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@example.com, visit www.dezshira.com, or download the firm’s brochure here.