Trade between Vietnam and Italy has shown resilience amid the global uncertainties. What key trends have shaped bilateral trade over the past year, and which sectors are seeing the strongest growth?

Trade between our two countries has evolved in an amazing way. If you take, for instance, 2019 -prior to Covid-19 - revenue was about $5.3 billion, while in 2024 it had grown to $6.9 billion. Looking at the growth between 2023 and 2024, it was about 13 per cent, which is a significant increase.

Vietnam is one of our key partners, not just our primary market in ASEAN but also one of the most dynamic markets globally.

A major key factor behind this is the gradual elimination of tariffs through the EU-Vietnam Free Trade Agreement (EUVFTA).

In terms of sectors, we are seeing growth in machinery, pharmaceuticals, electronics, footwear, and agri-food. For Vietnam, agri-food and electronics are particularly strong exports, while for Italy machinery and pharmaceuticals lead the way.

Of course, there are many sectors growing on both sides, especially since trade today often involves processing, where a product is exported, further refined, and then sometimes re-imported or exported elsewhere as a more finished product.

How has the EUVFTA continued to influence Italy’s investment in Vietnam? Are there new Italian companies entering the market as a result?

Vietnam is increasingly seen as an attractive investment destination by Italian entrepreneurs. While the EUVFTA primarily focuses on trade, it has also helped encourage investment by streamlining the governance of trade-related matters. This clearly shows that trade and investment go hand-in-hand. For Italian businesses, the usual path is to first discover the Vietnamese market through trade, and then move towards investment.

To date, over 160 Italian companies have invested in Vietnam. 12 new Italian investments were registered last year, according to Vietnamese authorities, showing steady, ongoing growth. Some are greenfield projects, while others are expansions of earlier investments. And that’s a very positive sign: companies already here are satisfied and choosing to grow their presence.

Italy has committed €500 million ($564.4 million) to Vietnam’s energy transition through the Just Energy Transition Partnership (JETP). Could you tell us about the latest updates and how this cooperation is being operationalized?

The JETP between Vietnam and the G7 countries plus Denmark and Norway is a relatively recent but ambitious initiative. The goal is to provide funding for pilot projects that can serve as models and attract further private investment. Like Vietnam, Italy is also going through an energy transition, which is a complex and long-term process involving many factors.

The idea behind the JETP is to combine public funding, including Italy’s commitment of €500 million, with efforts to raise private capital. At this stage, the Vietnamese Government is rightly taking the lead, having set up the structure, secretariat, and project pipeline.

Among these projects, one that Italy has adopted is a pumped-storage hydropower plant in Bac Ai, Ninh Thuan province [now part of south-central Khanh Hoa province]. This plant will store energy by pumping water to a higher elevation during low-demand periods and releasing it to generate electricity during peak times. It’s a sustainable, smart model that we hope can be replicated elsewhere in the country.

Beyond the JETP, Italy also has expertise in other energy-related areas that align with Vietnam’s National Power Development Plan VIII (PDP8). These include energy for transport, sustainable agriculture - which is a major global emitter of greenhouse gases - and hydrogen, where Italy has significant know-how to share.

Looking ahead, we are working closely with Vietnamese authorities to expand the number of joint projects. We are also pleased that the Ministry of Industry and Trade, which oversees the JETP in Vietnam, has just launched a website to promote future opportunities and ensure transparency.

What potential do you see for Vietnam and Italy to jointly develop sustainable supply chains and promote circular economy practices?

That’s another sector where we can work together, and in fact we already are. For instance, through our Agency for International Cooperation (AICS) - the Italian Government’s development aid agency, which has an office here in Hanoi - we are implementing an EU-funded project on the circular economy in agriculture. We look forward to participating in other similar initiatives.

What sectors hold promise for Italian investors in Vietnam?

First of all, I think there’s a general rule: the sectors that are interesting for Italian investors are those where Vietnam has already developed a comparative advantage. That’s the key concept.

The second rule is about sectors where Vietnam manages to position itself not only as a domestic market but also as a regional platform. From Italy’s perspective, Vietnam is seen as a strategic hub for ASEAN and Southeast Asia, and those are the sectors where we want to engage.

Italian entrepreneurs and businesspeople are looking at Vietnam through that lens. So, it’s not just about specific sectors, but rather about companies and locations where Vietnam offers both a comparative advantage and regional reach.

Of course, we’re mostly talking about manufacturing, because Vietnam is a manufacturing powerhouse. That spans from textiles to high-tech.

How can small and medium-sized enterprises (SMEs) from both countries collaborate more closely?

This is an important question because both Italy and Vietnam have manufacturing sectors that are largely driven by SMEs. In Italy, more than 90 per cent of businesses are SMEs. And that’s actually a good thing. Our SMEs are spread throughout the country, they create jobs locally, and they’re very flexible.

The key is that SMEs should aim to become international, which is, of course, challenging. So the question is: how can we cooperate effectively? I think one of the best ways is to group together, to form clusters or industrial districts. That’s a proven model for SME cooperation, and it’s the path that Italy has taken.

Now, we’re not suggesting that Italian SMEs are a model to be copied exactly, but they can serve as an inspiration. In Italy, SMEs often organize themselves into clusters based on local specialization, for example, shoes, furniture, eyewear, and so on. They share not just financing but also essential services that help them internationalize.

One of the major barriers for SMEs to go global is their small scale. Many are family-owned, with only a few managers, so it’s not easy to assign someone abroad full-time. That’s why cooperation and clustering are so important; they allow SMEs to act collectively.

In fact, Italy and Vietnam have already started cooperating in this area. Our governments have jointly set up technical centers, for example, in the textile sector and in stone processing machinery (used for marble and other materials). These centers help train Vietnamese workers to use the latest equipment and techniques. This is a practical way to support skills development in industries that are often driven by SMEs.

In light of global efforts to diversify supply chains, how does Italy view Vietnam’s role in reshaping production networks in Southeast Asia?

Vietnam is well-positioned for this ongoing redesign of global supply chains. Even more recently, despite the various challenges facing international trade and the persistent uncertainties in the global market, Vietnam continues to maintain its attractiveness.

That’s due to several factors: its strategic location, political and economic stability, the high quality of its workforce, and its strong growth rate. All of these make Vietnam a highly compelling destination for companies looking to expand and extend their supply chains.

While we’ve discussed how Italy can support Vietnam, in what ways do you see Vietnam contributing in return, perhaps even emerging as a strategic partner or a valuable source of strength for Italy in the region?

We trust that Vietnam will become an important consumer market. We see that the Vietnamese people are becoming more and more integrated into global markets, and believe there will be increasing interest in Italian products because of their quality and style. That can already be seen in fashion, furniture, and food.

We are confident that, with Vietnam’s continued growth and increasing purchasing power, this trend will accelerate. Vietnam will join other Asian countries that are already significant markets for Italian goods. And we are already seeing early signs, just look at the success of Vespa, or the popularity of Italian food and fashion.

We have so much to offer Vietnam, and I’m sure that as Vietnamese consumers become more sophisticated they will increasingly appreciate our products.

Another point I’d like to highlight is the importance of exchange. Vietnam is a fantastic destination for Italian tourists. Nearly 100,000 Italians visit every year, and that number is growing. Starting in July, thanks to Vietnam Airlines, we will have a direct flight connection to Italy, with three flights a week. I’d love to see more Vietnamese tourists traveling to Italy, learning about my country, and enjoying everything it has to offer.