Article by Danielle Myles courtesy of FDI intelligence.
The beautiful but economically stagnant south of Italy has started to show early signs of a long-overdue renaissance. Since opening their doors a year ago, the country’s eight special economic zones (SEZs) — stretching from Abruzzo in the centre, to Calabria in the south, and across to Sicily and Sardinia — have each built project pipelines of up to €1bn and instigated ambitious plans to modernise local infrastructure.
On the face of it, this is attributed to their tax and regulatory benefits, plus a generous helping of EU recovery funds. But their early success is in large part down to the local SEZ commissioners and their teams, which have been passionately promoting their regions, building relationships and stoking some friendly competition among themselves.
After decades of feeling like it received the short end of the stick compared with the wealthy north, southern Italy has been delegated the power and money to improve the regional economy in a way only it can.
But in one fell swoop, the central government may be about to take that away. Under a decree issued on September 7, the eight SEZs will be merged into a single zone to be managed by a single plenipotentiary commissioner from the capital, Rome. The finer details will be hammered out over the coming months. But as things stand, on January 1 the eight SEZ commissioners and their teams scattered across the south will be dismissed and replaced by a new authority in a city that does not even fall within the single SEZ territory.
All processes lead to Rome?
Those in Italy’s SEZ community commend the single SEZ’s goal of greater regional co-ordination, and the decision to extend SEZ benefits to every patch of land in the south. That compares with today’s rules which benefit only select municipalities within the zones’ catchment areas. Italy’s single SEZ will become Europe’s second biggest free zone after Poland, which conducted a similar overhaul a few years ago.
“There are many strengths in this reform, but there are several weaknesses,” says Aldo Cadau, commissioner of ZES Sardinia. “One of the weaknesses is centralising everything in Rome.” Among free zones’ most touted benefits is less red tape, but running all decisions and processes through bureaucratically clogged-up Rome defeats this purpose. As a resident of Italy, I have experienced first-hand the delays and administrative headaches of nationwide public services being managed from the capital.
Even the single zone’s announcement was marked by Rome’s typical disorganisation. The eight SEZ commissioners were not forewarned of the plan. On September 4, just three days before the release of the decree stating they will soon be out of a job, the commissioners were pitching the benefits of their zones at the Italian-Saudi Investment Forum in Milan.
More on Italy’s SEZs:
A new deal for Italy’s south
SEZs are a fundamental milestone for southern Italy
Global Free Zones of the Year 2023 awards – Rising stars
Fears over Rome’s inefficiencies are compounded by the increased amount of land now subject to SEZ benefits, which it is hoped will drive up investment applications.
“It will have to be seen whether the resources that will be made available will be sufficient, and whether the new single authorisations will be granted in a timely manner by the single centralised structure provided in Rome,” says Mirco Semeraro, a lawyer at Polis Avvocati in Bari. Indeed, there are serious doubts over whether a single authorisation window in Rome can obtain an investment project’s 30-plus local approvals as quickly as today’s regional SEZs can, given their local relationships and understanding.
As the government finalises the single SEZ structure, sources tell fDi there has been a push to transform the commissioner roles into deputy commissioners, to maintain some continuity. The government would be wise to take their advice, and expand on it by keeping a local SEZ branch in each region.
The regions will continue to market themselves as investment destinations. “We locals are much more motivated to attract investors to our territory because we know our territory needs investment,” says Mr Cadau. But the same goes for bringing investments to fruition. In just one year, Italy’s eight SEZs have fostered entrepreneurship, created new efficiencies and lifted business standards. The knowledge, experience, connections and efforts of those who have got today’s SEZs up and running cannot be wasted. In reforming its SEZ regime, Italy must not throw the baby out with the bathwater.