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Vietnam Drawing In Italian Investors - Vietnam Briefing News

By Christian Quill

May 30 – More and more Italian investors are considering their investment options into Vietnam. According to the Italian Ambassador to Vietnam Lorenzo Angeloni, the Italian government would like to boost Vietnamese-Italian joint ventures financially. This is especially the case in joint ventures in agriculture, breeding, fisheries, food-processing, craftsmanship, and energy.

The Italian government also wants to assist some Vietnamese government projects. The priority areas for those projects are energy, transportation, waste treatment, cultural and environmental projects, microfinance, fair-trade and sustainable tourism.

One reason why Vietnam is such an attractive market for Italian companies is because of its laws. Under Article 7 of Italy’s Law 49/87 on development cooperation, Italian companies get a huge advantage as it’s possible for them to demand soft loans to build joint ventures in Vietnam. This advantage is laid down by a law to create financial resources and add capabilities through new public-private partnerships to support inclusive and sustainable development, mostly by creating jobs and local added value as a synergy with Italian cooperation activities.

Below is the general framework for a new joint venture or capital increase:

  • Local partner has to control ≥ 25 percent of capital
  • Italian partner and the local company must work in the same field of the joint venture ≥ 3 years
  • Soft loan < 70 percent of the Italian partner’s share (maximum value US$7.15 million)
  • After a period of time, the Italian part has to pay the loan to the government without any bad reason for the joint venture
  • Italian firms must be selected by the government
  • Vietnamese partners must provide realizable business plans and projects

For the embassy’s Development Cooperation Office Head Carlo Cibo it’s a great chance for both sides. For the Italian companies to come to Vietnam and for the Vietnamese firms to cooperate. At present 39 Italian projects with a total capital of US$187.7 million are registered in Vietnam (Ministry of Planning and Investment’s Foreign Investment Agency).

Additionally the Italian government has granted official development assistance (ODA) for the next three years of US$42.88 million in soft loans and US$6.43 million in grants plus another further grant of US$10.72 million because of the result of a Debt Swap Agreement confirmed in 2010. The funds are especially for the areas of health improvement, training and support to small and medium-sized enterprises and environment/environmental protection. Today there are 21 Italian ODA projects with a total worth of US$108.63 million, which will finish during the next two or three years.

Dezan Shira & Associates is boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in Vietnam. To contact the firm, please email [email protected], visit www.dezshira.com, or download the firm’s brochure here.