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What do investors see in the ‘Lombardy model’?

Interview - August 11, 2016

Lombardy is the number one region within Europe’s “Four Motors” in attracting cross-border investments. Geographically on the principal east-west axis of Europe and at the heart of its most economically advanced area, the region is not only the engine of Italy, but also the continent. Major internationals have already established long-term investments in Lombardy and interest from Chinese firms in setting up here is rising substantially – and for multiple good reasons. So what exactly is its appeal and future potential? Governor Roberto Maroni explains what makes it so unique.

 

ROBERTO MARONI, GOVERNOR OF LOMBARDY REGION
ROBERTO MARONI | GOVERNOR OF LOMBARDY REGION

Let’s begin our conversation with the potential effects of Brexit. Some observers say Italy may benefit out of it. When it comes to the Lombardy Region, what role can it play in the high-growth corridor linking Africa and the Middle East to northern European countries?

Brexit is the start of a new process. I don’t look at Brexit as a problem, but rather as an opportunity for Italy and Europe, for the new Europe. Something has to change if Europe wants to survive Brexit. Otherwise, we will go back to the individual member states, and that would be a disaster for everybody.

We are working to get all the opportunities connected with Brexit. Italy has a great role to play and naturally Lombardy is at the forefront of these new opportunities. Lombardy is the most important region in Italy. 10 million people live in Lombardy out of 60 million in Italy. Lombardy has one-fourth of the Italian GDP with 800,000 companies. In Lombardy, we have all the most important international multinational companies from Europe and the world. Milan is the city number one in the world in terms of number of consulates. The number two is New York City, so just imagine!

Lombardy is not only the engine of Italy, but also of Europe. The region has been part of an association for 25 years, which is called the “Four Motors for Europe” – along with Catalonia, Rhône-Alpes and Baden-Württemberg. The Wall Street Journal a few months ago said that last year Lombardy was the number one region within the Four Motors in attracting cross-border investments.

 

What would you say are the key drivers attracting international investors?

We are the center of innovation. The vocation of Lombardy is research and innovation in healthcare, welfare, and manufacturing. We have 13 universities, both private and public. We have more than 40 hospitals, both private and public. We have 500 research centers in Lombardy, private and public. We have eight technology parks that are fundamental incubators where young people can develop their ideas into projects and create start-ups.

The key of the success of Lombardy lies in our capability to strongly integrate the public with the private sector. We work together and we create fruitful synergies.

All these conditions are unique to Lombardy; you will not find the same ecosystem in other regions. We are the number one region for manufacturing. We are the number one region for innovation. Lombardy’s GDP is €300 billion, and we invest 1.8% in innovation and research, which is twice as much as the Italian average. We want to reach 3% in a couple of years.

Even when I talk about investment in research and innovation, I mean both public and private resources. This strong integration is what we call the “Lombardy model.”

We put public money to finance applied research. I don’t want to finance researchers, but a project. To do this, we have to involve the private sector. We have to involve international companies, for instance. And I can tell you that thanks to our model, many of them decided to relocate their R&D centers to Lombardy. Consider Whirlpool, for instance. They picked Lombardy despite the fact that labor cost and the level of taxation in Italy is higher than in other countries.

 

What would you identify as the main economic sectors with the highest growth potential for FDI in Lombardy?

One is healthcare innovation, namely the future of the human care and medicine. We are making very important investments in the Expo area and creating a tax-free zone. The Italian government decided to invest €1.5 billion in 10 years in order to create the so-called Human Technopole, which will be the most important and innovative research center on genomics worldwide. It will be a point of reference for scientists from all over the world. Lombardy will be one of the most important global centers for healthcare and medicine.

The second sector is manufacturing, all kind of manufacturing. Digitalization and high-tech sectors create opportunities for us, as devices must be manufactured by someone. We are investing in this direction and we are getting more and more under the international spotlight. From next year, Lombardy will permanently host the World Manufacturing Forum, which is currently hosted in different countries all over Europe.

The third sector is infrastructure, both material and immaterial. Lombardy is 99% covered by broadband, 20% of which is ultra-broadband. We are going to invest €500 million in the upcoming months to extend the ultra-broadband to the rest of Lombardy. This is something useful for industry of course, especially for young people who live in villages, small towns, or even on the mountains. I want everyone in Lombardy to be able to fulfill their dreams from where they are. They don’t have to come to Milan to do what they want to do.

We have 1,500 cities and villages. The largest city, which is the metropolitan city of Milan, has 2.5 million people. The smallest village, which is Pedesina in the Sondrio province, has 32 inhabitants. Even these 32 have equal rights to enjoy the same level of services as the rest of the population and we, as the regional government, have the obligation to reach out to them as well.

 

What about in terms of transport infrastructure? How is Lombardy positioned in the strategic European trans-national network of the TEN-T corridors?

In terms of transport infrastructure, consider that 90% of the goods distributed in Italy come from Rotterdam, not from Genoa. It’s unbelievable.

We are at the center of all the most important European corridors. Here, we are taking advantage of European funds but also other long-term strategic investors such as sovereign wealth funds that are allocating important resources into these projects.

Not to mention the growing appetite of Chinese investors we are registering. This is a very important and very new trend. Almost every week I meet people coming from China saying they want to invest. They don’t want to buy companies and move them to China. They want to invest here and leave the company in Italy and be led by Italian management. This is something exciting and new for me. It’s fantastic.

 

When we look at Expo Milan 2015, it’s been a global event that brought Italy back on the global map. What is your personal perspective about the legacy of Expo Milan in shaping a new image of Italy?

I believe Expo Milan contributed to shaping a new image of Italy internationally, as the “Wellness Nation”. Made in Italy is fashion, food, but we also want Made in Italy to be wellness. There is a strong interlink between the theme of Expo and the planet, energy for life, and wellness.

The Italian style, the Italian way of living – which means you eat something good, you eat something that makes you happy and it’s healthy for you – it’s unique. That’s why the legacy of Expo will be devoted to wellness generally speaking with a particular focus on what I said before, namely the creation of the Human Technopole. Here you will find everything that is necessary to help us living longer and happier. The region already put €150 million into that project.

I also see an opportunity coming from Brexit in this context, as I strongly believe that it is thanks to visions like these that we will be able to shape a ‘brain gain’ of many researchers and young scientists that have gone to London to seek fortune years ago. We allocated €50 million to create a program to attract the best human capital for the Human Technopole.

Let’s talk about Lombardy from a cultural or touristic point of view. What makes Lombardy unique?

You talk of Tuscany and you immediately think of tourism. It is perceived as the natural region of tourism. Is it true? Yes, but also only in part.

Lombardy is the real land for tourism. Italy is the county with the highest number of UNESCO World Heritage Sites in the world, 51. Lombardy has 10 of these 51 UNESCO sites.

What we need to do in this area is invest more in marketing and to raise awareness about the richness we have in our region.

Therefore, we launched the Lombardy Year of Tourism from May this year to May next year. We put €60 million on the table to promote the territory. For instance, not many people know that we have 50 golf courses. Most of them are located in unique places in the world.

So, for instance, American tourists can come to enjoy playing golf in gorgeous places and then visit incredible UNESCO sites. 10 days in Lombardy, every day a different UNESCO site and a different golf course. This is something that only Lombardy and few other regions in the world can offer. Add on top of that Italian food, fashion, and the beauty of our lakes and mountains, and it becomes an experience like no other.

Lombardy is the land to visit. In Milan, you can see one of the most famous paintings in history, “The Last Supper” by Leonardo Da Vinci. We have the rock inscriptions in Val Camonica dating back 7,000 years, which is something unique in the world. We have a huge heritage that deserves more global attention. In the south of Lombardy there is Mantua that this year is Italy’s capital of culture: definitely another historical town worth visiting.

Moreover, in terms of gastronomy, every small village has something peculiar to offer. But to highlight our flagship dish, we have “Risotto alla Milanese”, a yellow risotto with saffron, which is now cultivated in Lombardy.

Valtellina is a valley famous for wine. We have different kinds of wines. For instance, we produce Franciacorta – our sparkling wine that is recording tremendous success. And allow me to say, much better than champagne!

So, as a final tip for our American friends, I’d suggest to try a Risotto alla Milanese with some great Grana Padano and a good glass of Franciacorta.

 

When it comes to the relations between the Region of Lombardy and the American market, what is the role of the US for Lombardy’s export and tourism?

I think that we are now at no more than 20% of the overall potential we can unleash with the US in terms of commercial and investment interests, but also in tourism. We can do much better and create more synergy in all segments. It has been enough that George Clooney went to live on Lake Como for it to become a major tourism destination. Lake Como is beautiful of course, but Lake Garda is nothing less, and Lake Maggiore is the same. The valleys all around are beautiful. We have to promote Lombardy more so that more people from the US come and start a snowball effect on our tourism sector.

I also see major opportunities in the agri-food sector. We are fighting against counterfeiting and “Italian-sounding” products that because of the packaging make people believe they are made in Italy, but they have nothing to do with Italy and the quality of our products.

 

Why should American investors pick Lombardy as their next investment destination?

First, because Lombardy is the best place to live. Second, because we are investing a lot of public resources in research and innovation. If investors decide to invest here, we provide 50% of the investment as free grants. Investors have, on their part, to guarantee to maintain the labor force throughout the years and employ young people.

 

I am aware you are a musician. If you would have to pick a musician that embodies Italy’s spirit, who would you choose and why?

Aretha Franklin, because of her inimitable soul music. Italy is soul, sentiments, passion, and heart. Aretha Franklin’s style is the best in the world, so is Italy’s quality of life. 

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