Federica Favi has been Ambassador of Italy in Oman since 2018. Previously she occupied the same post in Georgia and that of Commercial Secretary and then Consul in Cairo. She has also worked at the Permanent Representation to International Organizations in Geneva, while in Rome she was a member of the General Directorate for Asia, Oceania, Pacific, and Antarctica and of the General Directorate for Political and Security Affairs directing the NATO Office. In 2017, she was awarded the title of Officer of the Order of Merit of the Italian Republic.
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InvestorVisa: Ambassador, you have been in office for almost two years. Were there particular initiatives concerning Muscat’s economic relations with Rome that required your attention the most?
Favi: Since the beginning of my mandate, I aimed at strengthening our bilateral relationship at all levels, with an emphasis on the economic aspect. Italian companies are active in leading Omani sectors, such as engineering, services, and high tech industries. During the first part of my mandate, I have organized several high-level visits to consolidate the political and economic dialogue between the two countries, like the one of Prime Minister Giuseppe Conte in January 2019. I have also dedicated myself to arranging integrated promotion initiatives for various industrial sectors such as agri-food, the defence, and design industries. We are now preparing for comparable projects aimed at the aerospace, packaging, and healthcare industries.
In the past, you were also Ambassador to Tbilisi and Consul in Cairo. Were you able to find significant differences in the activities of the Muscat embassy compared to those of your previous posts?
They are three extremely diverse experiences, owing to different local contexts and characteristics of the Italian communities in these countries. Paradoxically, Muscat is the easiest, not only due to the size of the country and its economic and cultural features. Here visas are not an issue as critical as they were during my time in Egypt and Georgia. Omani’s spending capacity is not comparable to that of Egyptians and Georgians, whose countries still have pockets of poverty. Here, being Italian helps, like everywhere else. Our services to companies and our fellow citizens are the same everywhere. My approach to the job has always been one based on a significant rigour in service while pursuing greater flexibility in our actions to support the Italian System and to better suit the needs of individual companies or Italians who contact us.
Oman enjoys enviable political and economic stability in the Middle East and experienced a period of exceptional development over the last few years. Do you think that this could aid in establishing more robust ties with Italy? If so, what do you expect from the future?
Oman is an essential partner for Italy and Europe thanks to its strategical position at the crossroads of Asian, African, and European trade routes and its neutral stance in foreign policy, built upon a constant dialogue with every one of the regional powers. Since the 1970s, thanks to the foresight of the previous Sultan, Qaboos, the country has experienced an unprecedented development, starting a new phase in national history, called “Rebirth”. During this time the Oman the administration developed a great deal of admiration for our companies, which helped them be awarded prominent contracts and consultancy deals in several sectors, like those dealing with the conservation and restoration of Omani archaeological heritage and the most modern infrastructure projects. The country is experiencing a severe financial crisis, now aggravated by the pandemic, related to the low price of oil. In this context, the Sultan is planning a long-awaited modernization effort aimed at increasing the role of the private sector in the economy and reducing the dependency of the economy on hydrocarbons. These reforms could open up new opportunities for an even closer bond with Italy, which can be a partner in this transformation process by providing high-quality technologies, training, knowledge, and experience. In the coming years, we will have to continue working to foster our ties with the Omani economic system, at all levels, to seize the opportunities of this partnership fully.
Unfortunately, Italy and its economy are facing the great coronavirus pandemic challenge. What impact do you think there could be on foreigners’ attitudes towards investing in Italy? How is the pandemic perceived in Oman?
Following some very difficult months, during which there were more than 86,000 cases, Oman is ready to finally go back to normal: airports will reopen on 1 October. The lockdown forced many businesses to suspend their activity, and the economy already slowed down back in January, during the forty days mourning period for the death of Sultan Qaboos. Everyone is aware that we need to go back to business as usual, given that Oman’s economic outlook will be especially uncertain. The Sultanate will have to carry out fiscal, financial, and industrial policy reforms to overcome the current crisis while addressing the global economic challenges.
As far as Italy is concerned, I think that the measures introduced by the Government to support our industrial system show how they intend not only to relaunch exports but also to attract new investments. The regulatory innovations adopted and the associated financial support plans will allow for promotional initiatives capable of addressing the need for portfolio diversification that many Omani large groups have, as they will not only be investing in the domestic market but also try to identify new investment opportunities in mature markets abroad.
On which sectors do you think will best to focus in the future, in terms of both bilateral investment and industrial synergies? Could they be the ones undergoing significant growth following the current economic diversification efforts?
The Omani government has urgently sped up the diversification of productive activities to counteract lower revenues from oil exports and to mitigate the effect of the pandemic. Given the current macroeconomic situation in Oman, the main sectors on which the bilateral cooperation strategy focuses are agri-food and fisheries, product design and packaging, logistics and transport, aerospace, manufacturing, renewable energy, technological innovation, cybersecurity, and health. Cooperation with Omani authorities and economic operators has already begun in each one of these sectors, and we can offer our technologies and expertise to build industrial synergies and boost investments in both directions.
Oman is a country with a lot of potentials. However, it does not host facilities of the customary support structures for internationalization neither the ICE, if not with a desk within the Embassy, nor the Chamber of Commerce. How does the Embassy operate in this field, and what is your relationship with out of the country offices?
Opening an ICE Desk in Oman has been a priority since my arrival. Italian companies, especially small and medium-sized ones, can benefit considerably from the services of the Agency, which, thanks to its direct presence in the country, can rely on a growing network of contacts and relations with local economic operators. A recent reform transferred the competences concerning internationalization and coordination with ICE Agency, SACE, SIMEST, and the Cassa Depositi e Prestiti Group from the Ministry of Economic Development to the Ministry of Foreign Affairs and International Cooperation. This reform improved our coordination and the global projection of our institutions. Within this framework, although they operate from the UAE, there are also an expert from the Bank of Italy responsible for the area and an ICE desk working to attract investments. However, our local presence could be strengthened considerably: due to their traditions and cultural background, these markets must be constantly monitored. On 31 August, the existing contract with the ICE desk here expired, but we are confident that it will be renewed. An intermittent presence could not be enough. We hope to develop a full-time network of experts based in Muscat devoted to the exploration of the Sultanate market opportunities. We are working toward the ENIT’s inclusion in this network, as it is now a pillar of the Italian strategy to restart tourist flows, even more so when we are dealing with countries with a high spending capacity, such as the Gulf ones.
Italy implemented a visa program for non-EU investors that offers many advantages to those who invest in Italian companies and start-ups. Would an Omani investor be interested in obtaining a visa to follow their business in Italy and the Union more efficiently?
Omani entrepreneurs have several reasons to be interested in doing business in Italy and the EU, and an investor visa could certainly be an additional way to attract them. Right from the start, the visa sector has been one of my priorities. Thanks to the introduction of an outsourcing service to collect visas, in 2019 alone we were able to increase the number of visas issued by 40%, not just for tourism but also for business travels, demonstrating the keen interest of the Omani economic sector in intensifying the industrial link with Italy.
Which type of investment can particularly appeal to the average Omani businessman, both as a sector and in terms of business opportunities that the Italian company offers?
Italy is Oman’s second EU trade partner after Germany, and industrial machinery represents the main share of our export. Opportunities for industrial partnerships arise when the Omani demand for advanced technology meets private capital interested in expanding abroad. Other sectors with potential for investment in Italy include the hospitality industry and real estate sector, and Omani groups have already shown interest in examining promising opportunities in Italy. Omanis are attracted by our skills, our flexibility, and our approach focused on innovative solutions. For an economy undergoing a transformation like the Omani one, all of this represents a genuinely attractive long-term investment.
The Middle Eastern investment sector distinguishes itself for the notable presence of capital investors, both institutional and private (sovereign wealth funds, asset managers, family offices). In 2017, GCC-based institutional investors had a total of USD 3,500 billion in assets under management, 2,900 billion of which were managed by sovereign wealth funds. The Oman Investment Authority, a merger of two government funds, manages assets worth around USD 18 billion and ranks 38th among the world’s largest sovereign wealth funds.
As a result, investments coming from the Middle East are still mainly in the form of capital investments and not industrial ones. Manufacturing is still developing in the region and, in any case, it is going to stay in the area given the benefits available (no or low taxation, low labour costs, utilities aplenty, excellent logistics). European countries are penalized in this competition. Nevertheless, private equity investment funds (managed by Omani asset managers) are looking for investment opportunities, especially in high-tech sectors. Even medium-sized Italian companies could be able to negotiate beneficial agreements. We are talking about capital investments, not industrial or technological acquisitions. The investor bets on the strategy, the innovative potential of the company’s business model and product as well its skill in using economic resources to induce exponential growth. In such cases, the asset manager, as a facilitating partner, also promotes the development of the company’s business in the region. Venture Capitals specializing in investing in innovative startups and scaleups represent a new trend in the investment market. For the moment, they are mainly directing their attention towards companies with a foothold in the region, but Italian companies with high-tech know-how and the ability to operate internationally will always find potential partners. ICE’s FDI Desk, in coordination with the Embassy, helps Omani investors by proposing investment opportunities in various areas of the Italian economy and assists them throughout the investment’s life cycle (first assistance, tutoring, accompaniment, aftercare).
You have pointed out that in Oman the Italian soft power and cultural influence are unusually strong, as shown by a solid collaboration in the cultural field. Can you tell us more about this? What could be the reason for this Omani fascination with Italy?
Cultural cooperation plays a central role in our bilateral relations. Our collaborations range from archaeological excavations and museum exhibitions to music, language, and art. This fascination stems from Sultan Qaboos sincere and all-encompassing passion for our country and our rich artistic and cultural heritage, as his numerous trips to Italy can attest. This familiarity with Italy has spread to the population, who look at us with reverence and curiosity. However, there is also a second, critical factor explaining this steady friendship: the uninterrupted presence of Italy and its culture in Oman. Italian archaeological research in Oman represents one of the traditional and most important areas of bilateral cooperation, with excavations led by the University of Bologna, the Orientale of Naples, the Sapienza of Rome, and the University of Pisa, beneficiaries of the Foreign Ministry contributions. In 2019, the 40th anniversary of the Italian archaeological missions in the Sultanate was celebrated with an exhibition at the National Museum of Muscat and a book edited by the Embassy. The Royal Opera House in Muscat is the most prominent theatre in the Middle East. Under the leadership of an Italian director, Umberto Fanni, they collaborated on multiple occasions with major Italian theatres, including the Rossini Opera Festival in Pesaro and Teatro Massimo in Palermo. The theatre will celebrate Zeffirelli by staging the world premiere of the Maestro’s last work next year, a Rigoletto produced by the Muscat Opera together with the Arena di Verona. The Sultan Qaboos University, thanks to the MAECI’s professorship contributions, offers Italian language courses and an Italian lecturer will soon be available to students. Sultan Haitham has been the Minister of Culture for the last twenty years and, although the current financial crisis forced him to reshape public spending in all sectors, he is fully aware of how important it is to make the most out of Oman’s significant cultural heritage, as it brings economic, tourist and business returns.
Could this solid foundation of cultural sharing prove to be favourable for the Italian cultural sector, perhaps attracting the donations of Omani tycoons in love with the Bel Paese and, in turn, benefit from the advantages of the Italian investor visa?
There are many advantages and benefits associated with the investor visa that could attract Omani tycoons. If Italy wants its investment attraction programs to fully succeed it has to keep in mind that creating new opportunities for the private sector is paramount, as this is the area where the future of the Italian-Omani collaboration lies. We are currently bearing the heavy burden of the ongoing economic crisis but, thanks to its culture, Italy is still held in high esteem around the world. Hence the need for a systemic approach in the promotion of our country involving not only its historical, artistic and natural beauties but also Italian excellences in the aerospace and health industries. We need to spread awareness of these lesser-known aspects of the Italian economy, especially outside Europe.
To further stimulate the inflow of capital into the country, Italian laws provide for a beneficial tax regime on foreign income, as well as unique benefits if one invests in specific areas of Italy. We know that competing on taxation with countries like Oman is difficult but, together with other advantages such as those provided by the visa, can such a measure attract Omani entrepreneurs?
When an entrepreneur chooses to invest in a specific country, a favourable tax regime plays, without a doubt, a large role, even more so when they hail from a country with an extremely competitive tax regime. The current legislation shows the extent of Italy’s commitment to creating not only a business environment as friendly as possible for foreign investors but also favour employment and growth. For example, the “Golden Power” Decree, establishes that foreign investors can ask Italian institutions – starting with the Embassy – for assistance since the very beginning of the procedure. I am sure that Omani entrepreneurs will be receptive to the strong messages that Italy is sending abroad.
The different tax regimes introduced for new residents offer several benefits. A special flat tax on foreign income includes, among others, a tax exemption on inheritances and donations of assets located abroad, a substitute tax on foreign pension, a special exemption on income from Italian sources of income as well as a simplified visa procedure. These measures are aimed at those who plan to settle permanently to enjoy the high quality of life and the cultural and natural riches that make Italy one of the best countries in the world. Italy offers a wide range of stimulus and growth programmes for industrial and commercial investments. These include national aid plans and regional incentives for investments in less developed regions of the country, measures to encourage investment in specific sectors (industry 4.0, research and development, smart factories, agri-food, life science) and tax relief to reduce unemployment, especially among young people. Among these plans, there are the Development Contract and the 181/89 Law providing grants and financing at reduced rates, as well as various tax reliefs for companies investing in manufacturing, agricultural products, tourism, and environmental protection. For strategic investments (over fifty million euros), for example, there is a Fast Track procedure making ad hoc resources available to ICE and Invitalia to help foreign investors in finding production sites and managing administrative procedures. Other incentives and benefits are offered both to innovative startups and small and micro enterprises with long-term interest-free financing. The Government also encourages cultural, creative, and tourism companies to settle in southern Italy by helping them to cope with start-up costs, thus supporting the uniqueness of those regions.