How Italy Is Deepening Its Relationship With ASEAN

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How Italy Is Deepening Its Relationship With ASEAN

A series of initiatives organized by prominent members of Italy’s elite has developed new links with ASEAN states.

How Italy Is Deepening Its Relationship With ASEAN

Vietnam’s Prime Minister Nguyen Xuan Phuc waves as he arrives at the third High Level Dialogue on ASEAN-Italy Economic Relations.

Credit: The European House – Ambrosetti

At the end of November 2019, the Corriere della Sera, the most important Italian newspaper, published an article entitled “Southeast Asia is the new China.” In the piece, the author recounted the fears of global political and economic elites that the world is entering a phase of “deglobalization,” mainly triggered by the trade war between the United States and China and the trade-restricting measures put in place by G-20 countries.

After having analyzed the economic consequences caused by these events, the author concluded that, while the long-term risk arising from this situation is a decoupling between the U.S. and the Chinese spheres, at present the only certainty is the transformation of the world economic map, with the emergence of new productive areas. Significantly, the only example quoted in this regard is the Association of Southeast Asian Nations (ASEAN), indicated as one of the most economically dynamic regions in the world. The Corriere della Sera’s presentation of ASEAN as the exemplifying paradigm of a new and growing economic zone is certainly not accidental, as it reflects the increasing attention that the Italian political and business establishment has been paying to this region in recent years.

The first and best example in this regard is the “Italy-ASEAN Association,” established in 2015 thanks to the initiative of prominent members of the Italian political, academic, diplomatic, and business communities. The Association (chaired since its foundation by Enrico Letta, formerly Italy’s prime minister) aims primarily at fostering dialogue and commercial exchanges between Italy and Southeast Asia’s countries. Concretely, this has been done through the organization of a series of conferences, meetings, and events, the most prominent of which is the “High Level Dialogue on ASEAN-Italy Economic Relations,” arranged by the Association together with The European House — Ambrosetti, the leading Italian think tank and among the most-esteemed worldwide, and endorsed by the Italian Ministries of Foreign Affairs and Economic Development, the Italian Trade Agency, and the General Confederation of Italian Industry. As the name suggests, the Dialogue is mainly a forum of discussion focused on taking stock of the current volume of trade and economic exchanges between Italy and the ten Southeast Asian nations and on exploring ways to increase them. Additionally, it also aims to assess current areas of cooperation at different levels and find modalities to further increase the collaboration in new sectors.

The first High Level Dialogue took place in Jakarta in May 2017 and saw the participation of  seven ministries from Italy and ASEAN countries, 30 international speakers from academia and business sectors, and 200 managers from the most prominent companies active in the two geographical areas. The event addressed themes such as the macroeconomic and geopolitical outlook of Italy and ASEAN states, technologies for the future, competencies for development (in particular infrastructure, energy, machinery, and agro-industry), and tools for economic cooperation and development (with a stress on banks, financial institutions, trade agreements, and education systems).

The second ASEAN-Italy Dialogue was held in Singapore in April 2018; this meeting registered an increase of participation, with the presence of 10 government representatives, six national industrial associations, 35 speakers, as well as more than 300 executives from Italy and Southeast Asian states. On this occasion, the discussions scrutinized topics such as the progress of ASEAN regional integration and the impacts of the Belt and Road Initiative, digital innovation and industry 4.0, doing business in Southeast Asia, and again a general overview on the Italy’s and ASEAN’s geopolitical and macroeconomic situations.

The third edition of the Dialogue, organized in Hanoi in June 2019, represented an important milestone for the relationship between Italy and ASEAN countries. Along with the further increase in the number of important guests, for the first time the forum registered the participation of two prime ministers: Nguyen Xuan Phuc from Vietnam and Giuseppe Conte from Italy. In his opening remarks, Conte underlined that the Italian government considers ASEAN as an indispensable partner and that its integration project is important for the stability of the region and the world. Conte highlighted how he sees significant unexplored potential to further increase the investments and economic cooperation between the two sides, especially in the industrial sector. From this intervention, it is possible to understand that the Italian leadership is following a twofold strategy aimed at deepening Italy’s relationship and understanding with ASEAN mainly in two specific areas, politico-institutional and economic.

As for the first of these areas, in the last years Italy has been particularly active in engaging with ASEAN authorities at various levels. On November 2015, Italian President Sergio Mattarella paid a visit to the ASEAN Secretariat in Jakarta, becoming the first EU Head of State to do so. During the meeting, Mattarella noted the excellent relationship existing between the two sides and underlined the potential for an additional improvement. From his side, the then-Secretary General of ASEAN Le Luong Minh highlighted the important role played by Italy in fostering the European Union-ASEAN relationship, which is paramount to Southeast Asia in terms of trade, investment, and  political and security cooperation.

Also, the number of bilateral visits is increasing significantly. According to Ugo Astuto, former director of the Asia and Oceania section at the Italian Ministry of Foreign Affairs and now EU Ambassador to India, the growing importance of ASEAN in the context of Italy’s foreign policy is testified by the flourishing of meetings by heads of state and government, ministers, vice ministers and undersecretaries (especially with Vietnam, Indonesia, Singapore, Myanmar, Philippines, and Malaysia). Italy has also signed “Declarations of Strategic Partnership” with a few Southeast Asian states covering different sectoral areas. Moreover, in July 2018 the Italian Ministry of Foreign Affairs hosted a conference dedicated to “Italy-ASEAN cooperation on Higher Education, Science and Research,” an event that proves the expansion of collaboration in more technical sectors as well.

At the diplomatic level, Italy is also starting to coordinate its actions in the region in order to maximize results. On January 2017, for the first time the Italian ambassadors posted to the ASEAN countries met in Jakarta for a two-day meeting whose aim was to develop an operational strategy to enhance Italy’s presence in the region as a whole. Speaking at the event, then-Italian Foreign Affairs Minister Angelino Alfano stressed how “this is a region which is becoming increasingly important for Italy, from a geopolitical and economic standpoint, with its 630 million inhabitants and some of the most dynamic economies in the world.” Alfano then invited the Italian diplomats to “work to achieve a quantum leap in the region” and noted that “the meeting should start a reflection on strategy in order to boost ‘Brand Italy’ entirely, with a view to securing the success of our enterprises.” He concluded by underlining that “the cooperation with ASEAN countries is a clear political policy of our government, which is truly important, not a matter of theory.”

If we pair this declaration with the statement of Prime Minister Conte quoted above, it becomes clear that the second focus area of Rome’s action in ASEAN is connected to boosting Italy’s economic presence in the area, which is indeed the main aim of the aforementioned High Level Dialogue on ASEAN-Italy Economic Relations

According to UNCTAD data, from 2009 to 2016 Italy’s exports to ASEAN countries increased from $7.14 billion to $10.33 billion, whereas imports grew from $5.27 billion to 8.14 billion. Among the Italian exported goods, machinery, equipment, and chemical products have the lion’s share at 42.6 percent, while ASEAN states exported to Italy mainly computers, electronic products, and food, accounting for 41.5 percent of the total.

In addition to this, a report by the European House — Ambrosetti together with the Italy-ASEAN Association highlights how there is still room to improve these numbers. As the report notes, the recent conclusion of free trade agreements (FTAs) between the European Union and two ASEAN countries (Singapore and Vietnam) and the prospect for a future EU-ASEAN FTA can be beneficial in boosting the links between the two blocs. To that end, Italy could play the key role of “European ambassador” for the improvement of economic and trade relations with the ASEAN region. Lastly, the report states that Italy’s business environment could be a perfect match for ASEAN, as the country presents some world-recognized industrial excellence that could cater to the development needs of Southeast Asia’s nations.

With that being said, however, it is worth underlining that until now the volume of exchanges between Italy and ASEAN has not been particularly significant, in comparison to both world players and other European states. In 2018, ASEAN represented Italy’s 14th largest partner in terms of exports, imports, and foreign investments. Conversely, Italy was only  ASEAN’s 22nd largest partner for imports and the 25th for exports; as for the stock of investments, Rome ranked 26th among all ASEAN’s partners. In the European continent, currently Germany, France, the United Kingdom, and even Switzerland and the Netherlands represent bigger trade partners for ASEAN than Italy in terms of total volume of exchanges.

Against the backdrop of these data, it is clear why the Italian economic and political establishment wants to catch up with its global competitors and increase Italy’s presence in Southeast Asian markets. Nowadays, ASEAN is the third market in the world in terms of population and the sixth in terms of GDP; over the last decade it experienced an average annual economic growth of 5.1 percent. According to Enrico Letta, the chairman of the Italy-ASEAN Association, it is exactly for these reasons that gearing up Italy’s activities in the region “is no longer an option, but instead a true necessity.”

The various initiatives put in place in the last years seem to be heading in the right direction, and 2019’s High Level Dialogue may have constituted a decisive turning point in this respect. For this reason, the next ASEAN-Italy Dialogue, to be held July 1-2, 2020 in Kuala Lumpur, will be an important event to monitor in order to assess whether the recent deepening of Italy-ASEAN relations and the improvement of trade exchanges can become a solid and constant trend in the years to come.

Fabio Figiaconi holds a Master’s in International Public Policy and Management at Erasmus University of Rotterdam. He also holds a Master’s degree in Contemporary History from the University of Milan. He recently completed a traineeship in the political affairs section of the European Union’s Delegation to Laos and previously worked at the Italian Chamber of Commerce in Vietnam.