Italy’s Most Important Bank
Exclusive interview with the Intesa Sanpaolo Indochina Chief Representative, Mr. Tomaso Andreatta for “The Progress Time”
By Ivan De Stefano
The Italian most important bank, present in more than 40 countries, a feather in the cap that distinguishes ourselves for its solidity and its establishment on the international markets, despite the global banks crises of the latest years; for this special issue about Vietnam, by courtesy, I had the pleasure of interview a successful manager, Mr. Tomaso Andreatta, Indochina Chief Representative of Intesa Sanpaolo; he will provide us precious information about this Asian country with rich opportunities for Italy; in order to get to know Mr. Andreatta better, a focus on his career is shown below:
Soon after his Business Degree obtained in Bologna, working as Financial Analyst in Capital Markets and Management Consulting large groups, Mr. Andreatta decided to move to US, specifically in Los Angeles. After his accomplishment of a prestigious Master in Finance and Strategy at the UCLA Anderson School of Management, he came back to Italy in 1991. Other managerial roles in Santander and Hambros Bank will follow; in 1999 he arrived in the Intesa Sanpaolo group, always with an executive role. From 2007 he is Indochina Chief Representative (Vietnam, Cambodia, Laos and Myanmar) in the Intesa Sanpaolo group.
How has Vietnam changed, compared to the moment you arrived?
First time I arrived to Vietnam was in 2007 and in 2008 I moved there. At that time there were not towers in the city and the “presentable” offices were so rare that their prices were around USD 75 per square meters per month plus tax and management fee (about plus 15%). Despite high prices, for three times some companies overtook me paying large amount in cash in order to have an office where I thought to establish my bank.
When the construction of the first tower – where I established my office – finished, from my window I saw the jungle beyond the river Saigon. Shortly, skyscrapers appeared everywhere, so much that, soon, from my window on the 19th floor I will see nothing but buildings. New roads and entire districts have multiplied. Different cities are linked by the so-called “highways”, so-called because, in several cases they are large roads with more than one lane, but they are next to houses without any barrier and the traffic is obstructed by dogs, children, oxen and motorcycles that suddenly cross the street or turn around.
Motorcycles are the roads real owners but the number of cars is high and it continues its growth, enough to block the rush-hour traffic or when the streets flood because of the precipitations (a phenomenon that happens every year during the rainy season), but the presence of trucks has decreased, thanks to the law that impose them to pass through the city only at night.
Hanoi and HCMC airports in the past were comparable to the Italian ones in medium-sized cities, now they are bigger and more modern and the air traffic has increased (in 2016 HCMC will exceed 30 million passengers, approaching Fiumicino Airport).
Vietnam Airlines and Vietjet are the local airlines companies, the most operative low-cost competitor, they fly to many national, international and intercontinental destinations.
The economic growth signals are various and they go with the consumer maturity: when I arrived to Vietnam, the banks penetration was 5%, today it exceeds 20% with several credit/charge cards and consumer credit; the mobile phone penetration is 140% (and the 3G quality is better than in Italy) and Internet on mobile phones is used by more than 85% of the population, the highest percentage in Southeast Asia; salaries have doubled and the living costs too.
One of the few sectors in which the prices have reduced is the rents sector that, thanks to the construction of many buildings and shopping centers has carried, for example, the reduction of my office cost to USD 23 per square meters per month.
Now, the country is considered as a middle-income in the World Bank ranking and, even if backward compared to Asian countries that have started their development before, Vietnam proceeds quickly and with a specific attention to the social growth.
Even though petty crimes have increased (especially motorcycles thefts), generally people still feel safe, more than in other Southeast Asia countries.
Despite 2016 is the year of age of population curve inversion, therefore, the population will start on average to get old, the perception is to be in a “young” country, composed by young people that are present among who leads the country too.
What about the international credit evolution in 2017?
When I arrived to Vietnam, we had credit lines for € 7 million for the whole country and they were not employed, today our bank lines are hundred million and they still grow.
Generally, Vietnam receives various billion dollars in ODA from the World Bank, ADB, Japan, Korea, China and Taiwan; then from US, Germany and France both from authorities that encourage the development and both from EXIM Banks or from Export Credit Agency (ECA). In the past they were subventions, now they are loans with preferential interests and durations. Most of those money is clearly spent to feasibility researches and studies or to finance works from donating country societies. Meanwhile the need of infrastructural investments increases exponentially, the Vietnamese government has reached a level of indebtedness that does not allow to keep pace with government investments or sovereign guarantees.
In this context there are two possible paths to take: the privatization of state-owned enterprises, some of them – for example Vinamilk – with profits, and the opening of markets such as the energetic market to private and international companies. In this manner the large capital flow towards Vietnam should follow the private firms that invest in this country, both in the form of loans to enterprises and both in project finance.
Because this phenomenon could take place it is necessary that Vietnam opens markets, reduces governmental control on prices and promulgates law implementing regulations – such as the law who removes the maximum foreign control (49% for quoted companies) – and improves local societies and banks transparency.
Which are the perspectives for exportations and for investments from Italy?
Vietnam has good chances to win the ASEAN competition concerning the attraction of foreign investments, thanks to a government that is more stable and pragmatic than its neighbors’ ones, to a population from the Confucian and Mahayana Buddhist culture, therefore, a population more convinced of the advantages of working hard, of studying, of the social and working commitment and thanks to a religious homogeneity of population and language, uncommon in this world region.
This world area will benefit of the most elevated growth rhythmsin the world in the next decades, thanks to the young population, to the families’ accumulation, to the work ethic and to the relative peace. The ASEAN is slowly creating a market of 600 million consumers, not rich but with an increasing mobility.
Vietnam is living its evolution from country of semi-finished products manual transformation (so far clothes, shoes and furniture, recently computers and mobile phones too and they already represent the first entry of the exportations) to an industrialized country with intermediate and technological productions. Vietnam owes this development mainly to the direct investment from North Asia countries, Japan, Korea, China and Taiwan, where labor, ground, energy and pollution costs make necessary the delocalization.
Concerning Italy, there is a time window of a decade in order to invest and sell products in a broadly new and unknown market, supplementary for traditional markets of our enterprises. Finally, if we do not proceed, other people, maybe local companies, will fill the technological gaps.
The main characteristic of Asian markets is the requirement of dedication from enterprises owners and managers and generally, to establish a permanent basis in the market you desire to open. Asian people have a traditional culture based more on personal relationship than on laws and courts, more on the direct experience than on market researches. For these reasons, in order to sell machines, technologies and products that are not unique but better (and more expensive) than the Chinese competitors ones, it is necessary to have a storehouse, a sales force, some engineer or specialist familiar with the local language and culture, in order to give consistency to Italian products technical superiority, quality and duration.
The production on the spot and the adjustment of products to the local market features are important in order to reduce the costs in a context where consumers and investors have a restricted budget, for now.
From the moment I arrived to Vietnam, until now, only a few Italian companies have decided to invest here, but all of them, big or small firms, had success and have grown, without relocate but only conquering new markets. From Piaggio to Datalogic, from Bonfiglioli Riduttori to Carvico (elastic textile for swimsuit), from Microlys to Ariston Termosanitari or to Perfetti, all these enterprises decided to move to Vietnam, where they hired Vietnamese people and now they are successful companies. The true enemy is the fear of try the “new”: you do not need so much money to invest in Vietnam, everything is cheaper than in Italy, and, if something goes wrong, also closing is cheaper than in Italy.
How do Vietnamese investors perceive Italian market?
Italy is an absolute point of reference for fashion and design, they are sectors in which Italy has an important identity, in fact all local shops have names that sound like the Italian ones. Among the richest inhabitants, also the Italian cuisine and wines are extremely appreciated.
With the exception of some market niches, Italy attracts Vietnamese people for tourism and shopping, but not for the investments. Years ago I was in a local fashion company and its international CEO wanted to buy an Italian brand, such as some Chinese enterprises did, but the CEO has been expelled and the society contented itself with the status quo. Vietnamese do everything they can in order to give to their children an education in the US or in Canada, in the past especially people from the north of Vietnam wanted for their children an education in Great Britain, France and Germany too, they make huge investments in those countries. That is partly a result of historic connections developed with the reception of refugees after the end of the war; actually, today, millions of Vietnamese “boat-people” that moved to US, studying and working hard, can transfer 10 billion of remittance per year to Vietnam.
For Vietnam, Italy is a country such as other ones in Europe, interesting in order to increase their food, clothes, shoes, accessory and furniture exportations as soon as the Free Trade Agreement between EU and Vietnam – already signed in its key elements – will be ratified but it will take some time before the Vietnamese market opens for Italian exportations.
What should Vietnam do concerning the R&D domain?
Vietnam would pass from the model of “low labor cost country” to a high technology country. For this reason, it is forbidden for companies to import second-hand machinery and the innovation is promoted. One of the most successful policies is to offer tax relief for the foreign enterprises that invest in the local developed R&D domain. For example, Datalogic from Bologna, world leader in the sector of bar code readers, created an R&D sector based here in Vietnam, for the Asian markets products and it has been accepted in the economic Hi-Tech zone of HCMC, with extraordinary subsidies. The factory near Datalogic is Intel, that invested 1 billion dollars too.
The first thing that comes to mind is the complexity linked to the protection lack of intellectual property. There are good laws, but they are not implemented, so firms do all they can to protect themselves, through information and employees’ careful management. If, on the one hand it creates issues, on the other hand the fact that there are less ethical and legislative commitments compared to Europe gives carte blanche for research in fields as stem cells, transplants and other medicine branches which are more delicate in Europe.
Compared to Europe, the Vietnamese administrative bureaucracy is heavier and especially the ground properties use and certification raise complex problems, but taxes are lower than in Europe and this element has a positive result for SMEs Research and Development. There are various start-up companies in the IT field, both for new games and online applications, both for the programs writing subcontract and for the dynamic graphic of products from other countries.
Which are the strategies concerning tourism and environmental protection that is Vietnam implementing?
Tourism represents 10% of the Vietnamese GDP, but the country does not spend so much money for its promotion, perhaps because the ministry that manages it is the Culture, Sports and (lastly) Tourism Ministry. With 3000 km of coastline, mostly with tropical climate and pearls as Halong Bay (UNESCO Heritage Site), Vietnam could develop the maritime tourism. More limited is hills and mountains tourism, traditionally restricted to Dalat and Sapa, to the magnificent and vast caves of the country center and, for audacious tourists, to the rest of mountainous border with the north of China. Even if Vietnam has not a masterpiece as Angkor Wat in Cambodia, it has ancient vestiges and cultural attractions in Hanoi and its surroundings but especially Hue and Hoi An, in the center of the country.
Vietnamese coast crawls with new resorts, with hotels or even houses, generally luxury ones, but never too big because, over the years, the authorities have subdivided lands and now they are highly fragmented. Some of them are managed by international hotel chains and financed by local investors.
Years ago, with some European investors, I visited the entire coast hunting for an area with available kilometers of beach. Finally, we found only one zone, occupied by a Dubai project – construction of a whole city – stopped because of financial difficulties.
An important place is occupied by the gambling tourism that brings money from the nearest countries. Actually, in Asia, every country forbids to its citizens’ bets and gambling, but invites near countries citizens (especially the Chinese ones) in luxury casinos, often built next to the border. Several provinces plan to build casinos and lobby to Hanoi in order to obtain – so far unsuccessfully – an exception to the rule of local citizens.
About the environment protection, Vietnamese government appears determinate, it wants to change direction and to bring into question the axiom development = environmental costs. Therefore, it has signed a commitment in Paris in order to reduce by 8% the CO2 emissions if left alone – by 25% if the international community will help – within 2030 and it has organized a document with more than 50 activities that will bring us these results. Moreover, the government is properly worried about the Vietnam climate change vulnerability, a country widely below sea level in which a considerable part of the population still lives on agriculture. In the latest years, Mekong Delta lost several coastline kilometers and the salinity level of canals waters has substantially increased; this phenomenon affects plantation yield until provoke a replacement of rice fields with prawn farms.
Key topics are the water use and to avoid pollution – that this year has caused various phenomena of fishes’ great deaths near the coasts – and a growth of the electric power production but, without poison the air such as it happened in China. Because of this, the energetic program (n°7) modifications increase the number of renewable energy plants to the detriment of coal ones, that was the only identified source in the first edition of the program, with the hydroelectric, that is not polluting but it has a huge impact on environment and on population, because of the rivers deviation and the reservoirs creation.