of the Vietnamese who moved to the old Soviet bloc, where she earned three degrees. With her distinctive rimless glasses and short bangs, Thao is defined by colleagues as a workaholic who often works until late at night. Mother of three, Madame Thao runs a business empire with her husband, always maintaining a busy schedule.

Her airline, launched in 2011, is now larger than the national airline Vietnam Airlines in terms of passengers carried. It grew up in part through a bold service: bikini-clad flight attendants for flights to beach vacation destinations. A risky stunt that resulted in a fine from the government but got VietJet free advertising all over the world and, more importantly, sold tickets.

From a handful of domestic routes at launch, VietJet has expanded to cover more than 120 destinations. Positioned from the beginning as a regional and international carrier, Thao has outlined a very precise strategy: the expansion into all ASEAN markets within a radius of 2,500 kilometres, so that it can create worldwide bases that cover half of the world population. The company would already be in talks with partners across the region to expand outside of Vietnam. Thao's goal is to make history a second time by transforming VietJet into Vietnam's first global airline. “If we establish an airline in Europe, we can fly to any country. With our aircraft, costs, handling capabilities, and providing new services, I am totally confident that we can compete in other markets, in Europe or the US,” said Thao.

In 2017, VietJet debuted on the Ho Chi Minh City Stock Exchange with a market capitalization of $ 1.4 billion. In 2018 it carried 23 million passengers, accounting for 46% of Vietnam's passenger market. Although this number represents about half of the passengers AirAsia – Asia's leading budget carrier – carried in 2018, Vietjet has grown the fastest. The company's shares have more than doubled since its 2017 IPO, reaching a market value of $ 3 billion, the second biggest in Southeast Asia, after Singapore Airlines.

In recent weeks, a donation – 155 million pounds – from the Thao holding to a college at the University of Oxford has provoked mixed reactions. After this grant, Linacre College, which specializes in postgraduate courses, will become Thao College. The MOU between the two institutions was signed during Thao's visit to the UK to coincide with the UN's COP26 climate summit. VietJet, which has an ambition to expand into Europe, also signed a $ 400 million jet engine deal with Rolls-Royce on the sidelines of the summit.

On and off social media, some Vietnamese have appreciated the charity initiative. Others have questioned the reason for donating to a country that has 14 times the average income of Vietnam, doubting on sending such a sum out of the country, which has strict capital controls. A post on the government website claimed that £ 7.5 million of the donation will fund scholarships for Vietnamese and others in the region. Voices from academia have also expressed concerns about the renaming of an entire college within the federated Oxford system, as this action could suggest what might be for sale at Oxford. Linacre College said it received little funding compared to other Oxford institutions, defining the donation - agreed as part of a memorandum of understanding with Sovico - "transformative".

Thao is well known for her various philanthropic initiatives over the years and believes in a corporate culture with strong social responsibility for sustainable development. Strongly impressed with the academic environment of the University of Oxford, Madame Thao said Oxford is the right place to make her contribution to humanity through education, training, and research. This partnership will also serve to pursue one of VietJet's most important objectives, the reduction of carbon emissions. The Sovico Group, a founding partner of VietJet, is committed to ensuring that all its subsidiaries reach net zero carbon by the end of 2050 with the support of leading Oxford academics.

How Vietnam has become a crucial market for the EU

Vietnam is a case history in Southeast Asia. With political and economic successes, it has gained the trust of the EU and is preparing for the global stage

Vietnam is the flagship of Southeast Asia. The difficult years of decolonization seem a remote past. Today, Hanoi has a prosperous economy, stable political institutions and an effective international projection that has led it to sign important trade agreements. 2020 was a challenging year for everyone, but not for Vietnam, which was able to effectively prevent and contain the coronavirus pandemic (even if a new wave is now underway in the country) and then restart economically. Vietnamese economy grew by 2.9%, better than anyone else (including China and Taiwan) in Asia.

The confidence in multilateralism and the activism shown during the ASEAN presidency (which led, among other things, to the conclusion of the agreement on the Regional Comprehensive Economic Partnership) earned it the attention of the international community and the trust of the financial markets, especially the European ones.

Last winter, the outcome of the 13th Congress of the Vietnamese Communist Party summarized the dynamics underway. As noted by analysts, usually Communist Party congresses do not usually thrill the financial markets, but this year was an exception. The launch of an infrastructure development plan attracted foreign investors and projected the allocation of 119 billion dollars, as well as the commitment to increase the contribution of the private sector to the GDP growth from 42% to 55% by 2025. The free trade and investment protection agreements signed with the EU in 2019 are included in this scenario. According to Secondo Dezan Shira & Associates, there has been sustained growth in the flow of European FDI into Vietnam. This has been possible thanks to the revision of the normative environment that has welcomed more international players, thanks to greater protection on intellectual property and the increase in the maximum foreign shareholding in commercial banks from 30% to 49%.

In general, Vietnamese commercial turnover has grown dramatically over the past 10 years. The fastest-growing industries are heavy industry and mining, which generated $ 57.58 billion in exports - a volume up 33% from last year, followed by the light and craft industries (27.5%) and agriculture and forestry (8.8%). The EU is Vietnam’s third-largest export destination, with $ 12.6 billion in entry - up 18.1% year-on-year. As Vietnam Briefingreports, the main EU exports to Vietnam include high-tech products, machinery and electrical equipment, aircraft, vehicles and pharmaceuticals. Conversely, the main Vietnamese exports to Europe are represented by telephone equipment, electronic products, footwear, textiles and clothing, coffee, rice, seafood and furniture. In this regard, a high amount of FDI in Vietnam comes from Italian companies, namely in the fields of the pharmaceutical, transport, machinery and food products industry. Here, the Italian economic system would have broad opportunities for growth, particularly in sectors with a high level of specialisation.

The path towards economic liberalisation has not been linear. The Socialist Republic of Vietnam has often followed the footsteps of China, starting with the economic reforms inaugurated around the 1980s, and was inspired by the experience of its socialist neighbour in defining productive structures: a growth model based on heavy industry, a communist political philosophy, low labour and land costs that now support high exports. All these elements make Vietnam the worthy heir to the so-called "Chinese model", but Hanoi has its own vision of the future.

The national leadership has been able to carve out a certain autonomy in the regional geopolitical context. Through enviable diplomatic balancing skills, he dodged the flattery of former US Secretary of State Mike Pompeo while remaining firm with China on matters concerning the South China Sea. Thanks to its strategic role, Hanoi has avoided US sanctions, despite allegations of currency manipulation. Moreover, Vietnam was indirectly involved in the commercial tension between Washington and Beijing, benefiting from the re-localization of some multinationals that moved from southern China to more favourable political and commercial contexts. Compared to Beijing, Hanoi adopted an assertive but responsible approach, proving that the leadership’s projects aim at carving out an autonomous space within the regional context.

Not surprisingly, Vietnam is becoming the EU target market in Southeast Asia. Despite these similarities with the Chinese model, Hanoi’s attitude has proved to be more easily integrated with the context of multilateral cooperation with the EU. With respect to human rights and workers' rights, there are some grey zones, not fully protected by a centralist regime that does not admit clear dissent. But in trade and geopolitical terms, Vietnam has proved to be a stable and reliable regional partner, though uncertainties remain, from the coup in Myanmar to the positioning of the Philippines.  

The current growth of the EU's FDI in Vietnam seems to be just the beginning. If even the contingencies of the pandemic did not hinder its progress, one has to look even more carefully at the future developments of this emerging Southeast Asian economy.

L’ambiziosa transizione tecnologica del Vietnam

Il Vietnam lancia la Strategia nazionale sull’intelligenza artificiale, inaugurando una promettente transizione tecnologica che conferma il suo ruolo di punta tra le economie ASEAN

Il Primo Ministro vietnamita Nguyễn Xuân Phúc ha emanato la Strategia Nazionale su Ricerca, Sviluppo e Applicazione dell’Intelligenza Artificiale (AI) per il 2030. Dopo le straordinarie prestazioni nell’affrontare la crisi sanitaria dovuta alla pandemia, il Vietnam rilancia il suo ruolo nel Sud-Est asiatico, determinato a divenire centro propulsore per l’innovazione e lo sviluppo dell’intelligenza artificiale. Il piano è stato lanciato il 17 marzo 2021 in vista della convocazione dell’Assemblea nazionale – i cui lavori si tengono dal 24 marzo all’8 aprile 2021. L’Assemblea, la prima dopo il 2016, ha l’obiettivo di raccogliere i risultati positivi degli ultimi anni che hanno visto il Vietnam attestarsi tra le economie asiatiche più performanti del 2020, e di rilanciare il programma di sviluppo per i prossimi cinque anni.

La Strategia è infatti in linea con i programmi di modernizzazione annunciati nell’ambito del XIII Congresso del Partito Comunista vietnamita. L’ambizioso programma di sviluppo verrà promosso all’insegna del motto “solidarietà, democrazia, disciplina, creatività e sviluppo”, e la sua implementazione dovrebbe guidare la rotta del Vietnam verso la modernizzazione e la digitalizzazione prefigurate dalla nuova leadership. La promozione del piano Industria 4.0 rientra infatti in un progetto di ampio respiro che coniuga questioni di sviluppo socio-economico e sicurezza ad aspirazioni strategiche di rilevanza globale, oltre che regionale. 

Dal punto di vista della politica interna, l’intelligenza artificiale è considerata, a ragione, una tecnologia chiave per l’aumento della produttività del settore pubblico e per il rafforzamento della sicurezza nazionale. La Strategia si declina perciò in due ordini di obiettivi, quelli di breve termine da implementarsi entro il 2025 e quelli di medio termine per il 2030, anno di celebrazione del centenario del Partito Comunista del Vietnam. La roadmap prevede, tra le altre misure, l’affermazione di 10 marchi e servizi di AI entro il 2030 e la costruzione di tre centri di archiviazione di big data nazionali per uniformare l’accesso di aziende al computing e ad altre prestazioni. Inoltre, nel realizzare questo ambizioso programma, la leadership vietnamita delega a ciascun ministero l’implementazione di varie misure, che spaziano dalle responsabilità tecniche affidate al Ministero della Scienza e della Tecnologia, a quelle riguardanti le risorse umane delegate al Ministero dell’Istruzione e al Ministero dell’Informazione e della Comunicazione: ciascuna articolazione statale trova il proprio posto nella dettagliata Strategia 2030.Quello dell’AI è un settore dall’enorme potenziale per il Vietnam. Secondo la Banca Mondiale, grazie alla sua profonda integrazione con l’economia globalizzata, il Paese ha dimostrato una straordinaria resilienza alle conseguenze economiche del Covid-19, che hanno lasciato in ginocchio molte altre economie internazionali. E’ stato uno dei pochi Paesi a non subire una recessione, avendo vantato un tasso di crescita del PIL che è oscillato tra il 2% e il 3% nel 2020, e per questo è tutt’ora uno dei mercati emergenti più promettenti nel Sud-Est asiatico. Questo rinnovato impegno nel settore dell’intelligenza artificiale conferma il ruolo centrale del Vietnam tra le economie ASEAN, e dimostra come il Paese – la cui leadership ha dato priorità a crescita economica e stabilità –  abbia anche per investitori e imprenditori stranieri un grande potenziale in attesa di essere sviluppato.

Vietnam confirms its leadership

The XIII Congress of the Vietnamese Communist Party discusses the transformation of Vietnam into a great international power

2021 will be an important year for understanding the direction the Southeast Asian countries will take in the future, which appears uncertain now more than ever. Vietnam makes no exception and, against all odds, concludes the year of the pandemic with a growth in the economy of almost 3%, by showing an exemplary management of the health emergency. In this context the XIII Congress of the Communist Party of the Socialist Republic of Vietnam took place, which ended on February 2nd, after the appointment of the main party organs.

Vietnam has what is informally called a "four-pillar" political structure, which includes as many dominant leadership positions: the General Secretary of the Party, the President of the State, the Prime Minister and the President of the National Assembly. Since 2018, however, following the sudden death of President Tran Dai Quang, the positions of Secretary General and President of the State have been combined into a single pillar.

At the end of the Congress the figure of Nguyen Phu Trong emerged, reconfirmed for the third time as Secretary General and President for the new 2021-2025 term, becoming the longest-serving party leader in the history of Vietnam. The re-election of the 76-year-old former Secretary General came as a surprise to everyone, first of all for Trong himself, who supported instead the appointment of his colleague Tran Quoc Vuong. However, as the National Congress later declared, the choice fell on a figure already known and able to ensure stability for the party and the country in a time of profound global uncertainty, among a pandemic crisis and an economic recession. However, it remains possible that Trong resigns during his new term if a suitable candidate is found to fill the position.

The second notable name within the Vietnamese political landscape is Nguyen Xuan Phuc, reconfirmed once again as Prime Minister. Nguyen Thi Kim Ngan, head of the National Assembly since 2016 and the first woman to hold this position, remains in power.

Through the words "Solidarity, Democracy, Discipline, Creativity and Development", the National Congress has set itself the goal of elaborating, on the basis of the resolutions approved in the past years, the new guidelines that will direct the Party's action over the next term. A number of topics were examined, including the leadership skills of the members of the Politburo, the transparency of the political process and people's trust in the Party, in the State and in the socialist ideology. Furthermore, in the current emergency situation, the Party will undertake to seek the prosperity of the country and the happiness of its citizens, promoting solidarity and national unity. The objectives of industrialization, modernization, national security and the creation of a stable and peaceful environment in the Southeast Asian region, as well as the transformation of Vietnam into a great international power oriented towards socialism, remain at the fore. As for the implementation of the plan, the XIII National Congress has elaborated a complex of 12 strategic directions for national development in the 2021-2030 term. In this regard, the need to strengthen - and build, if they were not already present – institutions, in order to encourage the sustainable development of Vietnam, the socialist market economy, industrial transformation, emerging enterprises and digital transition has been highlighted. Furthermore, important changes are required in the area of education and training of qualified human resources. The Head of State, then, recommended: to stimulate human progress in all its facets, without neglecting the Vietnamese cultural identity; to fight vigorously against climate change, natural disasters and epidemics; to prevent conflicts, safeguard sovereignty and territorial integrity; to exploit the earth's natural resources and improve the quality of the environment; and finally, to implement a foreign policy characterized as much by independence and self-determination as it is dedicated to strengthening multilateral relations and integration into the international community.

But there is more. Long-term goals are also foreseen, such as transforming Vietnam into a modern upper-middle-income economy by 2030 and achieving a high per capita income by 2045. Certainly, ambitious goals, but also likely to happen for a State that shows steady GDP growth, despite adversity. Not to forget the interpretation offered by President Trong, according to whom all of this becomes achievable only through love for the homeland, resilience and national unity.

Vietnam is the new Asian locomotive

Despite Covid-19, Vietnam's economy thrives and records the best economic growth of 2020 in Asia

Vietnam confirms itself as the Asian economy with the best performance of 2020, as well as one of the few to have been only marginally affected by the economic crisis. Thanks to the successful fight against the Covid-19 pandemic, the Asian country was one of the very few nations in the world to register GDP growth in the past year, thus ensuring, in 2021, an advantage over regional and global competitors.

The health emergency has drained the economies of much of the world, nonetheless Vietnam has successfully managed to contain the spread of infections, with a total of slightly over 1,800 cases and just 35 deaths to date. Much lower numbers than what we are used to, especially considering Vietnam has a population of almost 98 million people. Building on previous epidemiological experiences, such as the 2003 SARS, the Vietnamese government was able to quickly implement a detailed emergency plan, weeks before other nations considered taking any measure. The borders with China were rapidly closed and, in addition to the restrictions on international transits, the government ordered rigorous monitoring of the infections, starting a scrupulous tracing of the spread of the virus. All these efforts have largely paid off and have allowed the country to record an economic growth of + 2.9% compared to 2019, which is even higher than the Chinese growth rate in the same period. The timely response to the pandemic has also helped to attract a large share of foreign direct investment and to increase the import-export sectors.

In the latter area, the expansion of the Vietnamese economy is largely driven by the numerous trade agreements concluded in 2020. The free trade agreement signed with the European Union, which entered into force in June last year, was followed by the Regional Comprehensive Economic Partnership (RCEP), which created the largest trading block in the world with 15 Asian economies. Furthermore, due to Brexit, the Asian country has signed a new free trade agreement with the United Kingdom, replacing the one previously ratified with the EU. Finally, Vietnam has signed bilateral agreements with Japan and South Korea and joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership together with other Pacific nations.

Even the services sector, which was most affected by the pandemic, managed to recover in the last quarter of 2020 and, despite a natural contraction in tourism for 2021, analysts calculated a drop in GDP only of 1, 5% lower than the potential if the health emergency had not occurred. 

Despite the unfavorable circumstances, therefore, a rather bright future seems to be looming for Vietnam. The British consultancy Center for Economics and Business Research (Cebr) has in fact estimated an exponential growth for the Asian state, which would establish itself as the 19th world economy by 2035. With a potential increase in GDP of 7.7% in the next 10 years and of 6.6% in the following years, Vietnam should be able to easily overtake other regional powers.

These development goals were highlighted during the 13th Congress of the Communist Party, which ended on Sunday 31 January with the re-election for the third term of Nguyen Phu Trong as General Secretary of the Party. The Congress defined Vietnam's economic-political trajectory for the next five years, pushing for the improvement of the country in terms of scientific and technological development.

Reasonably, the economic growth will go hand in hand with the achievements on the international stage. In this context too, 2020 was a positive year for Vietnam; it gained greater visibility in foreign relations by holding the Presidency of ASEAN and it was selected as a non-permanent member of the United Nations Security Council for the two-year period 2020-2021, successfully carrying out all international duties. With regard to the Presidency, Vietnam has promoted the reactivity of the Association, limiting the damage of the pandemic and ensuring, at the same time, the elaboration of the agenda set for 2020. But, among the greatest successes that Hanoi can boast, there it is undoubtedly the drafting of a United Nations resolution for the establishment of the International Day of Epidemic Preparedness, set for December 27th. To sum up, among diplomatic and commercial accomplishments, Vietnam proudly closes one of the worst years in history.

A third way for the EU and Vietnam

How and why the Free Trade Agreement marks a turning point in their diplomatic relations

“Trade agreements offer our companies a chance to access new emerging markets and create jobs for Europeans. I strongly believe that this agreement will also become an opportunity for people of Vietnam to enjoy a more prosperous economy and witness a positive change and stronger rights as workers and citizens in their home country.”

These words were used by the President of the European Commission Ursula von der Leyen to comment on the entry into force of the EU-Vietnam Free Trade Agreement (EVFTA) on Aug.1st, 2020. The agreement was defined as the most comprehensive trade agreement the EU has concluded with a developing country. It will ultimately scrap duties on 99% of all goods traded between the two sides by ten years. The agreement, however, represents a turning point not only for economic relations but also for diplomatic ones.

EU-Vietnam diplomatic relations officially began in 1990. It was just a few years after Vietnam’s shift towards a market-oriented economy through the Đổi Mới economic reform (lit: “restoration”). Scholars Nguyen and Mascitelli call this period “befriending each other”, but in practice, it was a one-direction approach: the EU began this relationship by providing humanitarian relief and supporting sustainable development projects. At least until 2006, when the Vietnamese economy began to grow rapidly. Trade and economic relations became far more important than aid in this second phase, which is called “strengthening the friendship”. In this period Vietnam joined the WTO (2007) and began negotiating the Agreement with the EU. Today, the EU is the fourth’s biggest trading partner of Vietnam. Vietnam is the EU's 17th trade-in goods partner,, and the EU's second-largest trading partner in the Association of Southeast Asian Nations (ASEAN). Moreover, with a total foreign direct investment stock of €6.1 billion (2017), the EU is one of the largest foreign investors in Vietnam.

Not only for Vietnam but also other South East Asian countries, China’s claims in the South China Sea are a sensitive issue. None of them dares to balance against China today: partly because of the fear to lose economic benefits offered by China’s Belt and Road Initiative; partly because they can’t seem to find an assertive ally in the US. In this context, a closer relationship with the EU would provide Vietnam with a “third way” to keep growing economically. And at the same time, Vietnam wouldn’t be forced to align with China or the U.S. to survive economically, in case the conflict in the region between the two should escalate. 

2020 has been an important year to strike the deal with Vietnam. In fact, in 2020 the country held the Presidency of the ASEAN Regional Forum. Hanoi called for the region to be “Cohesive and Responsive” in reaction to the threats posed by the new global challenges. This approach is likely to lever a common alignment in diplomatic relations with the EU too.

From the EU’s perspective, the agreement paves the way for future agreements with other ASEAN countries. It follows that in the antagonisms between two big powers, the US and China, the ASEAN countries emerge as a key partner for the EU. Not only for trade but also for strengthening the EU sphere of influence in the region. On Sept. 20th, 2020, in the official press release, even the EU High Representative Josep Borrell reiterated that strengthening the EU-ASEAN partnership is an urgent necessity.

2020 has not been a key year for Vietnam only. In 2020 the EU discovered the urgent need, spotlighted by the Covid-19 crisis, to diversify the supply chain and make its productive system stronger. Until now, the EU’s supply-chain has been too dependent on a single country. When China shut down factories, the entire Union had suddenly no way to maintain its productivity. Plans are now to present a strategy to reduce the vulnerability of core industries to potential disruptions in trade flows. In this context, Vietnam is a precious ally. This because Vietnam already emerged among other partners as a valid alternative at the beginning of trade tensions among Washington and Beijing. Today, it is one of the favourite destinations for European companies Foreign Direct Investments (FDIs). Especially Italian companies are active in transferring productive capacities from China to Southeast Asia: Vietnam represents the best option possibile in the region thanks to the attractiveness of its economic system. And this trend is likely to continue in the future.

With the official ratification, happened this summer, it can be stated that a new phase in diplomatic relations has started: “mutual support”, or need from each other. From humanitarian assistance, to trade and economic relations, to finally geopolitical strategy in times of US- China rivalry and the emergence of new geopolitical forces. If spent properly, the agreement is an opportunity that could turn into an impressive strategic alliance. 

Off on the Phad Thai foot

Southeast Asia is increasingly establishing itself in Italy and Europe thanks to its rich culinary offer.

“Don't eat anything your great-great grandmother wouldn't recognize as food” said the American writer Michael Pollan. Who better than Italians, always ready to criticize any foreign dish, to agree? And yet, in the latest years Southeast Asian cuisine is overcoming geographical boundaries and winning over even the most sceptical hearts. Not only are countless Thai and Vietnamese restaurants opening all around Italy, but even new TV series are being made to portray the scents, taste, and colours of Asian dishes. But which are the most popular in Europe and Italy today, that even your great-great grandmother would be fond of?

One could fill lots of book trying to illustrate the richness and variety of ingredients in Vietnamese cuisine, and it still wouldn’t be enough. When France colonised Vietnam and its neighbours in 1887, it formed the Indochinese Union and heavily influenced this region’s cuisine. But before that, the culinary heritage of Vietnam was influenced by China, which provided a fundamental contribution to the birth of Vietnamese popular dishes. Wontons, wheat noodles, chili peppers and corn can be found in both countries’ culinary heritage. When the French arrived, the ingredients list expanded to include potatoes, asparagus, onions, coffee, and many others. And today, two of the most beloved typical Vietnamese dishes both by locals and Europeans are the outcome of French influence!

The first one is Bánh mì, a delicious baguette-shaped bread made with rice flour instead of wheat flour. Fillings can be very fancy, but the most cherished one is a combination of grilled meat, coriander, pickled vegetables and sauces. The second dish is the world-renowned Pho: a soup of Vietnamese rice noodles and meat broths. It is common belief that the word Pho (pronounced fuh) derives from the French pot au feu (stew). The presence of beef meat, rarely seen in other typical Asian dishes, is further evidence of the influence left by the French colonisation.

As far as Thai cuisine is concerned, the birth of new Thai restaurants everywhere in Italy (not only in Rome and Milan) is a clear sign of its increasing success. Besides the classic Phad Thai (stir-fried rice noodles with vegetables, eggs, roasted peanuts, fish sauce, tamarind juice, garlic, chilli pepper, lime and palm sugar), there are many more creative combinations of flavours that are winning hearts in the West to the extent that Thai Massaman curry, the “king of curry”, was awarded first place in the CNN’s “The world's 50 best foods” list. The reason? “Even the packet sauce you buy from the supermarket can make the most delinquent of cooks look like a Michelin potential”.

While it is still hard to find Indonesian or Singaporean restaurants in Italy, the interest toward Southeast Asian countries’ cuisine seems to be a fast-growing trend. Suffice it to say that many other dishes in the aforementioned list come from ASEAN countries. Even Netflix, the media giant always very careful about its viewers’ needs, own two series that frequently portrait the cuisine in Bali, Yogyakarta, Cebu, and other Southeast Asian locations: Street Food Asia and Chef’s Table.

All encouraging signs that show once again the increasing interest in ASEAN countries’ history, traditions, and rich culinary offer in Europe and worldwide.

By Valentina Beomonte Zobel

New prospects and future opportunities for trade in Vietnam

The EVFTA paves the way for new investment opportunities for European countries and companies

Once again, the COVID-19 pandemic does not hinder moments of dialogue and discussion about new agreements with ASEAN countries. On the 8th of October, the webinar "Vietnam: the new trade agreement with the EU and opportunities for Italian companies" was held, organized by Assolombarda in collaboration with the Italy-ASEAN Association, in light of the entry into force of the Free Trade Agreement between the European Union and Vietnam. 

Indeed, following the experience of the pandemic, it is increasingly clear that international cooperation is now a valid and effective solution for the economic recovery of states. This is the case of the EVFTA, which significantly improves dialogue between the European and Vietnamese institutions. The agreement guarantees a number of opportunities to companies that decide to look towards Vietnam from Europe and that are willing to join new market segments within an area of increasing economic vitality. Actually, the country plans to grow by 2.7% in 2020, preventing the possibility of a recession, unlike many other developing countries that after years of continued growth, instead, will register a negative sign this year. In the context of geopolitical and trade tensions between China and the United States, Vietnam has become the preferred destination of many companies, including Chinese ones, which in doing so are able to sidestep Washington’s tariffs. 

Specifically, the new legislation over customs offers Vietnam consistent tariff concessions compared to other agreements. In this regard, the Director of the Vietnam Chamber of Commerce and Industry (VCCI), Thu Trang Nguyen, highlighted the advantages of the commercial arrangement compared to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP). The European Union has eliminated 85.5% of tariff lines towards Vietnam compared to 78%-95% guaranteed by the CPTPP. At this rate, by 2027, almost all products of Vietnamese origin exported to the EU will be taxed at 0%, with the exception of the so-called "sensitive goods", such as food and tobacco. These are ambitious trade targets for the EU and Vietnam, unlike the CPTTP, which takes about 10 years to generate the same effects. The agreement includes technical rules regarding the new customs norms and introduces tools that guarantee the fluidity of trade through the valorization of economic integration and the promotion of sustainability and the circular economy.

In tal senso, il Paese sta facendo passi da gigante nel settore energetico, potenziando e incentivando l’uso delle fonti di energia rinnovabile, come ad esempio le cosiddette “solar farms” che provvedono a soddisfare le esigenze energetiche garantendo un impatto minimo sull’ambiente. Il Vietnam intende, infatti, rilanciarsi da subito su questo fronte mirando ad un aumento della percentuale di energia solare ed eolica dal 10% attuale al 15%-20% entro il 2030 e al 25%-30% entro il 2045.

Si tratta di elementi che fanno ben sperare circa il futuro del Vietnam. Il Paese presenta ad oggi grandi potenzialità sulla scena economica internazionale e l’accordo pone finalmente le basi per una sempre migliore cooperazione bilaterale. L’EVFTA procede quindi in linea con gli altri accordi conclusi dalla UE negli ultimi anni e dovrebbe favorire la rapida ripresa economica del Vietnam, rendendolo una delle mete favorite per gli investimenti esteri e per il commercio di beni e servizi. Ad oggi, la crisi innestata dalla pandemia continua a porci di fronte ad un futuro incerto ed offuscato ma, attraverso accordi commerciali di questo calibro e migliorando la cooperazione internazionale, la ripresa potrà essere rapida e sostenibile.

By Hania Hashim

EU-Vietnam Free Trade Agreement: Benefits and opportunities

The FTA has finally been ratified by the EU and Vietnam. What are the implications for Italy?

The European Council approved on March 30th the Free Trade and Investment Agreement (FTA) between the EU and Vietnam. Today, also the Vietnamese National Assembly ratified the agreement, finalizing the procedure. This is the most ambitious trade agreement the EU ever set up with a developing country, offering significant advantages for European and Italian businesses in South-East Asia. After Singapore in November 2019, the EU-Vietnam FTA is the second agreement between the EU and an ASEAN country.

According to the EU Commission, exports from the EU to Vietnam could increase by 29% in 2035, with an estimated value of more than 8 billion euros. As a consequence, the agreement is expected to boost the creation of more than 110.000 jobs in the EU. These significant numbers will be achieved thanks to an initial 65% reduction in Vietnamese tariffs on EU products, that will be followed by an almost complete removal in 10 years from now. Other relevant points for the EU in the agreement are: the reduction of non-tariff barriers, by adopting European and international norms; an unprecedent access for European industries to the Vietnamese public procurement and services market; the ratification of international norms in regard to labour rights and environmental sustainability.

With regards to Italy, the agreement could prove to be extremely beneficial. Data provided by ISTAT and Confindustria reveal that until now Italy has a trade deficit with Vietnam: in 2018, the country imported goods for 2,5 billion euros, while it exported goods for just 1,3 billion. One of the reasons is definitely the high percentage of Vietnamese tariffs on European products, that creates obstacles also for the 4.400 Italian companies exporting to the Vietnamese market (mainly SMEs). By eliminating trade barriers and developing commercial ties with Vietnam, the agreement could bring significant benefits to some crucial sectors of the Italian market, namely the mechanical, automotive, textile, pharmaceutical and agri-food sectors.

Denomination of origin and geographical indication, which is crucial for Italian export, are also included in the agreement. 169 European Geographical Indications are protected, and among these 38 are Italian. The list includes Modena Balsamic Vinegar, Asiago and Gorgonzola cheese, Grana Padano, Bresaola della Valtellina, Campanian Mozzarella di Bufala, Prosciutto di Parma and San Daniele, Prosecco, Franciacorta, and others. The list is subject to continuing revision and potential extension.

Those listed above are just some of the potential benefits for Italy, the EU and Vietnam, that prove the importance of international trade. The FTA brings important benefits and offers interesting opportunities at a time when trade is suffering the dramatic consequences of the Covid-19 crisis. The hope is that this agreement will represent a useful precedent for other negotiations between the EU and South-East Asian countries.


Article edited by Valentina Beomonte Zobel.

Il momento del Vietnam

Nonostante la guerra commerciale tra USA e Cina e l’impatto della pandemia, il Vietnam si candida ad assumere un ruolo di spicco in questa nuova fase

Con una popolazione giovane e dinamica e attraverso una serie di riforme strutturali significative, negli ultimi decenni il Vietnam ha vissuto una crescita rapida e costante. A dispetto di crisi domestiche e internazionali, l’economia vietnamita si è mostrata forte e solida, sostenuta da una robusta domanda interna e da un’industria manifatturiera orientata all’esportazione. L’adesione all’Associazione delle Nazioni del Sud-Est asiatico ha poi contribuito nel tempo a rafforzare la posizione del Paese, sia sul piano regionale che su quello internazionale.

Negli ultimi anni, lo scontro commerciale tra Cina e Stati Uniti ha generato effetti collaterali che hanno interessato gran parte delle catene di valore regionali e globali. Per aggirare le tariffe e contenere i costi di produzione, diverse aziende hanno cominciato a trasferire le attività produttive dalla Cina ad altri Paesi della regione e in particolare del Sud-Est asiatico. Tra questi, si è distinto il Vietnam che, grazie alla competitività della sua economia, è stato in grado di attirare flussi di investimenti consistenti. Secondo diversi esperti e analisti, sembra proprio che in termini commerciali il Paese sia uno dei maggiori beneficiari dello scontro gli Stati Uniti e Cina.

Il 14 maggio l’Associazione Italia-ASEAN ha organizzato un webinar sul tema del Vietnam e della sua risposta all’emergenza sanitaria con l’Ambasciatore d’Italia in Vietnam, Antonio Alessandro, e il Direttore Generale per le Relazioni Internazionali delle Province del Vietnam, l’Ambasciatore Nguyen Hoang Long. L’obiettivo era quello di fare un punto della situazione in Vietnam alla luce della recente crisi economica e sanitaria.

Oggi infatti, data la profonda integrazione con l’economia globale, il Vietnam è  stato duramente colpito dalla pandemia di Covid-19. In termini di danni subiti dall’economia, il crollo del turismo, il calo della Borsa e la parziale interruzione delle catene di valore hanno fortemente danneggiato le attività economiche nel Paese. Tuttavia, l’impatto sanitario della pandemia non è stato così grave in Vietnam come in altri Paesi, grazie a diverse misure proattive che le autorità hanno messo in campo per affrontare l’emergenza. Sul piano sanitario, la capacità del governo di agire con prontezza per isolare i casi positivi, tracciare i contatti e attuare quarantene selettive, ha dato i suoi frutti. Nel Paese i casi di Covid-19 sono meno di trecento, con una mortalità pari a zero, e solo pochi casi gravi. Le autorità vietnamite, che hanno anche ricevuto gli apprezzamenti dell’Organizzazione Mondiale della Sanità, sono state in grado di fornire una risposta repentina e completa, che ha messo il Paese nelle condizioni di contenere l’impatto sanitario del virus e limitare gli effetti sul piano economico. Nonostante il Fondo Monetario Internazionale stimi per il Vietnam una crescita del 2,7% nel 2020, il governo vietnamita punta ancora a raggiungere l’obiettivo di crescita del 5% con un’ambiziosa strategia di rilancio, mirata a stimolare il consumo interno, attirare investimenti esteri diretti e sostenere l’esportazione di beni ad alto valore aggiunto.

Nonostante l’impatto della pandemia dunque, Il Vietnam si candida a svolgere un ruolo di primo piano nel contesto regionale e internazionale in questa fase incerta. La Presidenza temporanea dell’ASEAN, il seggio non permanente nel Consiglio di Sicurezza delle Nazioni Unite e l’entrata in vigore degli accordi di libero scambio con l’Unione Europea ad agosto mettono il Vietnam nelle condizioni ideali per continuare a sostenere lo sviluppo economico, politico e sociale del Paese nel breve e nel lungo periodo.


Article edited by Tullio Ambrosone.