THE ECONOMIC crisis has forced every company to be more efficient and more open to markets beyond just their local ones. In the case of Italian small and medium-sized enterprises (SMEs) the crisis has increased their need to internationalise their own activities, says Ignacio Jaquotot, who is the chief executive officer and chairman of the management board of VÚB bank, as well as the president of the Italian-Slovak Chamber of Commerce (CCIS). With regards to the banking sector, Jaquotot sees banks ‘going back to their roots’ as the best response to the crisis.
The Slovak Spectator spoke with Jaquotot about economic cooperation between Italy and Slovakia, investment opportunities for Italian investors in Slovakia, as well as the challenges that the economic downturn has brought to the Slovak banking sector.
The Slovak Spectator (TSS): Have the opportunities for economic cooperation between Slovakia and Italy been fully explored? What are the areas where this cooperation has produced the best examples?
Ignacio Jaquotot (IJ): For the most part, the opportunities for economic cooperation have certainly been explored. Nevertheless, I believe that the agri-food sector, including comparison of production processes and technology transfers, may offer significant space for collaboration. The renewable energy sector and a possible re-design of strategic priorities in the automotive sector may produce interesting benefits. In terms of the best examples it is hard to answer because if there is anything that characterises Slovak and Italian economic relations it is heterogeneity.
In fact the Italian economy is widely represented in Slovakia with large, medium and small enterprises. As to the presence of Italian entrepreneurs in individual industries, I can say that they are investing in all sectors from real estate, automotive, utilities, the financial system and industrial machinery to food distribution.
TSS: Last year Italy’s Minister of Economic Development Claudio Scajola visited Slovakia to attend the first economic cooperation forum between Italy and Slovakia. While here, he voiced an ambitious goal for Italy in Slovakia: to become the fourth or fifth most important trading partner for Slovakia during the next three to four years. How are these plans being fulfilled? Do you consider these plans realistic?
IJ: Former minister Scajola outlined an ambitious but real goal, but one that could be achieved under stable market conditions and not while exposed to financial uncertainties such as those that emerged during the recent dramatic period.
TSS: What would you list as the barriers to Italian investors wanting to do business in Slovakia? What do Italian investors consider to be the advantages of running businesses in Slovakia?
IJ: Slovakia certainly offers very attractive conditions to Italian investors. To be more precise, these include reasonable fiscal pressure, an industrial and labour culture that justifies expectations of profitability, a central logistical position and significant socio-economic stability. The biggest barrier is to find a way to be more attractive than any of the other neighbouring countries.
TSS: Is Slovakia still an interesting destination for Italian investors? Has the economic crisis changed Italian investors’ interest in Slovakia?
IJ: Indeed, as I have just mentioned, Slovakia is definitely interesting for our companies, but I would like to be more specific. The crisis is forcing every company to be more efficient and more open to the markets beyond their local ones. In the case of Italian SMEs the crisis has increased their need to internationalise their own activities. The crisis has, moreover, highlighted the financial issues of many Italian SMEs who are having a hard time moving forward with the investments that the internationalisation process requires.
TSS: What segments of the Italian economy are the most interesting for Italian investors in Slovakia?
IJ: The Italian investors in Slovakia cover practically all market segments; from wholesale distributors to retailers, and from industry to energy or banking. Sometimes people recognise only the big Italian names, but behind them there is an entire fleet of entrepreneurs that appreciate stability, the location of the country and the education of the workforce. But aside from these factors I have to refer to the good relationship between Italians and Slovaks, something that is normally expressed as a good chemistry between our two countries and our citizens.
TSS: The SME sector in Italy is very strong and many of the more recent Italian investments in Slovakia have been by small and medium-sized companies. How would you evaluate the condition of the SME sector in Slovakia? Could the Italian experience with SMEs help Slovakia to develop this segment in any way?
IJ: SMEs are the backbone of the European economy. You probably know that in Europe 99 percent of companies are SMEs, and in Italy alone there are more than four million SMEs and more than 15 million Italians work for SMEs. The experience of Italian districts with unique concentrations of SMEs represents without any doubt a model for potential re-arrangement and organisation of the network of Slovak SMEs.
Finally, for the last 20 years there has been plenty of literature on the nature, functions and added value of these districts. These issues fall within the field of cooperation between the ministries and the universities of the two countries.
TSS: In 2009 the Italian-Slovak Chamber of Commerce (CCIS), as the first Italian chamber of commerce active abroad, drew up a report about corporate responsibility. What was the impetus for the chamber to elaborate such a report? What have been the outcomes?
IJ: CCIS is able to produce, as proved by the first analysis of its social responsibility report, significant added value in favour of its associates, mainly Slovak legal persons related to Italian capital and associates. The same analysis, however, shows that an effort is required in order to bring added value to the country, to local communities hosting the associated companies. I would say this is the strategic goal of the social responsibility to be achieved by the CCIS.
Actually, this has resulted in a good service being delivered to its associates, because their long-term profitability depends on virtuous relations with the areas where they are based.
TSS: Since you are active in the field of banking, how would you characterise the current situation in Slovakia’s banking sector, at a time when the EU is pondering stricter supervision of banks or even the creation of a special fund into which banks would be required to contribute?
IJ: The crisis that started a couple of years ago in Europe is forcing governments, central banks and other stakeholders to rethink the model and to redefine the rules of the game. The situation has affected all countries – with more or less intensity – and each government and regulator is rightly trying to learn lessons from past experience. There are many ideas or projects under discussion, but if you want my own opinion on that, I believe that the best recipe will be [for banks] to ‘go back to their roots’.
Innovation is very positive but eventually the banks should be closer to the community and not forget that what citizens expect from banks is to behave respectfully and to protect at all times the interests of depositors.
TSS: What are the main challenges the crisis has brought to the Slovak banking sector? Are these challenges different from those in other European countries?
IJ: Slovakia has one of the soundest banking systems in Europe. But obviously when the external indicators of the country were affected, the banks reacted by using a generally more prudent approach to risk and by reassessing their levels of operating costs.
14. Jun 2010 at 0:00 | Jana Liptáková