The first year of the appointment of the Monti government expires tomorrow. Many objections can be made to this government, but certainly not that of inactivity. This argument also applies to the internationalization support legislation of our businesses.
In this short series of three articles we will examine:
1. What has been done in this year in this matter;
2. What still needs to be done;
3. What could be done to improve the system.
Of course, if we compare this year with the others that have preceded it since the beginning of the century, it can be said that these twelve months have been full of changes to this regulation. The main purpose of these changes was to streamline the system without increasing state spending, if anything – as has happened in many cases – reducing it.
Much still needs to be done, in the sense that there are still many implementing decrees of the rules introduced, as we will see in the next article. And finally, many other things could be done, almost all without having a heavy impact on public spending.
The refoundation of the ICE
undoubtedly the main news introduced, on several occasions, by the Monti Government concerned the aspect of promotion of Made in Italy abroad, which had been somewhat neglected in previous years. The suppression of the ICE, which took place with the financial maneuver of July 2011 (law 111/11) after much controversy and discussion on the subject, had left everyone a little dissatisfied.
A few months later, the “decree saves Italy” (Law 214 of 22.12.2011) of the Monti government brought the ICE back to life, with the new name of “ICE – Agency for the promotion abroad and the internationalization of Italian companies". The new agency is a body with legal personality under public law, subject to the powers of guidance and supervision of the Ministry of Economic Development, which exercises them after consulting, for the matters of their respective competence, the Ministry of Foreign Affairs and the Ministry of Economy and Finance. Its aims are to develop the internationalization of Italian companies and the marketing of Italian goods and services in international markets, and to promote the image of the Italian product in the world. The foreign network has been reduced, spun off and integrated into our foreign embassies. The Italian branches have also been reduced, and the Agency's personnel will not be able to exceed 450 units (the initial ceiling was 300, then increased with the of development - Law of 7 August 2012 n. 134, which contained most of the innovations). However, the implementing decrees are still missing, on which it is evidently not easy to reach an agreement.
The new control room for internationalization
The "development decree" has also changed the composition of the Control room for internationalization, the body set up by the financial package of summer 2011 and by the "save Italy" decree of December 2011, for better coordinate the internationalization policies and strategies of our country, organizing initiatives for promotion, analysis tools and market penetration and concentrating the use of financial resources towards specific and shared objectives.
The Cabin is co-chaired by the ministers of economic development and foreign affairs and it also includes the main national and regional governmental and economic actors who play a role on this front, such as the Minister for Regional Affairs, Tourism and Sport, the Minister for Agricultural, Food and Forestry Policies, the presidents of the Conference of Regions and Autonomous Provinces, Confindustria, Unioncamere, ABI, RETE Imprese Italia, and of the Alliance of Italian Cooperatives.
The Cabin had its first meeting on 18 July 2012, the second on 22 October, and resolved in materials Which: common strategy for promotion activities abroad; rationalization of the foreign network and coordination of the activities of Ministries, Regions, Chambers of Commerce; strengthening the attraction of foreign investments; identification of new export financing instruments.
They remain regulatory concerns on this new body. Does it join or replace the previous Control Room for internationalization, established with Legislative Decree 143/98, with largely similar tasks and objectives? The Control Room envisaged by the main regulation on support for internationalization (at least until now) was set up as the 2005th Permanent Commission of the CIPE for the coordination and strategic direction of foreign trade policy, but since 2 it has met only 2007 times ( in June 2008 and August XNUMX). Despite this hard life, however, it has never been abolished. Again: what value do the resolutions of the new Cabin, made up of government officials but also of external "lay" components? One would say that it only has a consultative role and that its "resolutions" must be incorporated into instruments by the government and the ministries concerned. A clarification would be appropriate on this point.
Enit restructured, Buonitalia repealed
Again with the development decree, the reorganization of the Enit - Italian Tourism Agency - network abroad was also launched. The progressive absorption of the 25 foreign offices of Enit into those of the Ministry of Foreign Affairs it will result in an almost complete saving of operating costs, which can be estimated at more 12,7 million euros. As already happened for the new ICE Agency, a significant reorganization of the employment of Enit personnel is envisaged in the face of a mission and activities that mostly look at the international context.
On this front, there could have been a little more courage in making cuts, given that Enit is now an empty institution, as its powers have been transferred to the regions. It could have been abolished by passing the residual competences to ICE or to the regions and by selling or putting the Italian and foreign offices to good use. But at least a first step has been taken.
Remaining in the field of entities for the promotion of our businesses abroad, with a law of the end of 2011 (Law 214/2011), Lawto company Buonitalia spa has been suppressed. Its functions as part of the promotion abroad of Italian agro-food production and interventions in favor of the internationalization of agricultural enterprises, they have been attributed to ICE – Agency for the promotion abroad and the internationalization of Italian enterprises.
I internationalization consortia
They have been set up i internationalization consortia, Whose mission will be addressed to new forms of internationalization, training, promotion of Made in Italy. In fact, they have as their object the international dissemination of products and services of small and medium-sized enterprises as well as support for their presence in foreign markets, also through collaboration and partnership with foreign companies.
In order to avoid the dispersion of resources in small interventions, the contributions to support the internationalization projects of various bodies, organizations or associations are now concentrated only on the projects carried out by the new internationalization consortia, by the Chambers of Commerce abroad and by trade associations.
Desk Italia was also created to attract FDI from abroad
The "growth decree 2.0" also provided for the establishment of a Desk Italy for “attracting investments from abroad, as well as facilitating foreign investors who express interest in carrying out initiatives of significant economic and social impact for the country“. Desk Italia is established by decree of the President of the Council of Ministers, on the proposal of the Minister of Economic Development, and "carries out its activity according to the guidelines elaborated by the control room for internationalisation“. The function of Desk Italia is that of "connection between the activities of promoting Italy abroad as a destination for foreign investments carried out by the Internationalization Agency - ICE, and the activities of accompaniment and establishment of foreign investors carried out by the National Agency for investment attraction and business development – Invitalia”. In addition, Desk Italia will elaborate "on an annual basis proposals for regulatory and administrative simplification on the issue of attracting foreign investments".
In the government's view, it will not be a new bureaucratic bandwagon, as Desk Italia will operate at the Ministry of Economic Development, making use of the staff of the Agency - Ice and the Agency - Invitalia, without further charges for the state. This heartens us somewhat, because after the (rather unsuccessful) experience of Invitalia, no one felt the need for a new bureaucratic body with offices, presidents and boards of directors: judging by what is written in the decree, we are talking about an operational, coordination desk, and not of a real company, and this could also be a positive experiment, and at least without additional costs.
Fund for sustainable growth also for promotion abroad
One of the cornerstones of the "development" is the “Fund for sustainable growth”, which comes from reorganization of the special revolving fund on technological innovation (formerly FIT). The Fund has as a priority objective the financing of programs and interventions for the competitiveness and support of the productive apparatus on the basis of projects of significant national interestarticulated along three strategic lines:
1. the promotion of research, development and innovation projects;
2. the strengthening of the production structure, in particular in the South, the reuse of production plants and the revitalization of areas in crisis situations through the signing of program agreements;
3. the promotion of the international presence of companies and the attraction of investments from abroad, also in connection with the actions that will be activated by ICE - Agency for the promotion abroad and the internationalization of Italian companies.
A dedicated section is set up within the Fund for each objective. For the pursuit of these purposes, the priorities, forms and maximum intensities of aid that can be granted under the Fund are identified with non-regulatory decrees of the Minister of Economic Development, in agreement with the Minister of Economy and Finance, in the compliance with public finance balances, to be issued within 60 days of the date of entry into force of the law (therefore from 12 August 2012, which has happened, but the decree is still bogged down). With the same procedure, the tools and procedures adopted can also be updated, based on previous experience. The aforementioned measures are activated with notices or directives from the Minister of Economic Development, which identify the terms, methods and procedures for the granting and disbursement of the subsidies.
In order to collect the funds necessary for the Fund, it has been foreseen the repeal of 43 rules on business facilitation, managed by the MiSE (among which the law n. 488/1992, those relating to negotiated programming or the Program Contracts, the Localization Contracts and the Area Contracts, and various laws on contributions for export consortia and on other foreign promotion activities). Thus they will recover approximately 650 million euros in 2012, plus another 200 million in subsequent years, to which must be added the resources of the "Revolving fund for business support and investment in research (FRI)" set up at Cassa Depositi e Prestiti Spa, estimated at around 1,2 billion euro.
The money can be used for subsidized loans that provide for repayments and, limited to interventions financed by the EU and the Regions, also for other forms of reliefexcept for the tax credit. Non-repayable interventions are abolished.
Internationalization support
The development decree (art. 42) reorganizes and simplifies the procedures relating to the Fund for internationalization established by Law 394/81 and managed by SIMEST, also establishing a reserve equal to 70% of the resources for SMEs. In particular, it establishes that the terms, methods and conditions of the interventions, the activities and obligations of the manager, the control functions as well as the composition and duties of the Committee for the administration of this Fund are determined by decree of a non- regulations of the Minister of Economic Development.
The revolving fund pursuant to article 2 of the law of 29 July 1981, n. 394 (disbursement of loans at a subsidized rate) finances the following interventions:
1. loans to exporting SMEs for the improvement and safeguarding of their capital solidity in order to increase their competitiveness on foreign markets. This facilitation however was suspended at the end of 2011 due to lack of funds, with the Circ. SIMEST no. 3/2011;
2. funding for entering foreign markets (non-EU) for the dissemination of products and services (which replace funding for commercial penetration abroad based on the famous law 394/81, now repealed);
3. funding for pre-feasibility and feasibility studies and technical assistance programs linked to Italian investments abroad;
4. interest subsidies to Italian operators for financing transactions for their share, or part of it, of risk capital in companies or businesses abroad owned by SIMEST Spa and headquartered in countries outside the European Union (art. 4 of law 100/90).
Protection of Made in Italy: the sanctions entrusted to the Chambers of Commerce
It has been entrusted to the Chamber of Commerce system sanctioning power in the event of violation of the provisions envisaged on the subject of Made in Italy which requires the owners or licensees of trademarks to accompany the products or goods either with precise and evident indications on the origin or foreign provenance, or in any case sufficient to avoid any misunderstanding by the consumer on the actual origin of the product.
The aim is to strengthen the action against illegal conduct involving the use of the brand in such a way as to induce the consumer to believe that the product or goods are of Italian origin, in line with the European legislation on origin.
Cassa Depositi e Prestiti buys SACE, SIMEST and Fintecna
With the conversion into law of the decree on the “spending reviews” (Law 135 of 7 August 2012) the Government has added another element to its work of rationalizing the structure of public shareholdings.
In fact, during the conversion of the decree a title was added, which contains some articles including 23 bis, which deals with the "disposal and rationalization of state shareholdings".
For this purpose, it has been attributed to Cassa Depositi e Prestiti Spa (Cdp) the option right for the purchase of the shares held by the State in Fintecna SpA, SACE SpA and SIMEST SpA. The option rights can also be exercised severally within 120 days of the entry into force of the law (on 15 August, the day following its publication in the Official Gazette). Within ten days of exercising the option, CDP shall pay the Ministry of the Economy and Finance the provisional consideration, equal to 60 per cent of the book value of the shareholders' equity as resulting from the consolidated financial statements, where drawn up, as at 31 December 2011 of each company for which the option has been exercised. The final transfer value, deemed appropriate by Cdp, is determined by decree of the Minister of the Economy and Finance, to be issued within sixty days of the date on which the option is exercised. This took place on 27 September 2012, giving rise to a provisional payment of a consideration of €3,8 billion.
With this manoeuvre, the MEF believes it can bring cash to the state budget for around 10 billion, to be allocated for the amortization of government bonds or for the payment of state debts. However, the nature of the three companies' business will not change. Fintecna, SACE and SIMEST will continue to carry out the activities already entrusted to them on the basis of legislative and regulatory measures currently in force. SIMEST SpA, in the management of financial support interventions for the internationalization of the production system, continues to comply with the agreements with the Ministry of Economic Development already signed or to be signed on the basis of the reference legislation.
So, this maneuver is about the possibility of using a part of CDP's abundant free capital to produce cash for the state and reduce its debt. Let's keep in mind that the 3 companies that will be acquired by CDP are three "cash cows" and certainly not three empty or loss-making boxes. Fintecna has a net worth of €2,3bn, but with the Fincantieri package and the public properties it could have substantial capital gains. SACE since 2004 (when it was transformed into a joint stock company) to date has produced 3,4 billion in net profits and has distributed 2,3 to the MEF as a dividend, to which must be added, in 2007, the extraordinary dividend of € 3,5 billion ( following the advance payment of rescheduled debts by Russia); it has respectable shareholders' equity (€ 6,2 billion plus another 2,3 billion in technical reserves) and good prospects for further growth. SIMEST is the smallest, but it too has been producing, albeit modest, profits for years. On the other side, a further objective of this regulation is to enhance the role of the CDP as a modern reference center for state holdings, understood not as the management of suffering companies but of efficient and well-managed public service companies.
From the point of view of the internationalization support system, Law 135/2012 does not change much, except for the fact that SACE and SIMEST no longer report directly to the Minister of Economy, but only indirectly, through the Corporate Governance of the CDP.
The merger of SACE and SIMEST into the CDP opens anyway opportunities and synergies which could turn out to be very interesting, as we will see in the third article of this series.
The incentives for forfaiting are decreasing
In terms of incentives, it must be said that the beginning of 2012 had been very unhappy for exporters, especially those of machinery, plant and works. Indeed the procedure in this regard for contributions on export credits was amended with SIMEST circular no. 2/2012 of 17.01.2012, that made substantial changes above all to the criteria for facilitating exports financed with fixed-rate divestments without recourse (forfeiting transactions).
Indeed, for transactions accepted after 17/01/2012, the appropriate margin on the cost of funding has been established, without distinction of country risk, according to the following criteria:
· 1,125% for transactions under 3 million Euros
· 1% for transactions over 3 million Euros.
The exporter is allowed to pay the debtor a portion of the margin requested by the discounting bank exceeding that recognized by SIMEST, while maintaining the CIRR as the minimum eligible rate.
In fact, the SIMEST contribution from now on will only cover possible increases in interbank rates that may occur from the time the contract is stipulated to the time of the discount.
Therefore, the different risk levels of the transactions and their consequent cost are not taken into account. It is evident that the cost of disinvestment of export credits with forfeiting operations has significantly increased since that date. We therefore recommend that exporters ask discounting forfaiters and banks in advance for an estimate of the costs that remain to be borne by the seller to finalize a forfaiting operation.
