Reforms create many new opportunities
Italian Trade Agency (ITA) President Ricardo Monti is actively working to get more companies and individuals to invest in his country.
Monti was recently in Japan as part of a push to attract Japanese businesses and individuals to invest in the country.
To assist with investment in the country, the ITA has a support team comprised of representatives from every government agency and ministry to assist investors in overcoming issues they may run into. This support runs from Justice Ministry representatives assisting with legal matters to the Environment Ministry consulting on obtaining permission for development. This assistance covers all stages of investment from the exploration phase to post-installation.
Like much of Europe, Italy saw some dark economic times in the first couple of years of the decade, but, according to Monti, the country has overcome many issues hindering investment in Italy. “We’ve decreased corporate taxes, made employment regulations much more flexible with the Jobs Act, which came into effect six months ago and is already having a big impact,” Monti said.
“The country has also revised a number of rules and regulations to make things easier for investors, under the idea of ‘whatever is good for the international investor is good for the Italian investor,’” he added.
The Italian government has overcome a major hurdle with a breakthrough in tax law. “Many companies with an international presence often have difficulties with assessments of transfer prices and run into difficulties with tax authorities over this issue. In Italy, companies can now do advance pricing agreements where they propose their plan to manage their transfer pricing to tax authorities. If there is no objection from the tax office within 90 days, the proposal is automatically approved for five years. This is a very important change,” Monti said.
Italy is also working to promote itself as a good base for international companies to export from, as it boasts a market of 800 million people within a two-and-a-half-hour flight from the country. This huge market makes Italy a good location for virtually any exporting manufacturer.
Three areas may be particularly attractive to international investors. One is newly privatized businesses, while real estate is also attractive as landowners are being encouraged to divest some of their holdings. The third are companies that have good human resources, products and knowledge, but have run into difficulties due to changes in the global market. The ITA works to bring in investors with financial clout and launches new companies. The ITA has undertaken about 150 such projects and in the past two years, half of them have been sold to international investors.
Italy has a large pool of talented and skilled workers, but rigidity in employment regulations kept some investors from expanding or even entering the market. The Jobs Act has for the most part, removed many of the barriers facing companies from a human resources point of view. Companies now have much more freedom in their hiring and the positive response from both existing investors and potential investors has been quite high.
Monti also noted that the government attitude on international investing has shifted dramatically as it has adopted a more accepting stance. “There is overwhelming evidence that a company that has initially had international investment has higher employment, higher added value, higher exports and higher investment in research and development,” he said.
“Japan is particularly important to us, as during the worst days of our financial crisis, Japan was there to invest in Italy. If you look at 2011 or 2012, a good amount of the little investment we saw came from Japan. Also, Japanese tend to be long-term investors and that is a very attractive trait. Additionally, Japan has traditionally invested in high-tech sectors such as pharmaceuticals, aerospace and information technology with an eye to using Italy as a base for Europe. We have not seen Japanese companies coming in and closing factories and laying off people. We see them building and growing existing companies and that makes them attractive investors for us.”
Monti concluded by noting that Italy and Japan are both major exporters and as global trade becomes more open, both countries can have bright futures through cooperation.