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News Analysis: How Italy steps up efforts to redesign FDI attraction policy

by Alessandra Cardone

ROME, Feb. 4 (Xinhua) -- Renewing its efforts to lure foreign investors, Italy has been taking crucial steps to overhaul its foreign direct investment (FDI) attraction policy, and recent trends showed "encouraging figures," according to Italian officials and experts.

"Inward FDIs have showed a favorable and encouraging trend since 2013, and in the last two years especially," Stefano Manzocchi, dean of Economy and Finance Department with LUISS University in Rome, told Xinhua.

Italy's economy was among those most affected by the European debt crisis, and its FDI inflows kept dropping even after global FDI started recovering in 2011, the economist explained.

"Yet, inward investments finally returned to growth, and their recovery proved particularly interest (of investors) in 2015," Manzocchi said.

Italy is Eurozone's third largest economy, and the eight-largest in the world by nominal gross domestic product (GDP). Nonetheless, it has long struggled to attract foreign investors, even before the global crisis, and lagged behind major European trade partners, such as Germany, Britian, France, and Spain.

The country's inward FDI stocks grew to 373.7 billion U.S. dollars (334 billion euros) in 2014 from 360.9 billion dollars in 2013, according to latest data by the United Nations Conference on Trade and Development (UNCTAD).

The result was seen as positive for the country. However, both Italy's most direct competitors in Europe, France and Spain, posted much higher figures: 729 billion dollars and 721 billion dollars, respectively.

Aware that the economy needed new oxygen after its deepest crisis in decades, Italian authorities have taken assertive steps since late 2013 to try and fill the long-time investment gap.

A Foreign Investment Department was specifically created within the Italian Trade Agency (ITA) to streamline and boost FDI governance, and assist investors "along the entire investment life cycle".

"Our goal is to align Italy with the best practices in terms of FDI attraction at global level," Andrea Napoletano, director of ITA Foreign Investment Department, told Xinhua in a recent interview.

ITA was turned into the sole reference point for investors, and its FDI department was charged with offering a comprehensive "customer care" to firms willing to explore investment chances in Italy.

"We promote investment opportunities through a systematic collection of demands coming from Italy's various realities," Napoletano explained. "Secondly, we present potential investors with selected proposals in different sectors, also according to their specific interests, in order to match FDI supply and demand".

A portfolio of best investment opportunities in Italy, comprising public assets and private companies, was being presented to investors during ITA's roadshows, the official added. "Thirdly, we provide the firm or entrepreneur who has decided to invest here with all the technical and practical support needed to streamline the process and start the business".

ITA has taken care of some 20 investments worth an estimated 6 billion euros (6.7 billion U.S. dollars) since Sept. 2014, and 65 percent of the projects were now in the final phase, the agency said.

The FDI attraction policy was supervised by the Economic Development Ministry, and carried out in close cooperation with regional governments, which "have a real picture of demands and opportunities on the ground," Napoletano said.

Finally, 10 FDI desks were to open in Istanbul, Tokyo, Shanghai, Singapore, Dubai, London, Paris, New York, San Francisco, and Sao Paolo, by the end of 2016.

Besides strengthening ITA's role, other recent steps positively affected Italy's performance in attracting FDI, the LUISS economist noted.

"A key provision was the so-called Destination Italy plan, which set up sort of a central management body at governmental level so as to synchronize the various activities of ministries and regions in terms of FDI," Manzocchi said.

"Among other changes, the plan helped simplify red tape for foreign investors, by making the Tax Office ease fiscal practices and the Public Administration Department streamline paperwork," he added.

"The foreign investors' interest grew both in traditional 'Made in Italy', such as food and luxury, and in innovative fields such as mechanics and, to a lesser extent, chemistry and pharmaceutical," Manzocchi said.

"Some of our banks are also controlled by foreign banks, and we are recently seeing a stronger interest from funds in South America and Arab countries," he added. (1 euro=1.12 U.S. dollars)

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