National development is not just about a country advancing economically, it is about spreading that growth, improving the quality of life of the people in the state, and from the smallest businesses to the largest corporations,” says Dr Andrea Ambra, Italian Trade Commissioner to Malaysia speaking to International Business Review Southeast Asia. More than only importing and exporting goods and services, trade also involves creating a strong basis of cooperation and investment between countries.
For Italy, strengthening this strong partnership with Southeast Asian countries is crucial. As one of the fastest growing regions in the world, Asean presents a massive platform of opportunities for international investors. At the same time, businesses in the region also have a lot to gain from taking advantage of the prospects in Italy.
Small is Major
A major regional power, Italy has the third-largest economy in the Eurozone (eighth in the world), and is home to the region’s fourth largest population. Its strategic geographical location–sharing land borders with a number of European nations, including Switzerland, France and Austria–also allows it to be a hub for manufacturing industries. “What this means for Asean investors is that, in addition to the Italian market, they also have access to the larger European one,” explained Dr Andrea.
Opportunities for partnerships are increased with the high number of small and medium enterprises (SMEs) and microenterprises in the country–which at 65 SMEs per 1,000 inhabitants, is significantly more than the EU average of 40. Dr Andrea points out that “while Italy is very well known for arts, fashion, design and furniture, many may not realise that the country is more renowned for its manufacture of machinery and capital goods.” Corroborating, the European Commission’s Small Business Act (SBA) 2014 Fact Sheet indicates that, compared to the EU average, Italian enterprises are more prevalent in manufacturing of metal products, machinery and equipment, as well as in food and beverage, and textiles.
Other industries for cooperation include tourism, oil and gas, sports, and arts and culture. While some may not regard art as much of a business proposition, it should be noted that the cultural and educational arm of the United Nations, UNESCO, revealed that more than 60% of the world’s art treasures are found in Italy. Also significant is that the value of the global art market in 2014 was worth an estimated 51 billion euros (US$57 billion) and growing rapidly.
Highlighting the bilateral relationship that exists between Asean and Italy, Dr Andrea cites the 2007 purchase of Italy’s FL Selenia by Petronas (Malaysian state-owned petroleum company and most profitable company in Asia, according to Fortune 500). Europe’s largest independent producer and marketer of branded automotive lubricants and related functional fluids, FL Selenia has operations across Europe and the Americas.
“Torino, Italy is FL Selenia’s R&D Centre serving the entire EU, where they research and develop new products, and after that they export the goods to other parts of Europe and the world.” He also revealed that Indonesia went the sport route and purchased one of the country’s leading football teams, Inter Milan.
Cream of the Cream
“Our top sector for local and foreign investment is the oil and gas sector, and this is a very large industry that includes vessels, tanks, oleo-dynamic products and rings. It is also a high-technology sector where innovation is required regularly,” explained Dr Andrea. Another important sector in Italian economy is the automotive industry. In Asean, Italy has manufacturing plants for the renowned Vespa scooters and car marque, Peugeot, in Vietnam, from where it exports to other nations in the region.
Known for its bold designs and innovative engines, Dr Andrea pointed out that his country can collaborate with Southeast Asian nations in developing their auto industries. “Particularly in the areas of electric and hybrid vehicles. And since Malaysia is the only state in the region that has two domestic brands, Proton and Perodua, there are more opportunities for partnerships and joint ventures between our countries,” he said.
For Asean countries trying to create a presence in the Eurozone, Italy provides just the right platform and holds its own in the region, with world-renowned technology and innovation spanning a wide range of economic industries. More than just the wide regional reach of Italy, the country also provides a number of incentives to attract and enhance foreign investment in the country. According to Dr Andrea, the three main focus areas of the Italian Trade Commission is to increase joint ventures and the transfer of technology; attract bilateral investment; and develop the country’s tourism sector, adding, “Why would anyone want to invest in Italy? Primarily, it would be because we have products and services that you cannot find anywhere else.”