Domestic Economy
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Italian Comeback

Italian Comeback
Italian Comeback

This is the largest Italian trade delegation that has ever visited Iran and held over 1,000 meetings in two days to explore avenues of cooperation, the European country's deputy minister for economic development announced.

Calenda is heading a 370-strong trade delegation, including representatives of key Italian companies and banking groups, which arrived in Tehran on Sunday.  

The prospects of post-sanctions Iran, considered "one of the best emerging markets for years to come", have led to fierce competition globally for a share of the untapped lucrative market. The latest of the countries to visit Iran is Italy.

The Financial Tribune interviewed the Italian official on the mission's plans and offers for the post-sanctions Iran.

“Our visit is a comeback,” declared Calenda, emphasizing that his delegation comprises 178 firms, representatives of 12 banks and the Italian Trade Promotion Agency.

The deputy minister added that Italy’s SACE, an export credit agency, which is technically the country’s exports and imports bank, has confirmed it will invest €5 billion immediately after the implementation of the Iran's nuclear deal with the West to support trade transactions.

According to Calenda, the Italians are mainly focused on four sectors, namely energy; environment; manufacturing and trade of medical and biomedical devices; and the auto sector and mechanics.

Talks regarding oil, gas and banking relations are also on the agenda, but the industrial sector is our top priority, since close to 90% of the current delegation are made up of the small to medium enterprises, he said.

Italy was one of Iran’s main trade partners before the imposition of sanctions, as bilateral trade stood at €7 billion in 2011, but has since dropped to €1.6 billion.

According to Calenda, Iran’s July 14 nuclear deal was the most significant, positive piece of news on the global arena where we hear bad news on a daily basis.

“We aim to bring the level of trade between Iran and Italy back to pre-sanctions level and we are highly positive that this can be achieved in close to two years,” said the Italian deputy minister.

 

> Cooperation in Auto Sector

Iran’s lucrative auto market has already attracted giants from Germany, France, Japan and South Korea. Italy is the latest to test the waters.

“We have a very expansive auto and auto parts manufacturing sector in Italy, which is among the very best in the world. We have brought nearly all of the country’s key auto firms on this economic mission, as we intend to help them understand the Iranian market and make contacts with their counterparts here,” Calenda said.

Cooperation in the auto sector, including auto parts manufacturing, goes beyond merely trading parts and cars.

“If you want to have a presence in the auto market in a country, you have to establish a production center and manufacture the products right there. Otherwise, it is highly uneconomical to ship all the parts and products, and focus merely on trade.”

The deputy minister emphasized that the establishment of production centers will bring Iran-Italy cooperation to “the next level”, which will be a joint venture.

The Italian firms are highly interested in establishing factories in Iran and willing to share modern industrial technologies, he added.

Calenda described the global competition among auto giants eying Iran’s market as a “significant opportunity”.

“We do not plan to beat any auto producer in the race towards getting a piece of Iran’s auto market. In fact, we mainly seek to supply them. Italy’s strategy is to supply automakers with state-of-the-art auto components. Hence, the more OEMs flock to Iran to manufacture autos, the more opportunities will arise for Italian auto parts manufacturing firms,” he said.

Calenda noted that Italian firms held talks with two large Iranian auto manufacturing companies, Iran Khodro and SAIPA, during their business meetings on Sunday.

> Small and Medium Enterprises

Earlier on Sunday, at a conference dubbed 'Iran-Italy Business Forum', Iran's Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh said, "Although Iran boasts various industries such as petrochemicals, steel and automotive, it is small- and medium-sized enterprises that constitute 90% of the industrial sector. Therefore, it is important to tap into the potential of industrial associations and unions for further cooperation.”

In response, Calenda noted that the visiting Italian trade delegation is mostly made up of SMEs that seek to cooperate with reliable partners in Iran. The advantage for the Iranian industrial sector, according to the minister, is that the SMEs have a different mechanism from giant, multinational companies.

“SMEs have a tendency to open up production centers in the countries they invest in, meaning that they will bring their knowhow and technology with them. The big companies, however, tend to only focus on production and using up the resources of the country,” he said.

Drawing on his experience with SMEs and the role they have played in contributing to the Italian economy, Calenda said SMEs in Iran can flourish by following a set of guidelines.

“The key is to have an entrepreneurial attitude. In order for SMEs to flourish, you have to cut down the bureaucracy as much as you can, provide them with access to foreign markets and financial support, and then they will move. The particular characteristic of SMEs is that they develop by themselves. All you need to do as the government is create the framework.”

> Memoranda of Understanding

According to the Italian official, many MoUs were signed on bilateral cooperation, including in marble and leather sectors, as well as between the two countries’ museums.  

“Iran is currently exporting marble without much value-added. Italy intends to provide Iran with machinery and tools,” he said.

Italy envisions a similar scenario for cooperation in the production of leather and leather accessories.

”Based on the agreement between Italy’s Maxxi Museum and Tehran’s Museum of Contemporary Modern Arts, we intend to make use of some of the fantastic pieces of art that you have in order to exhibit them in Italy,” he said.

The forum concluded by signing memoranda of understanding on technology transfer, technical and scientific education, industrial marketing and expansion of tourism, in addition to an economic MoU between the private sectors of the two countries.

Financialtribune.com