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Scaling new heights of growth

Italian-Singapore business relations are expected to improve further with the much-anticipated signing of the EU-Singapore free trade agreement this month.

President of the Italian Chamber of Commerce in Singapore Federico Donato greeting then-President of Singapore, Tony Tan, and the President of Italy, Sergio Mattarella, at the Quirinale Palace on the occasion of the Singapore State Visit to Italy in May 2016.

"The unique combination of merging reputable brands and know-how together with market knowledge and access is the ideal recipe to look at for cross-country opportunities in the years to come." - Mr Donato.

ITALY is the eighth largest economy in the world measured by its gross domestic product (GDP). It is the fifth biggest in manufacturing globally and second biggest in Europe. These are strong reasons for stepping up bilateral business and economic relations between Italy and Singapore, says the president of the Italian Chamber of Commerce in Singapore (ICCS), Mr Federico Donato. The upcoming free trade agreement (FTA) between the European Union (EU) and Singapore which is set to be concluded soon, would provide significant new opportunities to businesses in Italy and Singapore to enter into new mutually beneficial deals, he adds.

"Italy-Singapore business relationships are strong as all major Italian companies together with several SMEs are present here. However, if we consider that Italy is the eighth biggest economy by GDP globally, there is definitely room for significant improvement. Likewise, I believe Singapore firms should look at stepping up their presence in the whole of Europe ex-UK and especially in Italy," Mr Donato said in an interview with The Business Times.

Italy-Singapore business relations can grow further, building on the existing synergies among their economies - like a tradition of strong family-owned businesses and a growing and vibrant SME sector which plays an important role in the economies of both countries - says the Italian chamber chief.

Highlighting the role of family businesses in Italy, Mr Donato said that his country is home to 15 out of the 100 oldest companies worldwide, five in the first 10, with family legacies stretching back 1,000 years.

The big bulk of the Italian economy, from large conglomerates such as Fiat to the smallest SME, is composed of family-owned companies which account for 60 per cent of the total number of companies listed on the Milan stock exchange and 25 per cent of the overall market capitalisation. There is a similar picture in Singapore, where family-owned companies are 52 per cent of the total and account for over 30 per cent of the stock market capitalisation, says Mr Donato.

The Italian Chamber chief says that SMEs in Singapore and Italy are defined by very similar parameters and essentially are companies with a turnover of up to S$100 million. This is different from other European countries where the concept of SMEs applies to firms with revenues up to S$300 million. "Moreover, both economies are dominated by SMEs which account for more than 95 per cent of the total number of companies; with 65 per cent of jobs in Singapore; and 79 per cent of jobs in Italy," he adds.

"These topics have been key subjects of a business delegation to Italy led by me and the then-SCCCI president, nominated MP Thomas Chua in 2015. ICCS joined efforts with SCCCI in a week-long field trip where Singaporean entrepreneurs met Italian family-owned counterparts ranging from billion dollar companies to small businesses. These similarities, coupled with an overall quite similar corporate governance, could make a perfect match of Singaporean and Italian companies," says Mr Donato.

There are exciting days ahead for the growth of Italian-Singapore business ties to new heights with the expected signing of the EU-Singapore FTA, which trade experts say will be one of the most up-to-date free trade deals to be entered into. "The EU-Singapore FTA, scheduled to be signed by the end of October, is going to be the real game changer for all European companies already present in Singapore or considering an expansion in this part of the world. This is a long-awaited turning point that will finally allow our companies to compete fairly with US, Australian or Japanese competitors," says Mr Donato.

"Europe is the second biggest trading partner and by far the biggest FDI contributor in Asean accounting for one-third of all FDI to the city state. With more than 65 per cent of European FDI in Asean concentrated in Singapore, I am convinced that the FTA can only boost European prominence in the region," he adds.

"As Eurocham treasurer and member of the executive committee, I do hope that the FTA won't only represent an opportunity for European companies, but also for Singaporeans looking to expand their horizons in Europe, still an extremely strategic and sizeable marketplace, with one of the highest spending power globally."

Turning to some of the recent exciting business and economic projects being undertaken by Italian and Singapore companies, Mr Donato says that he was extremely impressed by the recent investments by Temasek last year in Italian fashion brands Moncler and Stone Island.

"Such investments will allow these two brands to access both funding and a unique understanding of Asia, which should help them further reinforce their presence in a growth area. On the investor side, considering that Moncler is among the global brands with the highest revenues per sq ft ratio in many major Asian malls, I believe Temasek will not regret such an investment. At least, not in this moment," says Mr Donato.

"The unique combination of merging reputable brands and know-how together with market knowledge and access is the ideal recipe to look at for cross-country opportunities in the years to come. I am convinced that such combinations can work not only for Temasek and Moncler, but also among smaller players," he adds.

In fact, as the second-largest manufacturing power in Europe and the fifth in the world, Italy has much to offer Singapore and the other South-east Asian countries. "Italy is a good fit for Singapore companies looking to step up their know-how, while South-east Asia is a unique marketplace with over 600 million consumers and strong growth forecast. It would be extremely difficult for Asian companies to close the current technology gap organically and in a short period of time, as much as it will be difficult for Italian companies to approach Asean in any meaningful way without strategic alliances. In this light, I see tremendous opportunity on both sides," says the Italian chamber chief.

"Still today, Italy is home to a significant number of brands, globally known and appreciated, in a multitude of industries. Italy has to offer Singapore know-how, knowledge, and a uniquely diversified economy to form alliances and partnerships."

Italy already has a sizeable and varied business presence in Singapore, according to the Italian chamber chief. "By virtue of being one of the most diversified economies globally, Italy's presence in Singapore spans many different industries: from shipping to design, from fashion to banking, from F&B to machinery, automotive, consumers and more. With Singapore as gateway to an area composed of countries at very different stages of the economic cycle, my country can be relevant in several ways," says Mr Donato. "As a non-exhaustive example I think of the entire Italian food industry as an interesting one: a sector with an estimated value totalling about US$170 billion in aggregate (about 60 per cent of Singapore's overall GDP) can indeed make the difference in an area characterised by rising disposable income and therefore higher attention towards food processing and security."

Italy is not only a point of reference for wellness and a healthy diet as also reflected by its No 1 ranking in the Bloomberg Global Health Index, but it also has one of the most vertically integrated food industries on earth, with a unique control of the output from R&D, crops cultivation to food production, security and packaging, including the whole service machinery for the various aspects of the food industry, he highlights.

"I believe these competencies can be of extremely high value for Singapore's thirst for industries' champions and for the whole Asean region in need of making the entire industry more reliable and secure," says Mr Donato.

After having graduated from Bocconi University in Milan and completed his studies at NYU, Mr Donato started his career in the financial industry. He covered different roles and geographies, working with very different players in New York and Singapore: from global banks such as Credit Suisse and Intesa Sanpaolo to smaller advisory firms and even as an entrepreneur running a multi-family office for a few years before returning to a major Swiss bank as wealth manager.

"In Singapore for 13 years, I joined the ICCS board in 2009 and served as treasurer and vice-president before becoming president in 2014. As the youngest president ever of an Italian chamber worldwide, I see my main mission as to bring change in a way that communicates the true value of 'Corporate Italy' and leverage its remarkable strengths," says Mr Donato.

While Italy's arts, theatres and culture make it a cultural superpower, with esteemed fashion houses, mega-yacht builders and luxury carmakers, "Made in Italy" has now become a cross-industry concept associated with something beautiful, well-made and of exquisite quality. "By leveraging these unique assets, ICCS is successfully raising interest, attracting sponsorships and adding members. We are extremely lucky in having so many admired brands with a strong pull factor - from luxury goods to F&B, from precision engineering to industrial design, and stressing on this attractiveness has been the silver bullet of our expansion. Once I became the vice-president of our chamber association in Rome, overseeing all Italian chambers worldwide, I have tried to apply this logic and bring the same spirit to all Italian chambers globally," says Mr Donato.

"I am a lucky man, married to a wonderful Singaporean lady who gave me a lovely daughter and has always been extremely supportive, bearing with all the time I have sacrificed from the family due to my commitment with ICCS on top of the work schedule. It has been challenging at times to be an employee, entrepreneur, husband and more recently a father since the balance among all roles is often hard to strike. I can hardly complain though, since the greatest love of my life aside from my wife and family is Italy. It is indeed an honour to represent such a successful business community in a vibrant country as Singapore," he adds.

A treasurer's perspective

"IT IS a pleasure for me to manage the financial well-being of ICCS, but it is also a challenge in a competitive environment such as Singapore that is characterised by high costs.

The Chamber is a private entity registered under the Registry of Societies, even if ICCS is part of the Italian institutions in Singapore, our mandate is to keep a profitable and healthy balance sheet.

Our annual performance is evaluated by the Italian Ministry of Economic Development which assigns a score to the 82 Italian chambers in the world. In the last three years ICCS was always ranked among the top 15.

Our revenue related to business development services has grown more than 50 per cent in the last three years, and our membership collection has grown 10 per cent in 2018. This is confirmation that ICCS is the point of reference for Italian companies in Singapore and Singaporeans who want to invest in Italy."

- Alberto Martinelli, treasurer, ICCS

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