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Italy looks to ASEAN in open trade campaign
Amid a global wave to push for protectionism, Italy, the world’s eighth-largest economy, has maintained its stance toward multilateralism and hopes to strengthen its economic ties with Southeast Asia
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Amid a global wave to push for protectionism, Italy, the world’s eighth-largest economy, has maintained its stance toward multilateralism and hopes to strengthen its economic ties with Southeast Asia.
Delegations from Italy and ASEAN nations kicked off on Monday the first edition of high-level dialogue on ASEAN-Italy economic relations. The event was initiated by Italian stakeholders to show their seriousness in increasing investment and trade with the region, which has been minimal so far.
Associazione Italia-ASEAN chairman Enrico Letta said Italy was serious about its intention to increase investment in ASEAN despite global trends toward protectionism. He said Italy was sure multilateralism and free trade was the future of the global economy.
“We think that the great message of a prosperous world with a great and large free-trade perspective is important. We are thinking and trying to push in that direction, and we want to give this signal and message,” Enrico said during a press conference for the two-day event.
“Free trade is good, we have to work in that direction and we must overcome obstacles. Second, multilateralism is good and ASEAN is a good signal to overcome nationalist obstacles.”
Bank Indonesia (BI) previously cited that the ASEAN economy had grown at around 5.5 percent per annum over the last 15 years following the Asian financial crisis in the late 1990s. The figure is much higher than the 3.9 percent annual growth of the global economy during the similar period.
In 2016, ASEAN’s share of the world’s gross domestic products rose to 6.1 percent, while its trade value rose to 6.9 percent in 2015.
Moreover, ASEAN’s attractiveness is also evident in the amount of foreign direct investment in the region, which amounted to US$121.9 billion between 2011 and 2015, from $29.8 billion between 2001 and 2005.
Separately, Italian Trade Agency president Michele Scannavini claims Italy ranks 31st in investment in ASEAN with around only a 0.1 percent share. Moreover, Italy is also ranked 23rd in exports to ASEAN, with a 1.9 percent market share.
Even so, Scannavini said Italy had identified a potential market in the ASEAN region as a whole, and specifically cited the aerospace, infrastructure, energy, pharmaceutical and food processing sectors as enticing prospects for Italian investors.
“There is a base already [in ASEAN] but clearly in a situation where there is uncertainty and some trend for protectionism in other parts of the world, Europe and Italy can play an important role leading the development of industry in these areas,” he said.
Italy’s interest in the region falls in line with ASEAN’s goal to increase integration within the region to become a global economic powerhouse from its current position as the eighth-largest economy in the world behind the United States, China, Japan, Germany, the United Kingdom, France and India.
Last month, World Trade Organization director general Roberto Azevedo said there was “deep uncertainty” about economic and policy developments, particularly in the United States and clarity was needed over US President Donald Trump’s “America First” trade policies, Reuters reported.
Protectionism, though, is not restricted just to Washington. There is a rise in nationalist sentiment worldwide, starting with Britain’s vote last year to leave the European Union and including various candidates in France’s presidential election.
In addition to investing in ASEAN as a whole, Italian stakeholders have expressed their serious intent to increase bilateral economic ties with Indonesia despite ongoing political tensions in the country. Furthermore, Letta noted that Italy would be “the first row inside the EU to push for a fast and successful free trade relationship with Indonesia”.
Data from the Investment Coordinating Board (BKPM) shows that Italy invested $26.7 million in 169 projects across the country from January to December 2016. This increased from $104.1 million for 118 projects in 2015.
Meanwhile, data from the Trade Ministry shows that the trade balance between Indonesia and Italy reached $184.9 million last year, dropping drastically from $504.7 million in the previous year.
Separately, Indonesian Chamber of Commerce and Industry (Kadin) deputy chairperson for international relations, Shinta Widjaja Kamdani, noted that Italy was looking beyond its traditional trade partners in the EU due to uncertainty in the region.
In terms of Indonesia-Italy economic relations, she said, there was huge potential in the fashion and automotive industries.
“The automotive industry might be small but it has advanced technology with a pretty large value. Furthermore, the sports industry is also interested in developing because there is a large base of Italian soccer club fans in Indonesia,” Shinta told The Jakarta Post.
