Boost competitiveness, attract foreign capital Italy's Plan for new Investment
intro Economic recovery presents new opportunities to contribute to the country's growth. But investment needs fertile terrain in order to prosper. The government is now planting the seeds for an improved business environment, starting from a privatisation plan that offers a privileged point of entry into Italian industry and the Italian equity market.
Italy: showcasing our best
The privatisation plan Company Name sector type of transaction timeline Shipbuilding (cruise liners, mega yachts, vessels) under CDP Trading on Italian Stock Exchange since early June. Capital increase through IPO IPO done in June 2014 Reti Gas transportation and power high voltage under CDP 30% of the company sold through trade sale October 2014 Broadcasting TV infrastructure Under RAI SpA 40% of the company sold through IPO IPO done in November 2014 Utility 5.7% of the company sold through ABB February 2015 Postal services, financial services, ICT, logistics 40% of the company to be sold through IPO October 2015 Air traffic control 49% of the company opened up to private capital First half of 2016 National railways 40% of the company opened up to private capital 2016 Export finance, credit insurance under CDP To be determined To be determined
A strong manufacturing sector Italy's manufacturing sector is integrating digital technology and services within global supply chains, through the application of Industry 4.0 principles. The country's manufacturing identity is changing: the traditional strength of the four Fs (food, fashion, furniture, and Ferrari ) is now flanked by the strong performance of other sectors: robotics, mechatronics, biopharmaceuticals and aerospace. As evidence of the push for excellence, the trade surplus in manufacturing for 2015 is forecast to reach 104 bn. large developing economies are moving up in global manufacturing top 15 manufacturers by share of global nominal manufacturing gross value added rank 1980 1990 2000 1 united states united states united states 2010 united states 2 germany japan japan china 3 japan germany germany japan 4 united kingdom italy china germany 5 france united kingdom united kingdom italy 6 italy france italy brazil 7 8 9 china brazil spain china brazil spain france south korea canada south korea france united kingdom KEY 1. south korea ranked 25 in 1980 2. in 2000, indonesia ranked 20 and russia 21 10 11 12 13 14 15 canada mexico australia netherlands argentina india canada 1 south korea mexico turkey india taiwan mexico spain brazil taiwan india turkey india 2 russia mexico 2 indonesia spain canada note based on ihs Global insight database sample of 75 economies, of which 28 are developed and 47 are developing. manufacturing here is calculated top down from the ihs global insight aggregate; there might be discrepancy with bottom-up calculations elsewhere. Source: IHS Global Insight; McKinsey Global Institute analysis
Commercial trade trend of export 2011-2014 Export of goods bln Estimation st on 1 half % change y-o-y +3.8% +2.0% +5.0% 375.9 390.2 390.2 398.0 417.7 cagr 2011-2014 +1.9% 206.7 st 1 half year 2011 2012 2013 2014 2015 Estimation st on 1 half 1,058.9 1,093.6 1,093.2 1,134.8 +3.3% +3.8% 428.6 442.6 437.4 438.5 +3.3% -1.2% +0.2% +2.3% +0.8% Source: MISE on Istat and Eurostat data
Manufacturing PMI According to the PMI manufacturing sector index, in May Italy ranks higher than Germany and France, thanks to our impressive export growth. Italy is among the strongest performers and appears to be staging strong recovery. eurozone purchasing managers index ( PMI) 56 PMI is an advance indation of what is 54,8 really happening in the private sector economy. 54 52 50 48 51,1 49,4 50 = no change based on monthly surveys of a representative panel of around 3,000 Eurozone manufacturing firms. tracked variables: output new orders stock employment prices 46 Source: Markit Eurozone Manufacturing PMI, June 2015
Export goods +50 bln additional exported goods in 2016 in key countries potential change in italian export bln 9.2 mature countries emerging countries new opportunities 8.9 4.2 1.9 1.8 1.7 1.7 1.5 1.3 0.8 0.7 1.9 1.6 1.5 1.4 1.3 1.2 1.1 1.1 0.9 0.8 0.6 0.4 0.3 0.3 0.6 0.4 0.3 0.2 0.2 0.2 0.0 usa germany japan south korea france canada poland australia uk spain china mexico turkey brazil emirates indonesia malaysia saudi arabia india vietnam singapore philippines kazakhistan peru colombia nigeria marocco qatar ethiopia angola ghana mozambique -25 bln +14% -23 bln +52% -2.5 bln +49% KEY: AMERICA EUROPE ASIA OCEANIA AFRICA Source: Prometeia
AT Kearney FDI Confidence Index 2015 fdi confidence index ranking and scores ranking 1 1 1 2 2 2 8 4 3 4 3 4 7 6 5 4 3 4 13 12 9 6 5 18 10 21 16 19 19 7 10 8 12 9 8 10 7 11 20 12 22 13 14 14 9 15 16 18 17 16 18 21 19 23 24 20 21 22 23 24 25 0.0 0.5 1.0 1.5 2.0 united state 2.10 china 2.0 united kingdom + 1.95 canada - 1.94 germany + 1.89 brazil - 1.87 japan + 1.80 france + 1.80 mexico + 1.79 australia - 1.79 india - 1.79 italy + 1.75 netherlans + 1.74 switzerland 1.74 singapore - 1.79 South korea + 1.72 spain + 1.71 sweden - 1.71 belgium + 1.70 denmark + 1.69 austria + 1.69 turkey + 1.69 poland + 1.68 norway + 1.68 finland + 1.67 KEY values calculated on a 0 to 3 scale + - moved up moved down maintaned ranking Source: A.T. Kearney Foreign Direct Investment Confidence Index, 2015
untitled... New opportunities will also arise from new investment incentives. The government is implementing a policy package, which includes sector-specific measures as well as new rules to ensure a more certain and more transparent fiscal framework.
Government measures to improve investment and the business climate
Targeting specific sectors The government has adopted a sector-specific policy to stimulate investment through tax incentives, and specifically, through: More flexible and more easily transferable project bonds for investment in infrastructure Reform of REITs, to attract investors in the Real Estate A 50% tax credit on investment in broad-band networks Simplified procedures to access and exploit oil and gas resources
TAX incentives The government has introduced a set of incentives to promote investment in capital goods and innovation. The government has also appropriated new funding for the Nuova Sabatini, a scheme that help companies to secure financing for new machinery and equipment. A 15% tax credit on additional investment in machinery and capital goods over the 10,000 threshold; 25% tax credit on additional investment in R&D (50% if contracted with universities, research centres or other qualifying firms); Patent Box special treatment of revenues sourced from patents and trademarks, with tax relief of 30% in 2015, 40% in 2016 and 50% from 2017 onwards
TAX Framework A well-defined tax framework is an essential aspect of a sound business environment, which is able to attract foreign capital. The government has introduced measures to stabilise the taxation structure for investors. Introduction of international tax ruling standard a four-year agreement between multinationals and the Italian Revenue Agency on implementation of tax regulations Improved taxation governance for new investment the Italian Revenue Agency can advise on the application of taxation regulations regarding business plans for industrial restructuring projects or investments involving a sum of at least 30 mn
Innovation as the new target Innovation is risky, but it is rewarding for growth in the long term. The government will support companies in addressing this risk, through a series of dedicated measures. Introduction of the Innovative SMEs, which can benefit of the same fiscal incentives of innovative start-ups Access to equity crowdfunding to innovative SMEs Start-up visa a fast track to open a start-up in Italy
Evidence
M&A M&A level has reached this year the highest level since 2007. Value of agreement was over 59 bn dollars last January (data source: Dealogic), with an increase of 60% with respect to level of 2014 Figures recent M&A deals. 405 mln 800 mln 207 mln 7 BN 1.67 BN 809 mln
Sound public finances as a stable ground The government has committed to a series of structural reforms, in order to increase Italy's competitiveness, to ensure a more certain institutional framework and to improve the business environment. Together with sound public finances, these reforms will increase the country's stability. Some results are already visible, and have led to a range of opportunities for new investment. The indebtedness of Italian households is among the lowest within the OECD; the net worth of Italian households is over 8.7 bn (latest available data, as of the end 2013) and is around 8 times net disposable income. Contribution to GDP growth primary syrplus % % GDP 1.0 0-0.3 0.6 8.0 6.0-1.0-2.0-3.0-3.15-2.0 4.0 2.0 0 2.4 0.8 0.04 1.6-3.5-2.0 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 15 15 15 GDP trend (Nota: 2015 expected: +0.7%; GDP yoy: +0.7%, as of 31/08/2015).
Ministry of Economy and Finance For any further inquiry please contact: segreteria.ministro@tesoro.it Printed by: Centro Stampa XX Settembre - RGS - I.G.I.C.S. - Ufficio VIII
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