Property & Life Magazine Special Edition by Adrian Friggieri

STA SP TE ECI OF AL TH ED E E ITI CO ON NO MY

PROPERTY & LIFE MAGAZINE Property, Business, Investments & Lifestyle

Service You Deserve, People You Trust. cover story A Relentless Pursuit of Excellence p.6 A special interview with Ben Mangion of Ben Estates Ltd.

Focus

Issue 03

Exclusive Interviews Ever Forward p.10 Sara Grech and Ray Bugeja talk about their growth, fusion and success

Vision, Value & Strategy p.14 PLM goes corporate with Dave Shaw, Chief Operations Officer, iPro Solutions

Leading in Challenging Times p.8

Team Up for Life p. 18

The Hon. Prime Minister Lawrence Gonzi’s take

MSV Life CEO David G. Curmi’s overview

on the economy

on corporate strategic vision

Trust us for life freephone 8007 2220 www.msvlife.com

Registered Address: MSV Life p.l.c., Pjazza Papa Giovanni XXIII, Floriana FRN 1420, Malta. Telephone: (+356) 2590 9000 Freephone: 8007 2220 E-Mail: info@msvlife.com Website: www.msvlife.com MSV Life p.l.c. is authorised by the Malta Financial Services Authority to carry on long term business under the Insurance Business Act 1998. COM101110A

Income tax will be reduced from 35% to 25% for those earning a maximum of €60,000. This reduction will be spread over 3 years, with the rate being reduced to 32% this coming year, 29% in 2014 and 25% in 2015. Single Computation

Married Computation

Parent Computation

0-8500

0-11,900

0-9,300

15%

8,501 - 14,500

11,901 - 21,200

9,301 - 15,800

25%

14,501 - 19,500

21,201 - 28,700

15,801 - 21,200

32%(2013) 29%(2014) 25%(2015)

19,501 - 60,000

28,701 - 60,000

21,201 - 60,000

35%

60,001

Following the income tax reductions applied across the board in 2007, 2008 and 2009, as well as a further reduction in 2012 for working parents, income tax will once again be reduced over the coming 3 years for single persons that earn in excess of €19,500, married couples that earn a combined amount of at least €28,700 and working parents that earn more than €21,200.

New ColleCtioN

State of the

Economy Special Edition 2012/13

Contents

EDITOR’S NOTE As a business development manager for a corporate clothing manufacturing company, I had to prospect for overseas buyers and also train staff about lead prospecting. It was an experience trying to understand how to motivate and encourage people. But I learned some of my most important lessons when I attended marketing and business studies. I certainly was not as self-aware at that time, being really honest about my strengths and weaknesses, as hopefully I am now. I think early on in many people’s careers, one has a tendency to want to show off the good side, and vulnerability and degrees of humility are not viewed as desirable traits. The lesson from that was that self-awareness trumps all. You need to know what your strength is, but you really learn during tougher times what your and others weaknesses are. The biggest shift for me was that I realised how important intrinsic rewards are, like the value of a meaningful role, over extrinsic rewards, especially when I commenced working on this special edition regarding the State of The Economy. It was an immense challenge to plan, coordinate and get this act together in such a short space of time. The end result is this month’s edition, which brings together some of Malta’s leading protagonists and key decision makers in one single issue to share their expert opinion and prognosis concerning our economy. In so doing, I confirmed that when someone gives you an idea, try to wait just thirty seconds before criticising it. If you can do that, wait thirty minutes. Then if you become a Zen master of optimism, you could wait a day, and spend that time thinking about why something actually might work. One of my favourite quotes which I adopted for this issue is by Robert Collier, “The great successful men of the world have used their imagination; they think ahead and create their mental picture in all details, filling in here, adding there, altering this bit and that bit, but steadily building – steadily building.” With our focus on the Maltese economy, we are proud to approach a very sensitive topic and bring together some of our country’s leading finance and economic leaders who give us their standpoint on our past, present and future. Nobody knows what is going to happen in Europe and in Malta in the near term. We look further down the road and evaluate how the possible outcomes for the coming year could evolve. Personally, we here at Property & Life Magazine are rather optimistic about the future and hope that the alternative is better than the current situation. Despite the international economic turmoil we witnessed steady economic progress. The retooling of our economy must continue apace and we should be careful to safeguard our past achievements. Martin Vella Managing Editor

“In the business world, the rearview mirror is always clearer than the windshield.” Warren Buffet Disclaimer All rights reserved. No part of this work covered by the copyright may be reproduced or copied and reproduction in whole or part is strictly prohibited without written permission of the publisher. All content material available on this publication is duly protected by Maltese and International Law. No person, organisation, publication or party should rely, or on any way act upon any part of the contents of this publication, whether that information is sourced from the website, magazine or related product without first obtaining consent from the editor. The opinions expressed in the Property & Life Magazine are those of the authors, and are not necessarily those of the editor or publisher.

COVER STORY 06 A Relentless Pursuit of Excellence Bernard Mangion, CEO of Ben Estates Ltd, talks to the Property & Life Magazine about his company’s growth and due diligence management State of the Economy 08 Leading in Challenging Times Prime Minister Dr Lawrence Gonzi reviews 2012 and examines Malta’s economic performance 13 Mapping our Next Step Minister Tonio Fenech cautions that we cannot let our guard down and must continue to invest to further economic gains 18 Team up for Life Contribution by David G Curmi, CEO MSV Life, on innovation in product development and the Life Insurance Market

21 The State of Our Economy Shadow Minister for Finance, Economy & Investments Karmenu Vella assesses Malta’s balance of payments and financial stability

23 Budget 2013 Review PwC Senior Manager Bonavent Gauci provides an impartial evaluation of Budget 2013 presentation

26 The Malta Chamber’s Evaluation on 2012 and Forecasts for 2013 Tancred Tabone’s perspectives on macro and micro economic prospects 33 Malta must not be left behind by Banking Union EU Member of Parliament Profs Edward Scicluna discusses the resilience of our banking sector and the new EU Directive on capital requirements EXCLUSIVE INTERVIEWS 10 Ever Forward An outstanding interview with Malta’s foremost real estate agent Sara Grech

14 Vision, Value & Strategy In our Corporate Interview of the Month, iPro Solutions COO Dave Shaw talks about corporate culture and leadership values

Publishers: Adrian Friggieri and Martin Vella Managing Editor: Martin Vella Technical Adviser : Marcelle D’Argy Smith Publication Manager: Martin Vella Advertising: 9926 0162; 9940 6743 advertising@propertymagazine.com.mt ; martin@propertymagazine.com.mt Contributors: George Bonnici, George Carol, David G. Curmi, Mark Dixon, Anthony Doublet, Angelo Farrugia, Tonio Fenech, Bonavent Gauci, Richard Geres, Lawrence Gonzi, Carmelo P. Romano, Edward Scicluna, Tancred V. Tabone, Karmenu Vella, Designer: Ian Farrugia Content: Martin Vella Print Production: Union Print Co. Ltd. Office: EBN Ltd, Charles Court, Flat 16, St. Luke’s Road, G’Mangia PTA 1027 Telephone: (+356) 21231385

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State of the

Economy Special Edition 2012/13

Main Interview

by Martin Vella

Ben Estates Ltd is one of Malta’s emergent property investment and real estate organisation. It aims in the development and management of a diversified and centrally managed real estate portfolio. Property & Life Magazine recently caught up with Bernard Mangion, the company’s CEO, and asked him about Allianz Real Estate’s current and future projects. Background

PLM: What makes Ben Estates a premier service organisation?

his month’s CEO spotlight profiles Bernard Mangion, CEO and Founder of Ben Estates Ltd. Since 2008, Bernard has become a recognised leader in providing property management and maintenance services to the real estate community. With an extensive database and over 100,000 market participants utilising the Ben Estate’s Platform, the company has become synonymous with successful online marketing and due diligence management. Enough of the background, and on with the interview. 6

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BM: The shortest answer is, probably, our huge passion for the real estate industry. This is the driving force behind our track record of successful transactions, both in the sales and letting areas. When a client approaches us, there is a chain of processes that is set in motion. Firstly, we assess the nature of the request and narrow down the list of further

actions. Secondly, we present the options to the client, bearing in mind the criteria of efficiency and time management. We always provide our clients with a personalised service, no matter how the painstaking process might turn out to be, meticulously following up and striving to maintain an open channel of communication. To this end, we have just launched our loyalty program, which will reward repeat clients with discounts and priority service.

Main interview

State of the

Economy Special Edition 2012/13

PLM: Is it tough to differentiate in the real estate space? BM: I will resort to a worn down cliché in the service industry, but it does reflect reality: the difference lies in the quality of the service rendered. It all boils down to treating the clients with courtesy and respect, which we regard as a process and not as a mantra. Our negotiators are being purposefully selected and professionally trained to learn the skills that make possible a positive interaction: patience, resilience, indiscriminate consideration and a relentless pursuit for the respect of ethical and moral principles.

“The path of a broker is shaped almost entirely by their psychological makeup”

PLM: Is Ben Estates able to meet demands at any level or is the focus on a niche market?

ensuring a proper environment for them to perform and grow. We do have a diversified team, but each member enjoys absolute equality in their opportunities to achieve success. We do not particularly favour people in management positions or the experienced to the detriment of any new comers. My confidence in the efficiency of our system is supported by our incredibly low churn rate; we are constantly receiving resumes, hiring and expanding, without having to operate any replacements. At this rate, we will be studying the feasibility to set up a dedicated HR department in a not so distant future.

BM: Our primordial interest, from the beginning, has been the residential sector. However, we often respond to requests coming from the commercial area and we address them with a satisfactory rate of success. There is a more clear cut dedication and focus at the individual level, as each negotiator, more or less intentionally, becomes more knowledgeable in sales or in letting, in a particular geographical area, as well as in either the residential or the business niche.

“Expertise comes with time, but success comes from the inner determination”

PLM: What makes for a successful broker today? Is it the personality and drive or the intellect?

PLM: Do people still come in to see the real estate agent or is much of that work being done online? BM: Following July, we have noticed a steady rise in the online requests, but this has not translated into a decrease in the “physical” approach; our office in St. Julian’s is regularly welcoming clients that simply pop in, drawn by a window advert or as part of their quest for accommodation. Many clients have reported feeling at ease in our office, on account of the staff’s rather casual, friendly approach and an obvious frenzy to find a suitable property as fast as possible.

BM: The path of a broker is shaped almost entirely by their psychological makeup. Whether one possesses the sufficient patience, resilience, self motivation, will power and discipline to what will ultimately determine their place, or lack thereof, in the field, is paramount. Expertise comes with time, but success comes from the inner determination. Having said that, I must emphasise in our belief that continuous professional development, is likewise essential.

PLM: Is getting engaged in the deal still a passion for you?

PLM: How critical is maintaining a diverse workforce for Benestates and is HR inclusion the next step?

BM: Getting engaged in the deal is a powerful, addictive excitement. Once you come to appreciate it, it becomes a part of life which you anticipate and enjoy. A considerable part of the satisfaction comes from the awareness of your own expertise, not as a personal arrogance, rather as guarantee of a job well done. When both parties appreciate the transaction as a “good deal”, you know that you have accomplished at your best the task as a professional negotiator.

BM: Our HR policy has always revolved around choosing the right people and

EDITOR’S NOTE

Bernard Mangion is Chief Executive Officer of Ben Estates Ltd. Before Ben Estates, he was involved in the real estate sector as a property consultant. He also previously worked selling upmarket properties, specialising in providing plots of development, historical Palazzos and luxury seafront apartments..

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State of the

Economy Special Edition 2012/13

country report

Leading in

Challenging Times by the Hon Lawrence Gonzi

The past five years have presented some very unique challenges to the world economy particularly the international economic recession and the European economic slowdown. Our economic performance is there to sustain our investments in society and any wrong decisions can undo all our achievements, writes Prime Minister Dr Lawrence Gonzi.

ost of our economic partners and European neighbours saw their unemployment rates soar, had to implement tough austerity measures and saw their economy slow down and even contract. Being a small and open economy was vulnerable to this evolving situation. The threats were real and Government had to intervene responsibly and with maturity. Decisions had to be taken, choices had to be made. My Government was adamant to protect and create more jobs. Today, with a still fragile international economic environment, Malta can pride itself of having achieved positive economic results and is considered by many international agencies as one of the few good economic performers in the European Union. Malta’s economy grew consistently faster than European averages translating this growth into jobs. Job creation was amongst the fastest

in the European Union and we, as a country, have managed to create more than 20,000 jobs. Unemployment remains the fifth lowest in the European Union at 6.6% compared to a euro area average of 11.7%. Our growth was well diversified between traditional and new sectors with the assistance and support provided by Government being well received by operators. In addition, Government also continued with its programme of fiscal consolidation bringing the deficit to below the 3% threshold. This makes Malta one of the very few economies with sustainable public finances with a deficit below 3% of GDP. To my Government, the economy is not about numbers and statistics. The economy is about people and families. Malta’s economy is composed of workers, investors, self-employed and consumers who contribute to our economic results which sustain our studnets studying, our elderly and all those people who receive medical care through our health system. With our central economic tenent being the creation of jobs, Government has sustained investors, large and small, in their investment projects. Government approved 160 industrial projects between new developments and extension projects with a combined investment of over €355 million. In addition, specific programmes for industry were launched representing an investment of €42 million. We are also aware that the small and medium sized business owners and self-employed are the backbone of Malta’s economy. Specific schemes for SMEs such as MicroInvest and MicroCredit have generated over €90 million in private investment. All these schemes have translated in new jobs being created. In the Budget for 2013 we introduced an extension to the already successful MicroInvest scheme. To date, SMEs employing up to 10 people that invest or employ additional workers, would benefit from an income tax reduction of up to €25,000. My Government plans to extend this scheme to those SMEs that employ up to 30 persons.

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By supporting investors through incentive schemes and by creating an enabling environment for business we have together created more than 20,000 jobs over the past four years. By creating more and better jobs, the average pay has also increased by over €2,000 since 2008. In addition, government has embarked on a tax reduction programme which has benefitted all the working population. Throughout the past four years we reduced 25 taxes including introducing a new tax band for parents last year and revising the tax bands. As announced in the budget, my Government remains committed to reduce the top income tax rate from 35% to 25% over the coming three years. Malta continues to position itself as the country with the lowest income tax in Europe.

To my Government, the economy is not about numbers and statistics. The economy is about people and families. Apart from reducing taxes, Government is also supporting home buyers in their investment. My Government is committed to reduce the stamp duty on property. Presently, property tax stands at 5% on amounts exceeding €116,500. This

country report

State of the

Economy Special Edition 2012/13

early next year. Our investment in a new campus of the Institute of Tourism Studies is also set to commence next year. Government is investing over €23 million between 19,000 students through the stipend system which is contributing to Malta’s success in increasing the number of students who continue with their education. In addition, over 2,000 students have benefitted from our scholarship programme with students pursuing specialised studies at master’s and doctorate level s well as in specialised streams such as art and sports.

benefit will also apply to those who are buying their second property as well as to those selling their first property. The valuation carried out by the bank architect will now confirm the market price. Government will no longer send its own architects to carry out valuations. Stamp duty will be removed in the case of inheritance and donation of property from parents to children. Government will also launch another scheme subsidising home loans from banks, with buyers benefiting from a €14,000 subsidy. Government is also supporting families and the elderly. Apart from reducing income tax for parents and introducing tax breaks for returning mothers, Government has once again increased maternity leave from 16 weeks to 18 weeks and will also increase the children’s allowance. The allowance will be increased by €100 per child and over 20,000 families will be benefitting from this measure. To my Government, our economic performance is there to sustain our investments

We are also investing in healthcare and social services because we truly believe that there can be no economic success without a caring society that places the human being at its core. Government has invested heavily in the health service and today record levels of service delivery are being registered. With operations being carried out at Mater Dei increasing and reaching new record levels, Government is also investing in public private partnerships so that operations such as cataracts and knees arthroscopies are carried out in private hospitals at no cost to the patient. Government is also increasing its efforts against cancer. Apart from the ongoing investment in the €68 million oncology hospital, Government has also increased in expenditure on medicinals. Following the success of the national breast screening cancer which has saved the lives of over a 150 women, we are now embarking on the second national cancer screening programme for colorectal cancer.

in society particularly in health, education and general well-being. Only a sustainable economy that is growing and creating employment can lead to higher investments in our society and in our people.

Concurrently we are investing in a number of open spaces and parks for our families to enjoy. Throughout these four years we have given back to the public a number of open spaces particularly the St George’s Square in Valletta, the gardens in Qui-si-Sana and the adventure park in Ta’Qali. This investment is set to continue with the inauguration and development of new parks.

Malta continues to position itself as the country with the lowest income tax in Europe. Throughout the past four years, Government has continued to invest heavily in education at all levels. We have continued with our programme of building a new school every year and we are committed to continue with these investments into the future. We have invested over €50 million in our University and works are underway on the new MCAST campus with the first block being inaugurated

Together we have achieved a lot over these past four years and we should feel proud of our achievements as a country and as a people. However, we must not remain complacent or take these results for granted. The international economic environment remains fragile and any wrong decisions can undo all our achievements.

Editor’s Note

Lawrence Gonzi is Prime Minister and Leader of the Nationalist Party. Throughout the past legislature as Prime Minister, Lawrence Gonzi had to handle Malta’s economy during one of the world’s worst economic recessions. Under Dr Gonzi’s stewardship, Malta is today regarded as one of Europe’s best performing economies with positive results being registered both in terms of economic growth and job creation. The past legislature was also characterised by the Arab Spring and Dr Gonzi positioned Malta as one of the key regional players especially through the evacuation of thousands of international citizens. Dr Gonzi’s tenure as Prime Minister since 2004 is characterised by a number of reforms that were undertaken as well as overseeing Malta’s first few years as a European Union member.

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State of the

Economy Special Edition 2012/13

talking point

by Martin Vella

The old saying goes “two heads are better than one.” Out of all the interviews I have conducted, some remain ingrained in my mind. This interview with iconic real estate agent Sara Grech endowed me with another unforgettable experience. The story I share with you today deals about her joint venture with finance man and entrepreneur Raymond Bugeja yielding productivity, results, and a great success that created laughs, profits and comradery. From left to right: Semira Tabone Grech, Comm. Raymond Bugeja,Sara Grech and Benjamin Tabone Grech

Background

ara Grech and Comm.Raymond Bugeja have decided to bring together their experiences, skills and resources in establishing family businesses in real estate, catering, retail and more. They plan to do this both in Malta where they mostly reside, and possibly in London, where they plan to have a second home. Their shared passion is to offer high-quality brands and products in family- and lifestyle-related customer segments. PLM: What excited you about the opportunity to partner Sara Grech with The Raymond Bugeja Group when it presented itself? SG: The concept of offering a suite of lifestyle products which will soon extend to other offerings. My philosophy to food and healthy eating has always been about enjoying myself in a balanced way. Food and drink is one of life’s greatest joys. PLM: Both Sara Grech and Ray Bugeja enjoy a reputation for integrity and class. What is the secret to maintaining that image? SG: It is no secret, it is simple. Consistency in maintaining your integrity and class at all

Editor’s Note

times, without exception, becomes a way of life. Knowing and doing what is right is a part of who you are. There are many outside influences that test our moral and ethical behavior. A number of persons will dislike you for sticking to your convictions, people at times may not always agree with what you do, but they will have great respect for you knowing that you stand up for what you believe in. We believe that integrity is the number one quality people one should have.

“In this business I have learnt that one sure way to success is to build a firm foundation with the bricks that others throw at you!” PLM: What do you see for growth for Sara Grech and The Raymond Bugeja Group? SG: Partnerships with leading international brands rather than simply organic growth. We are passionate about spreading the

vision of making people’s lives better through breakthrough customer service. PLM: How much is innovation a part of the Sara Grech/Raymond Bugeja culture and is this fusion typically innovative? SG: Innovation and change are inherent in our culture – the world is ever more dynamic and in business you need to keep step, to stay ahead. This fusion brings together marketing and people skills with finance and startup expertise – it also brings two people together who determinedly built their respective businesses from a zero base. Our motto is to move Ever Forward even when you do something that is successful, don’t rest on accomplishments, look at what you did and ask yourself “how come we have done this better and what have we learnt from it?” PLM: How broad is Sara Grech/Raymond Bugeja footprint and where are there any opportunities? SG: Already broad and destined to grow significantly broader with new ventures

Sara Grech: Ms Grech’s father, Alexander Grech, set up the first ever real-estate agency in Malta in 1962. After completing her studies overseas, Ms Grech set up her own real-estate agency, Sara Grech Ltd. The company has 5 strategically located outlets in Malta and has 50 people between employees and property negotiators. The brand has established itself as a leader in Malta, operating in the sale and letting of residential and commercial properties. Sara Grech Ltd obtained ISO 9001 certification in 2010. A destination management company La Krosse was formed in 2010. Ms Grech attended college at Mount Carmel Academy in New Orleans, has a diploma in hospitality management from the University of San Francisco and has an MBA in general and strategic management from the Maastricht School of Management. She is the Honorary Consul General for the Philippines in Malta. She is on the Board of the Malta Federation of Estate Agents, a member of the Malta Chamber of Commerce and a Board member of the Malta Guide Dogs Foundation. 10

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talking point

State of the

Economy Special Edition 2012/13

already in the pipeline. We will be unveiling several exciting announcements in February 2013. PLM: How has the synergy between Sara Grech, and the Raymond Bugeja restaurants? SG: As mentioned, there are synergies in offering lifestyle products (cross-marketing) and in the complementary skills of the two business owners – there are also the natural synergies in sharing corporate overheads. PLM: What makes the fusion so successful and what makes this so special? SG: Experience, a determination to continue succeeding, a focus on as mentioned integrity and class, a shared vision to bring quality offerings to Malta, the personal relationship and a shared business style. PLM: You have been a leading spokesman for the real estate industry. Is there a growing awareness of the value of real estate? SG: Yes certainly people have become more property savvy which is a great thing. When one realises that your home can give you so much joy as well as capital appreciation it’s a breath of fresh air. Today’s market should be looked at as an entry into buying property at a very good price. For first time buyers, buyers wishing to grow their property portfolio, buyers looking to downsize or buy a larger property there is no better time than now.

you different. In this business I have learnt that one sure way to success is to build a firm foundation with the bricks that others throw at you! The word Impossible, is two letters too long!

market, we are specialised in the sale and leasehold of high-end residential and commercial property. As part of the expansion of our property division, we are very careful who we recruit and who represents the brand. We ensure that our agents are professional with respective sales success and have exceptional leadership qualities, with good communication skills and are entrepreneurial in their way of thinking. This differentiates us from others We know that customers need to find agents available to view properties at any time of the day and we are the only agents on the island that are open 360 days a year with longer opening hours, from 8am – 8pm daily and 9am – 6pm on weekends. This is certainly one of our competitive advantages.

“We believe that integrity is the number one quality someone should have. “ PLM: How do you maintain an innovative culture with your size and scale and drive it throughout the organisation? SG: Think think think! I am a person who loves change and change drives me forward and I make things happen. «There are those that do and there are those that talk about what they know how to do.» We recently moved into new premises in Msida and created a market center. All agents are now able to talk to each other on a day to day basis. There is no agent on the island that enjoys this powerful knowledge all in one room on one floor. It’s amazing energy. The team becomes stronger each day we are in operation. Our offices are being converted into lounges to meet and greet customers spread over 5 prime locations. We have re organised our IT system to ensure that our working tools work for us smartly. It is an innovative approach and more.

PLM: With your size and scale, how do you maintain such a close-knit culture with your employees?

PLM: What type of transformation is taking place at Sara Grech? SG: Everything we do is about empowering and inspiring people to make better choices for life. As a professional service company operating in the premium sector of the real estate

SG: My hands on approach and wanting to be involved in the operations has given me the advantage of staying close to my people. My love for communicating and achieving is so instilled in me it’s second nature. I look forward to working closely with all employees on a day to day basis and because I work long hours I am able to manage my time well. I dedicate my time and I go out of my way for my agents because I know exactly what it means to them. I started from zero base and I understand how difficult it is to achieve and to continue trying when things go wrong. Feeling bad when things go wrong is easy, picking up quickly is what makes

Editor’s Note

Raymond Bugeja: Comm. Bugeja left Malta in 1972 and rebased in 2010. He has worked in finance roles with Reuters, TNT and SG Warburg (now UBS) in London, Buenos Aires, Rio de Janeiro, Paris, Hong Kong and Milan. In 1999, he set up, with three other senior executives from SG Warburg, Kairos (investment management), a highly successful organisation with offices in London, Milan, Rome, Turin, Luxembourg and Lugano. Comm. Bugeja sold out of Kairos in 2010 to rebase in Malta. He owns two restaurants in Malta (Al Molo, fine dining, and The Joint, steakhouse).Comm. Bugeja is an FCCA (UK), a Chartered FCSI (UK), and an FIoD (UK), obtained an MBA in finance from the New York Institute of Technology and is at the dissertation stage of a DBA with SMC University (Switzerland). Comm. Bugeja is a Commendatore Pro Merito Melitensi of the Sovereign Military Order of Malta and an Officer of the Most Venerable Order of the Hospital of St John of Jerusalem.

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Economic Focus

State of the

Economy Special Edition 2012/13

Mapping our next step by Tonio Fenech

Tonio Fenech rationalises that success is generally attributable to different contributing factors but a major factor behind Malta’s economic resiliency and growth is its capability to respond to challenges taking place beyond its frontiers.

ts quick responsiveness ensures that globalization and economic development are taken in our stride as a means to create new opportunities for businessmen and employees alike. Government’s long term strategy for Vision 2015 and beyond embodies our efforts at attracting and supporting niches of activities that have the potential to create high-value added activities. We have come a long way in achieving these targets – in a number of sectors Malta has already reached levels of excellence with the financial services industry and online gaming leading the way. In other areas, we have also gone a long way: the aviation industry has literally been transformed around the Safi Aviation Park with a number of top international names in this sector employing over a 1,000 personnel. In some other sectors, we have got things running in the past few years – the digital gaming sector being a tangible example of this.

“Incentivising job creation remains fundamental” Some have questioned the motivation behind the decision to identify and invest not in one or two key sectors to achieve growth and excellence, but rather seven. Indeed, we believe that the recent experience of the international crisis have taught us the benefits of diversification – a decision that has made the country less prone to sector-specific shocks and the benefits of not putting all our eggs in one basket. A primary objective of Budget 2013 was to build on these results and to support other niches that have witnessed scope for growth over the past years.

opportunities that are being created. The property sector remains one that gives an important contribution to the Maltese economy. Government, during this year, started a number of schemes and initiatives to help this sector. We want to assist the Maltese young generations to fulfil their dream of owning their homes and we will be increase the ceiling on which first time home buyers pay their taxes. This benefit will also be extended to those families buying their second home and selling their first home in the process. We will not tax further the transfer of property from parents to their siblings. Another important reform related to the decision to increase the possibility of choosing between a 12% withholding tax or the capital gains tax from seven to twelve years.

Two specific examples include the development of plug in/plug out facility for ICT and Digital Content Businesses and the strengthening of incentives to attract international film productions with rebate for production is increased from 20% to 23% and to 25% if Malta is featured as Malta. Economic prospects for Malta are positive, but caution should prevail. 2013 will be another tough and challenging year. The Autumn Economic Forecast published in November forecasts negative growth in Europe. Hundreds of thousands of jobs will be lost. This reality impinges directly on us, particularly as it is accompanied with waves of austerity around the continent. This will put further pressure on our export-oriented industrial base and on our tourism markets. In this context, incentivising job creation remains fundamental. This is why we have further incentivised industry and the self-employed to generate further growth and create jobs. We will be extending the successful Microinvest scheme, which effectively entails a tax reduction for those small and medium sized companies. Businesses up to 30 employees will now be able to benefit. We will be launching a number of incentives to achieve more growth through the nurture of entrepreneurship skills in our education system at all levels. We have reduced top income tax rates to improve consumer spending power.

These initiatives should give a further boost to the property sector, which is being also incentivised through a number of schemes that are attracting to our islands foreigners in good quality jobs. Among these schemes we had the ones like Highly Qualified Individuals and High Net worth Individuals which together with the economic sectors of the financial services in particular the Funds and the Online Gaming sector are contributing to the growing demand of residential property and quality offices from these foreigners who are choosing either to stay or invest in our country. Until the end of October almost 700 properties were sold to foreigners with a value exceeding 105 million euro.

We will pursue in our endeavours to enhance our touristic product and further increase the number of connections to Malta. We will be finalising the upgrade of a number of major touristic attractions while we continue our active programme of renovation and restoration of our product Malta.

Despite these numbers, we cannot let our guard down. We must continue to invest and allocate our resources in those sectors that will generate further economic activity, and in turn more and better jobs, and ultimately improving the standard of living of our populations. That is the ultimate measure of economic policy success.

This is supported through significant investment in education and training, aimed at ensuring that our young people benefit from the exciting

Editor’s Note

Having joined the legacy firm of Pricewaterhouse in 1993, Tonio Fenech was involved within the Audit and Business Advisory services division of the firm for the first five years of his career, advancing to become the firm’s Senior Management Consultant. He started his political career with the Nationalist Party contesting the Birkirkara Local Council Election, Malta’s largest locality and was elected its Mayor. He had to resign this post on being elected to Parliament through the Eight District. He was then appointed Observer to the European Parliament representing Government. Fenech was appointed Parliamentary Secretary in the Ministry of Finance by Prime Minister Dr. Lawrence Gonzi. He was responsible, amongst others, for the accession into the euro zone, the achievement of the Maastricht convergence criteria and also the successful termination of the contractual agreements and the finishing of the works at Mater Dei Hospital. In 2008, Tonio Fenech was appointed as Minister of Finance, the Economy and Investment. He also held a number of political appointments including Member of the Housing Authority Board, and member of the e-Malta Commission. Fenech was responsible for managing Malta’s economy throughout the international economic and financial crisis. Despite these challenges, Malta’s economy continued to register growth, while the jobless rate remained among the lowest in the European Union. Follow this Tonio Fenech was also responsible for undertaking significant national reforms, including the privatisation process at Malta Shipyards and a restructuring process at Air Malta.

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State of the

Economy Special Edition 2012/13

Corporate Interview of the Month Background

Pro Solutions is the enterprise technology partner of choice for multiplatform software development, delivering a broad range of custom plug-ins and modules coupled with a service-oriented approach throughout the entire application life cycle. Known for its extremely fast grid control and breaking new ground in Linus, iOS development, iPro has established itself as the trusted partner worldwide for use in mission-critical applications. With regular releases and competitive pricing, iPro meets the changing needs of enterprises across the globe. Founded in 2012 and headquartered in Belgrade has prestigious corporate customers including large financial institutions, multinational retailers, and global IT consultancies. PLM: How would you define iPro Solutions, services and product offerings?

DS: Operating across five continents with a representative office in Malta iPro is a Serbian based company specialising in the outsourcing of multi-platform software development and support activities. iPro has the complete skill set when it comes to software development, offering C++, .Net, Java, HTML5. We also develop on Windows, Linux, iOS and Android platforms. Above and beyond, we have a niche concentration within the Retail industry, with one of our teams being highly experienced working on Retail and Business Intelligence systems. Having been appointed as Retail Pro development partner for the Europe, Middle East and Africa (EMEA) territories and worldwide development centre for Swift QB demonstrates our expertise and excellence in this sector. We provide custom software development services that can range from the creation of plugins and modules, database applications, mobile apps, middleware and even software application integrations. We also developed two small and simple products that help business to monitor their IT services and alert them should their system fail. Furthermore, we have a particular niche which is focused on the Retail industry, whereby we develop customised modules and plug-ins for retailers.

“The goal is to align your workforce to your strategy and then motivate them to achieve” PLM: What makes iPro Solutions unique and how has it remained so consistently successful?

by Martin Vella

Property & Life Magazine goes head-to-head with Dave Shaw, Chief Operations Officer, iPro Solutions. 14

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DS: We view the business through the eyes of our clients. Any COO needs to attract great people but that is only part of the story – you then have to get them to work together. The goal is to align your workforce to your strategy and then motivate them to achieve. We have chosen to follow our clients and build solutions and services that help the COO and the board create a more engaged workforce.

Corporate Interview of the Month

State of the

Economy Special Edition 2012/13

From an inside-out perspective, we have always been a firm that has an insatiable curiosity, a firm that is ultimately a meritocracy and that has remained very flat. And we always strive to do better. PLM: What are the biggest challenges that COOs face in driving innovation? DS: Around the world there is a fight for growth and relevancy. Every COO is in that fight, so it’s about your strategic levers. You don’t have conspicuous consumers in Western economies like you had over the past few decades. So you either have to look to the East, consolidate or innovate. The way you move somebody through an organization is also changing and we have to be at the forefront of that. PLM: How critical is global experience for you today and is it challenging to be effective without it? DS: It’s the number one request we see from clients – they are looking for leaders who can meet a culture where it is and move it over time. This is the key to moving any workforce. People don’t change unless there is a reason to change – you have to meet an organisation where they are and move them. Leadership today transcends borders given that consumerism is happening all over the world. Therefore, you need the skills to motivate a workforce across cultures.

“Today there is a fight for growth and relevancy. Every COO is in that fight, so it’s about your strategic levers” TEU: How would you highlight the expertise and the culture which the Company brings to its clients? DS: iPro provides its customers with people who are qualified and conversant, both from the technological aspect, as well as from the business process side. This provides the competitive advantage that our implementations are done in a holistic manner. People who do well here know that the modus operandi of our business are expectations that are critical to our success in serving our customers. To iPro culture, it is important to us that our people share our values. It is essential to us that the team members have a high dose of enthusiasm and the will to learn fast. Thanks to our recruitment strategy and process – we look for people having the same aptitude and mindset that we embrace within the company.

strategy, we strive on innovation and we always make sure that unnecessary structures and barriers that may impede the creativity and the free flow of ideas, or damage the excitement of working on interesting projects, are immediately removed as soon as they start to roll their head. We also give innovation a different form, whereby

The constant communication and exchange of ideas between the management and staff helps foster the values and culture throughout our organisation. At the same time people will grow together with the company’s success. PLM: How critical has it been to reach out to business leaders and build a strong public/ private partnership?

we focus on the principle of adaptation were we adapt the right technology to the customer needs since.

DS: Business is all about building relationships, and this has been a critical success factor for our us, especially when one considers that our operations are spread across five continents. We have a global market to serve and at the same time to compete with. Part of our success is also due to the strong partnerships that we built based on trust with business leaders.

PLM: How has your brand grown overseas and do you foresee continued opportunities in international markets? DS: Our brand has grown rapidly, so much so our client base is now across five continents. We never thought that we would enter certain markets but we did and the results that we are achieving are beyond our forecasts. Opportunities are always out there, it is just a matter of having the right resources and the energy to go out and grab such prospects.

PLM: What is your outlook for iPro and where will growth come from? DS: We have a very positive outlook. In fact we are predicting to double up our operations by Q2 2013. We are experiencing growth from the north American and European markets whereby demand is increasing steadily.

PLM: The expectation is that you must be a great leader. DS: A lot of the principles around leadership sound so intellectually simple, but in practice, they are tough to actualise. As a leader, you cannot have a bad day; and you have to wake up and go to bed thinking about the company. Whatever you reflect will become your team’s reality. So with every interaction that you have with an employee, he has to feel better after that conversation than before. If you try that all the time, you will be amazed at how effective it is. Sometimes it’s about two simple words: thank you, or telling someone what he or she did made a huge difference to the organisation.

PLM: Do you take time as a company and individually to appreciate your achievements? DS: We do celebrate our success at the end of every project both as a company and also on an individual level. This is done by reviewing what we have achieved and by exploring openly new aspects that can be done even better. We are constantly learning from every fraction of work that we do by having an open mindset to ideas and by embracing better ways to do things. PLM: What are the biggest challenges that you face in driving innovation?

For questions about products and pricing, please contact info@iproplus.net or call (+356) 2203 0509.

DS: Today there is a fight for growth and relevancy. Every COO is in that fight, so it’s about your strategic levers. Having a customer centric

EDITOR’S NOTE

Dave Shaw was appointed COO of iPro Solutions in July 2012. He was named on iPro’s Executive Board to manage global field operations. Prior to his role on the iPro Executive Board, Dave held the role of Infrastructure Solutions Manager at a leading ICT company in Malta.

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Vault 14, Level 2, Valletta Waterfront, Malta Tel: (+356) 2203 0509 Email: info@iproplus.net

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Corporate SECTOR

State of the

Economy Special Edition 2012/13

Can Corporate Governance survive the Eurozone crisis?

by James Satariano

Malta’s Institute of Directors (IoD) Chairman James Satariano has announced that IoD will be holding an event supported by the Malta Financial Services Authority (MFSA) on Thursday 17th January 2013 to initiate the debate in Malta about reviewing Corporate Governance within a eurozone context to shed new light on the system’s strengths and Malta’s role as an international financial centre and business hub.

oD has been “flying the flag for Corporate Governance in Malta” says Mr. Satariano. “Financial services have become a cornerstone of our economy, with their contribution to Malta’s GDP approaching 20%, financial services are in the spotlight like never before. The global banking system seems to have been stumbling from one crisis to another for the last five years,” he adds. Last year the European Commission adopted a green paper and launched a wide-ranging public consultation on the EU corporate governance framework. IoD UK reports the preference for the comply or explain model of governance in which a company would have to disclose why it does not follow EU recommended practice. Other issues looming large include the separation of Chairman and CEO positions with investors calling for mandatory separation of the positions, Board diversity, pay disclosure, say-on-pay and limit to Board mandates to name just a few.

“Malta’s jurisdiction requires management in a way that promotes confidence” With Malta’s growing international financial centre, the Maltese Islands are not immune to the winds of globalisation, and Malta’s jurisdiction requires management in a way that promotes confidence, while ensuring that that the country continues to avoid the contamination that has struck elsewhere. Speakers at the joint IoD/MFSA conference include Central Bank Governor Professor Josef Bonnici, Mr Frederick Mifsud Bonnici, Chairman, Bank of Valletta plc., Dr. Michael Xuereb, Director, MFSA Regulatory Development Unit and Dr. Anton Bartolo, Director of the MFSA’s Enforcement Unit.

The conference will be moderated by Mr. Peter Barrett, who was a Board member of leading Hong Kong companies, Hutchison Whampoa and Hong Kong Telephone for 15 years and is a founding council member and Honorary Council life member of Hong Kong IoD. Peter has assisted IOD Malta for many years, both in presenting programmes and assisting with their design. Mr. Satariano says, “Malta’s highly regarded jurisdiction is beginning to move towards the top-tier, and is gaining traction as an EU onshore solution for many segments. There is a considerable international presence on Malta, therefore our very topical theme for IoD’s first Corporate Governance event of 2013 is, “The changing nature of Corporate Governance following the Eurozone crisis.” We are fortunate to have a raft of leading speakers to stimulate productive debate. We look forward to this key event in Malta’s financial calendar and to contributing to the discussion about appropriate and ethical governance under the Malta flag. ” The event is free to attend through pre-registration. Online bookings may be made by registering on ssl@go.net.mt. For further information visit www.iod.com/malta The event above has been accredited with 2.5 hours of structured CPE qualifying for the attainment of Professional Development Competencies in terms of the MIA CPE Regulations.

Corporate brief

A worldwide association of members, the Institute of Directors provides a professional network for all corners of the business community. The Institute of Directors has been supporting businesses and the people who run them since 1903. As the longest running organisation for professional leaders, IoD is dedicated to supporting its members, encouraging entrepreneurial activity and promoting responsible business practice for the benefit of the business community and society as a whole. Our philosophy is to support, represent and set standards for directors.

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State of the

Economy Special Edition 2012/13

corporate strategic vision

Team up for Life by David G. Curmi, CEO, MSV Life

Two years after the restructuring and rebranding of MSV Life p.l.c. we can look back with great satisfaction on the results achieved and we are grateful to our shareholders and directors for their foresight and sound judgement.

SV is today the leading provider of life protection, long-term savings and retirement planning in Malta. The company has grown to become one of the largest financial services companies on the island and enjoys an excellent reputation for being a trustworthy and dependable partner.

are the cornerstones of the foundation on which our business is based. At over €1.2 billion our with-profits fund is one of the largest managed savings funds in Malta and is evidence of the trust which policyholders have shown in the company over the past eighteen years. Innovation in product development and distribution

MSV’s strength in the market derives not only from our strong financial credentials but also from the very responsible manner in which we manage and conduct our business. Our core business is that of helping people have happy and secure futures; we preserve assets and we sell promises of peace of mind. Our success and reputation depends not only on the quality of our products and service, but also on the manner in which we manage and run our business. Honesty, integrity, security, high ethical standards, confidence and people development 18

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Two of MSV’s key strengths are its product breadth and its distribution reach. MSV has a wide range of life insurance and savings related insurance products designed to suit the four principal demands for life insurance namely, protection, savings, investments and retirement. We have spent the good part of the last one and a half years manufacturing new products aimed at meeting the needs of our very large customer base and at increasing the demand and

awareness for risk based products such as our new Guaranteed Over 50s Plan, Free Life Cover for New Parents and Newly Weds, the Key Person Protection Plan, the Group Life Plans and others.

“At over €1.2 billion our with-profits fund is one of the largest managed savings funds in Malta” Although MSV is principally a bancassurer, we also operate a multi-distribution platform. Firstly I must state that our winning bancassurance partnership with Bank of Valletta p.l.c. has been hugely successful, and this is clearly our most important distribution channel. Whilst MSV’s strength lies in manufacturing insurance products and services, we work very closely

corporate strategic vision

State of the

Economy Special Edition 2012/13

with the bank to ensure that the products that we design are the products which the clients of the bank want to buy. On the other hand, Bank of Valletta’s strength lies in distributing MSV’s products through its extensive branch network. This formula has worked well judging by MSV’s performance over the past eighteen years. In addition to the bank channel, MSV also operates through tied insurance intermediaries, independent financial intermediaries and insurance brokers. We have the largest network of tied insurance intermediaries that make up our enthusiastic and dedicated sales force. Through this channel of distribution we can reach customers who may not necessarily be Bank of Valletta customers, and customers who may prefer to talk about their personal financial planning requirements in the comfort of their home or of their office. We are committed to increase the awareness of the Maltese for basic voluntary life protection, since the indicators that we have, show that only around 36% of the working population in Malta have some form of life protection, and that most of this protection is used as collateral against bank borrowings. Therefore, most families are either uninsured or inadequately insured against the death of their primary income earners. The Life Insurance Market The economic environment internationally has not been ideal for life insurance companies globally. The historically low yields, the low economic growth, the exceptional volatility in equity markets and the subdued demand for saving and investment products continued to weigh on life insurance companies and, in 2011, led to a reduction in the global life insurance premiums of 2.7% with the sharpest decline observed in Western Europe of -9.8%. In 2012 life premiums have continued to fall sharply in developed life markets such as Germany, Italy, UK and France. Between 2000 and 2007 the life insurance sector in Malta recorded year-on-year double digit growth that was significantly higher than the average growth achieved in other European markets as life premiums increased by an average of 18% per annum. The local life market experienced its first decline in 2008 when a decrease of -21% was registered as a result of the financial crisis. The market recovered relatively quickly and 2009 saw an increase of +6% followed by an increase of +16% in 2010. In 2011 the total life market premiums reduced again by -7% due

Our company is also committed to contribute towards developing a stronger savings culture in Malta. The trend of diminishing savings in Malta is not unique to the island but is, indeed, a European-wide phenomenon. People would rather spend than save. Disposable income is reducing. There is a general lack of interest socially to provide for the long term because the long term is something that will happen in the future, it is intangible. Life is getting more complicated in a social sense; broken families, single parents, multiple marriages, multiple dependencies. As more and more families will have to rely on public resources for their welfare, Governments should be encouraging voluntary long term personal savings. Malta is still one of the few countries in the EU that does not encourage voluntary personal savings through tax and other incentives. Life insurance is well recognised as being among the most disciplined means of saving for the long term.

to a lower demand for single premium savings plans. In 2011 the total life market premiums in Malta amounted to €209 million.

“The indicators that we have, show that only around 36% of the working population in Malta have some form of life protection” There are growth opportunities Although life insurance companies are playing an increasingly important role in Maltese household savings, comparative studies with other European life insurance markets show that whilst the Maltese life insurance market has grown significantly between 1994 and 2011, the per capita spend on life insurance is still very low compared to the average European spend. In Malta, the density of life premiums per inhabitant is still around one-third of the average EU27. The growth potential of life insurance business in Malta is estimated at around 1.6 % of GDP, as the Maltese life insurance market is expected to converge to other life insurance markets across Europe. However, this growth will depend on the reform of the National pension system and on the introduction of incentives to encourage voluntary lifetime savings.

Finally we are looking forward with enthusiasm to play an important role in the expected National pension reform particularly in the creation and provision of Second and Third Pillar retirement solutions once the required legislative framework is put in place.

EDITOR’S NOTE

David G. Curmi is Chief Executive Officer of MSV Life p.l.c. Mr. Curmi is an Associate of the Chartered Insurance Institute of the United Kingdom and a Chartered Insurer. Mr. Curmi is a regular lecturer on various insurance topics at the University of Malta and at the Malta Insurance Training Centre.

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‘Whyte Harte’ Triq il-Kostinjuz, Naxxar, NXR 6352│E-mail: info@vccontractors.com Tel : 21420086 │ Fax Number: 21415832 │ Mobile Numbers: 79494661 / 79424661

Economy and finance

State of the

Economy Special Edition 2012/13

The State Of Our

Economy by Karmenu Vella, PL spokesperson for Finance

Karmenu Vella explains why Malta’s economic performance, as well as its economic potential, should be assessed by the success or otherwise of the major economic objectives such as full employment, financial stability, price stability, a healthy situation in the balance of payments, economic growth and above all a fair distribution of income.

ince 2004 Malta’s debt build-up has exceeded the limits of financial prudence and acceptable levels surpassing the Maastricht criterion of 60% debt to GDP ratio for healthy state finances, and is jeopardising our financial stability. This year we will be ending with a debt ratio in excess of 72% of GDP. In absolute terms our central government debt has shot up to €5 billion and, taking into account all public sector debt, for every €1.00 worth of production we have a €1.00 worth of national debt. This clearly indicates a situation of instable finances. Changes in current government fiscal policy, rationalising existing economic priorities, efficient implementation of budgetary measures, as well as effective control on government revenue and spending can go a long way in reversing the ‘leveraging of Malta’. Playing down the debt problem because it is domestic will not exonerate us of the problem. As businessmen and families all know, debt burdens can be transferred but must ultimately be paid by some future generation who will experience the pain but not the gain. Domestic debt might not involve a transfer of wealth from the Maltese to foreign economies, but it does not exclude redistributive transfers from the taxpayer to the bond holder. The implications of domestic debt on the economy cannot be ignored. For starters, government borrowing may have crowded out productive growthenhancing private investments. It is creating inflationary pressure with subsequent effects on the purchasing power of wages and income and industry competitiveness. The suggestion that

electricity and gas cylinders as well as fuel prices have been exorbitant. In this context, budgetary increases in petrol and diesel tax did not help at all. Unsurprisingly, we have been experiencing in Malta a consistent rise in domestic inflation, measuring around 3% using the RPI. Inflation has been eroding the purchasing power of wages and widening the gap between the higher income groups who can adjust their fees quickly and effectively compared to people living on fixed incomes such as pensioners and wage earners. Inflation is also eroding industry competitiveness as prices rise more than those of our competitors. Using the HICP Malta’s inflation rate is much higher at 3.2% yearly average for October than the Euro Area average of 2.5%. This does not augur well for our export oriented industries.

debt will be partly financed through inflation is too outrageous to be seriously considered. What is certain is that more than €230 million of debt servicing has to be paid out annually out of taxation. This amounts to one and a half times our education bill. Excessive borrowing has also limited the government’s manoeuvrability in using fiscal policy as a counter-cyclical tool. Price hikes in energy rates, increased tariffs for government services and other measures to mitigate fiscal deficits have created a social deficit which in turn has lead to further fiscal deficits.

“The suggestion that debt will be partly financed through inflation is too outrageous to be seriously considered”

It is only through economic growth that we can guarantee quality jobs and reverse the present trend of a deteriorating job quality and the recent rising trend in unemployment. The aim of generating wealth through economic growth is to achieve the higher objective of securing a fairer distribution of income. It is a positive move to reduce income taxation for the higher income bracket earners in the proposed budget, but it is unacceptable that low wage earners are forced to foot the bill. It is preposterous that minimum wage earners have to pay income tax. Equally regressive is the fact that the majority of taxpayers will not benefit from these tax cuts but have to pay higher taxes on expenditures. If the government as it is stating purposefully planned for regressive taxation then truly there is something rotten in the state of Denmark.

Total debt reduction is not necessarily a shortterm target of monetary policy but reducing the budget deficit to less than 3% certainly is. Making optimistic but unrealisable growth predictions only reduces the deficit ratio on paper, thus making the problem worse at a later stage. The debt problem has been a source of persisting inflation. Because of the growing debt the government is less inclined to pursue policies that contain price increases. Not all of our inflation is imported. A significant part is home inflicted. In some cases, higher-than-EU-average prices of

EDITOR’S NOTE

Mr Vella is Shadow Minister for Finance and is also co-ordinating the PL’s Electoral Program. He graduated as an Architect and Civil Engineer, and later obtained a Masters in Tourism Studies. Apart from his practice as an architect, he had been appointed Director on the Board of the Mid-Med Bank, worked as the General Manager of the Libyan Maltese Holding Company, served as Minister of Public Works, Minister for Industry, and later as Minister for Tourism and was Chairman of an international hotel management company. Presently he is the Chairperson of the Maltese-Turkish Business Council (working to improve the business and investment between Malta and Turkey), Chairman of Orange Travel Group and a member of the Vodafone Malta Foundation (a voluntary organisation giving support to social projects) .

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Open art

Wishing you all a Merry Christmas and a Prosperous New Year Open Point SY

Budget 2013 review

State of the

Economy Special Edition 2012/13

Budget 2013: Competitiveness, innovation and entrepreneurship by Bonavent Gauci

Bonavent Gauci analyses the 2013 Budget presented in Parliament by Tonio Fenech, Minister of Finance, the Economy and Investments. The Budget aims to continue fiscal consolidation, strengthen the social safety net, while providing enough incentives for further investment and the creation of further jobs.

n the 2013 Budget, Government described its industrial strategic policy as being based on three pillars: competitiveness, innovation and entrepreneurship. Government also reiterated its determination to persist in attracting new investment, as well as to continue to support existing investors in fostering business growth. To sustain this strategy, €14 million in incentives are being allocated to industry in 2013. This is in addition to the €200 million tax credits granted in the past 4 years and other incentives such as the €42 million assistance granted under the €20 million for industry program and the High Energy User scheme. In this latter scheme, six manufacturing entities consuming more than 2GwH annually are being assisted to invest in the conservation of energy and in the generation of energy from alternative sources. In this Budget, this scheme is also being extended to factories and hotels in Gozo.

“These revisions will remove barriers that in the past may have caused uncertainty where corporate restructuring may be necessary to reinguvinate or consolidate businesses” The Finance Minister indicated that notwithstanding that Malta is not likely to qualify for the Least Development Status (Objective 1 status) in the 2014 to 2020 EU

reduced interest rates. 440 businesses have so far benefited from €38 million financing at reduced interest rates under this scheme. These two schemes complement the Micro Guarantee scheme, launched in 2012 where enterprises with up to 20 employees may be granted guarantees to enable them to secure financing from commercial banks.

budget period, Government is striving to maximise the structural assistance, which it may grant to investors. This is particularly important to alleviate the incremental cost of doing business in Malta given our island status and geographical position at the periphery of Europe. Government is also proposing to enhance innovation with key projects such as the development of the BioMalta Campus, a €38 million investment aimed at developing Life Sciences in Malta. Together with Smart City, these two projects offer the infrastructure necessary to stimulate the development of these sectors, pillars in the Vision 2015 strategy.

Other proposed measures include the development of the regulatory framework within which factoring services are provided to facilitate the financing of sales invoices. Revisions to tax rules relating to mergers and divisions were also announced aimed at facilitating business reorganisations carried out with the intention of increasing economic efficiency. These revisions will remove barriers that in the past may have caused uncertainty where corporate restructuring may be necessary to reinguvinate or consolidate businesses and stimulate further investment.

The Minister also announced a number of schemes and initiatives aimed at providing assistance to business start-ups particularly in the ICT industry such as the proposed €3.5 million investment in the development of ‘plug in/plug out’ facilities to house businesses in this sector. Another initiative is the creation of a ‘Hub’, which will encompass software houses, digital artists and students and which will provide facilities and mentoring to companies in the digital games sector. Other incentives announced include those aimed at increasing the competitiveness of the local film industry.

An innovative form of funding announced by the Minister is the launch of the B.START scheme aimed at encouraging established businesses to invest ‘seed capital’ in start ups approved by Malta Enterprise. In so doing, investors would benefit from a tax rebate up to a maximum of €30,000. Whilst new in the local context, this concept of crowd funding has been around for more than 15 years.

The Budget also refers to the various schemes in place aimed at assisting SMEs in the raising of finance. The MicroInvest scheme, through which businesses may benefit from tax credits equivalent to 40% of the investment (up to a maximum of €25,000) is being extended for two further years. Similarly, Government is in discussion with the European Investment Fund to extend the JermieMicrocredit scheme, which enables businesses to benefit from

The initiatives announced in the Budget should encourage potential and existing entrepreneurs to cultivate their business ideas thereby stimulating competitiveness, innovation and entrepreneurship and contributing further in the process of implementation of the Vision 2015 strategy. Small and medium-sized enterprises The European Investment Fund is the European Investment Bank (EIB)’s specialist provider of SME risk finance across Europe

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Editor’s Note

Bonavent Gauci is a Senior manager within PwC’s Advisory practice specialising in corporate finance, valuations and strategy and business recovery services.

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State of the

Economy Special Edition 2012/13

Commerce, Enterprise & Industry

The Malta Chamber’s

evaluation of 2012 and forecasts for 2013 by Mr Tancred Tabone

The Malta Chamber of Commerce, Enterprise and Industry was at the forefront of discussions related to the macro and micro economic prospects for this year and the forecasts for next year. From the start of 2012, Malta’s growth prospects were threatened by the bleak international scenario.

xternal demands for goods and services remained vulnerable to the effects of austerity measures that were rife in countries which constitute our principal target markets. Notwithstanding all these difficulties, 2012 has emerged as an overall positive year for the Maltese economy. There is no doubt that one of the major contributors for the positive results achieved thus far has been the buoyant growth of the financial sector and especially the banking segment. Recent studies compiled by the European Central Bank have identified Malta’s banking sector as being one of the most robust and resilient within the EU. The capital buffer retained by local banks remains by far one of Europe’s highest. This was no doubt influenced by the minimal impact that was experienced by the local banking sector following the international financial crisis and turmoil in the global banking industry. Malta’s banking system has also been ranked as the tenth soundest in the world in the World

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Economic Forum’s Competitiveness Index. This is also further testament to the sound and reputable yet practical legislative framework laid out in the Malta Banking Act and the active monitoring undertaken by the regulator, the Malta Financial Services Authority (MFSA).

“Businesses in the Maltese Islands faced a difficult 2012 and possibly 2013, but in general they remain positively tuned” We believe that the financial sector in Malta has continued to emerge stronger through the financial crisis. When one considers the dire situation of the banking sector in Europe, we feel that from a general perspective, the sector kept on growing from strength to strength. During the last years, new banks continued setting up in

our jurisdiction and there has been an increase in bank deposits. We forecast this sector to continue in this positive path, nevertheless, EU legislation such as the proposed Banking Union and the Financial Transaction Tax (FTT) will have an impact on the continued growth. At the Malta Chamber, we have recently conducted the annual Eurochambres Economic Survey (EES) amongst our members. This was the 20th year in which the survey was being carried out. The replies included around 227 respondents representing almost a quarter of our membership. Both the manufacturing and services sectors were well-represented in their replies. According to the overall survey results, businesses in the Maltese Islands faced a difficult 2012 and possibly 2013, but in general they remain positively tuned. Although the mood in general cautionary but with the determination to go on seeking solutions to present issues and new potentials for profitable trade.

Commerce, Enterprise & Industry

Economy Special Edition 2012/13

private sector and the Maltese Government. At the same time whilst our ratings were being reaffirmed, those of our Euro zone partners were being downgraded. Fiscal consolidation and structural reforms should remain a top priority for any Government running the country, as we had indicated in our Budget submissions the underlining priorities of this document were positive. No particular economic shocks, namely increases in tax and utility rates, were introduced. On the contrary, the announced reduction in income tax rates is in line with the Malta Chamber’s consistent requests for reduced tax burdens in the economy.

could change and the final outcome will depend on the timeliness of the projects and last-minute change of plans. In the end, all of the economic activity will rely on a number of factors. These will include the way in which the fiscal budget is administered, the way trade will evolve in locally produced and provided goods and services, and the stability of the local financial system as it is subjected to new regulations on a global and euro-zone basis. All of these are bound to condition the performance of economic activity throughout 2013.

“Malta’s banking system has also been ranked as the tenth soundest in the world in the World Economic Forum’s Competitiveness Index”

The forecasts for next year remain overall upbeat and the results of the survey mentioned earlier clearly confirm this statement. Despite the fact that times do not seem easy, there is reason to believe that local industry and service providers are holding their ground. The manufacturing sector is registering encouraging results whilst the services sector is seen facing temporary setbacks in the local market, which nevertheless, is seen to be overcome over the course of 2013.

There is no denying that businesses in the Maltese islands faced a challenging 2012. They suffered the effects of gross instability in important neighbouring markets across the euro-zone and in North Africa, particularly, Libya.

Under this analysis, six parameters were analysed namely: investments, exports, domestic sales, employment, business confidence and total turnover. The mood in general remains positive for next year. Business confidence is rising and local market sales are envisaged to rebound in both the manufacturing and services sectors. The number of firms which do not plan to invest is seen rising, hence additional activity, including new employment, will depend on the volume and type of new capital accumulation in 2013. Very few companies replied that they will add on their current employee numbers, nevertheless, such projections

State of the

Europe’s business community has, of course, experienced the damaging impact of the global financial markets and subsequent Eurozone crises. The destabilizing effect on companies of this protracted period of economic turbulence dominates the general economic scenario, as it has for the last four years. Business confidence at a European level are at a historical low. Confidence, while intangible, is a critical factor in any business’ growth prospects, so this is a worrying development. Across Europe, businesses clearly see little sign of any swift recovery and the overall sentiment is that 2013 is set to be another very tough year.

Malta will be experiencing a general election on the 9th of March next year which may also easily disrupt business momentum in a number of sectors. As we have done on several occasions, the Malta Chamber augurs that in the run-up to the election, political parties steer clear of unsustainable promises which could de-stabilise the economy in the years to come. Ultimately what is required from any new administration is to make sure that economic growth and competitiveness are on top of the country’s agenda.

Notwithstanding this bleak international situation, the local economy performed well. In fact, our economic performance was acknowledged as “robust” and “stable with potential for growth” by a number of independent sources such as the International Monetary Fund and the European Commission. Another sign of this success has been the fact that the major credit rating agencies have acknowledged the work being done by the

EDITOR’S NOTE

Mr. Tancred Tabone was born on the 24th October 1952. He is married to Karla nee Stephens and has two sons Luke and Alan. Mr. Tabone occupied the post of Deputy President in the previous Board of Management of the Malta Chamber. Prior to that, he was President of the Malta Chamber of Commerce and Enterprise and led the organisation through its merger together with the Federation of Industry. In his business, he is presently Managing Director of Forestals Group of Companies. Besides, he is a Malta Enterprise Director and sits on MCESD as a Malta Chamber Representative. Mr. Tabone was appointed Managing Director of Forestals Group in 1981. He served as Director of the Malta Trade Fair Corporation from 1992 – 1998, Chairman of the Malta Trade Fair Corporation from 1994 – 1996, Director of the Water Services Corporation from 1992 – 1997, Chairman of the Water Services Corporation from 1995 – 1997, Chairman of Mediterranean Offshore Bunkering Company Ltd from 1999 – 2005, Chairman of Enemalta Corporation from 2003 – 2005.

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State of the

Economy Special Edition 2012/13

Economic & Budgetary review

World Rank: 50 Regional Rank: 23 Malta’s economic freedom score is 67.0, making its economy the 50th freest in the 2012 Index. Its overall score is 1.3 points higher than last year, with significant improvements in freedom from corruption, fiscal freedom, and the control of government spending. Malta ranks 23rd out of 43 countries in the Europe region, and its overall score is above the regional average. Malta’s openness to international trade and investment has helped to restore economic growth to a healthy level, and the country has taken steps to enhance the competitiveness of its financial institutions. The banking sector is one of the soundest in Europe and has weathered the European sovereign debt turmoil relatively well with no need for capital injections. Despite recent overall progress, some of the foundations of economic freedom remain weak, undermining prospects for more dramatic growth. The court system, while transparent and relatively free of corruption, remains inefficient. Measures designed to enhance the effectiveness of government have yielded uneven results, and bureaucracy continues to discourage dynamic entrepreneurial activity. Privatization has slowed. The government continues to intrude excessively into economic activity, imposing significant tax burdens and maintaining high levels of spending. Public debt, at almost 70 percent of GDP, has crept into potentially dangerous territory.

The trade regime is the same as that of other members of the European Union, with the common EU trade weighted average tariff rate standing at 1.4 percent, but layers of non-tariff barriers raise the cost of trade. Foreign investment is welcome, and investment regulations are generally transparent. The financial sector has undergone gradual restructuring and expansion, and the banking sector has become more open to foreign banks.

Source: 2012 Index of Economic Freedom 28

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State of the

Economy Special Edition 2012/13

Economic & Budgetary review

Malta Economic Overview 2012-2013

Progressive reduction of top 35% income tax rate to 32% (reducing to 29% and 25%) on income up to €60,000

€411 1.3%

Tourist expenditure On a per capita basis expenditure by tourists increased by 10.4% to €411.30 per person during the first half of 2012

Possibility of alternative property valuations for tax purposes in respect of immovable property transfers

The total industry turnover index up to July 2012 increased by 1.3% when compared to the same period in 2011

Rate of inflation expected in September 2012

2.3%

Tourist departures up to August 2012 increased by 0.8% over the same period last year to 981,286 visitors

546 Male

Water conservation 50% refund of their expenses capped to

€1,000

1,724 Female

€6,779 million

Labour supply

during the 12 months to May 2012

GDP for 2012

GDP for 2012 is expected to be €6,779 million representing an increase of 4.9% (in monetary terms) over 2011

Trade gap up to August 2012 which stood at

2.7% for 2012

€1.4bn

Imports growth (33.3%)

1.7% for 2013

The female labour supply during the 12 months to May 2012 increased by 1,724 compared to an increase of 546 in the male labour supply

2010-2012

The deficit for 2012 is expected to reduce to 2.7% of GDP. In 2013, the deficit is expected to reduce to 1.7%

Cost of Living

Trade gap Notwithstanding a visible widening in the trade gap up to August 2012 which stood at €1.4bn, the level of export growth (42.5%) was greater than that of imports (33.3%)

Introduction of possibility of tax neutral mergers and divisions subject to prior Revenue approval

Enhancement of benefits for certain industrial, cultural, film making and other services activities

981,286 visitors

Labour force

Export growth (42.5%)

The measures announced by the Minister of Finance, the Economy and Investment in the budget speech for 2013 include:

Removal of duty on inheritance and donation of property from parents to children

0.8%

The rate of inflation was volatile during the year however, in September 2012 it is expected to be 2.3%

In May 2012, the number of people registering for work amounted to 6,698 (4.2% of the labour force)

Extension from 7 to 12 years of opt-out period from 12% final tax on transfers of immovable property

The weekly cost of living increase for 2013 is €4.08 per week. In line with recent years, this increase will be granted in full to pensioners

Property related measures Income tax and stamp duty The period for opting out of the 12% final withholding tax capital gains regime on transfers of immovable property situated in Malta will be extended from 7 to 12 years. People taking a bank loan to finance the purchase of their residential home may provide a valuation of the property by the bank’s architect and such valuation would represent the market value for tax purposes. In other cases where the value of the immovable property exceeds €250,000, buyer and seller may opt for the property to be valued by the Government’s architect (valuation valid for a 6 month period) before concluding the contract of sale, with such value representing the market value for stamp duty purposes. A donation or transmission causa mortis of immovable property from parents to their children should no longer be subject to duty. Ten year holding period that applied to a transferee post-inheritance will no longer apply when the transferee is a person with special needs.

PETROL +26% DIESEL +30%

Stamp duty rate of 3.5% would have been applied on the first €150,000 (instead of the first €116,468.67) of the value of the property when a person purchases immovable property as his sole ordinary residence.

2012: Petrol +5% and Diesel +8%

Source: World Economic Forum Global Competitivness Report Budget 2013 by Pricewaterhouse Coopers

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State of the

Economy Special Edition 2012/13

Sector report | Property

Malta: a cool climate that’s hot on the quality-of-life index by Nigel Leyson

It’s official - Malta has the best climate on earth. Malta was one of two countries that were tied for first place with the title of Best Climate, according to the Quality of Life Index issued by the International Living magazine last year. Sharing top honours was Zimbabwe.

et a Mediterranean climate (over 5 hours of sunshine a day) isn’t all that Malta has to offer. Malta’s many other virtues in the nine categories of the IL index combined to earn it 3rd place overall in the Index, pipped to the post by the U.S. and New Zealand. That ranking speaks volumes for the size of Malta’s quality offering relative to the island’s land mass of just 122 square miles. How about a stable government, economy and a modern health service? These factors carry a lot of pull for wealthy English and Europeans looking to get away from their frosty climes. In fact, frost and snow are unknown in Malta with shirt sleeve order and temperatures of 70 degrees Fahrenheit (21 degrees C) in November. Many European capitals are less than three hours flight away. Crime is low, education levels high, the locals hospitable and Englishspeaking with 48 English language schools. As a result, homes and apartments here have now attracted the international set. So have the historic harbours, five-star hotels, restaurants and summer nightlife. But overseas domestic buyers aren’t the only ones to recognise the reputation of the island’s property potential. Malta’s success in attracting City hedge fund managers to redomicile to the island as a result of a well regulated and cost-competitive jurisdiction has spurred more demand for high quality homes in the sun. Back in 2000, it wasn’t like this. Sure, the island had a loyal following of repeat overseas visitors but nothing that one could call gold standard. Despite its geographic location and abundance of sun and sea, Malta’s lifestyle as an upmarket destination had little relevance for the aspiring overseas home buyer. That was until Portomaso was built. George Fenech, the Tumas Group’s Chairman, pioneered the lifestyle concept in Malta. He had a €140 million dream. He wanted to enhance the quality of life for those buyers who could make the right investment decision. His vision of the Portomaso marina would bring Malta to the attention of the international property market with an Oscar of the property world - Gold Award in the Best Marina Development Category in the 2005 International Property Awards. As a result, Portomaso was acclaimed

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the most exclusive address in Malta and became home to the well-heeled, international celebrities and footballers. Those that bought in 2000 have seen the value of their property rise by over 300%. Rental returns, have risen also, giving a yield of up to 06% .

“A well regulated and cost-competitive jurisdiction has spurred more demand for high quality homes in the sun” Out of the Portomaso mould have been cast two more luxury developments in the north and south of the island, both a stone’s throw from the Med. They are already reaching completion, thanks to Tumas Developments, the Group’s property arm. As both properties websites rather prosaically state, these two new residencies ‘offer lifestyle choices of the highest standards’. More to the point, poured into these two moulds are all the expectations of luxury, safety, tranquility and, you’ve guessed it, lifestyle. Tas Sellum and Ta’ Monita have been designed to suit most pockets. Tas-Sellum offers a one-bedroom apartment of 68 square meters starting at €158,000 going up to a million plus for larger apartments whilst Ta’ Monita offers apartments starting at €98,000 going up to a million plus. Both residences are termed Specially Designated Area*, allowing the buyer to purchase more than one property in Malta and Gozo for private use or for business. Perhaps we should create a Portomaso Quality Index. Zimbabwe wouldn’t stand a chance.

Contact details Tumas Developments Tel: (+356) 2138 6802 (+356) 7949 7504 Email: info@tumasdevelopments.com Web: www.tumasdevelopments.com

Sector report | Property

Ta’ Monita

State of the

Economy Special Edition 2012/13

The benefits of buying property in Malta · Attractive Tax advantages

Tas-Sellum

· Relief through 58 double taxation treaties · No annual Rates or Property Tax · Ideal business location · Mortgage to purchase a property available to non-residents · Safe environment with a Low crime rate · Low cost of living · High standards of Health care · High standard of Education · English speaking with 48 English language schools.

Portomaso Marina Photo Martin Pettersson

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Economy and finance

State of the

Economy Special Edition 2012/13

Malta must not be left behind by

banking union by Edward Scicluna

Our banking sector has been one of the more resilient since the financial crisis began in 2008. Unlike most other EU countries, Maltese banks did not need a taxpayer provided public bailout. Profs Edward Scicluna shares his perspective on how they continue to hold above average levels of core capital and should be well placed to implement the new EU directive on capital requirements without too much difficulty.

ut we need stability in the eurozone banking sector if our financial sector is to continue to thrive. As we have seen as the financial crisis in private banks mutated into a sovereign debt crisis, financial services across the EU are deeply intertwined. Virtually all banks, large and small, are exposed to debts in the four EU countries currently receiving bail-out money, and all would suffer from any disorderly default. In December ministers and MEPs will probably reach a deal on the first part of a banking union for the eurozone. The legislation before us establishes the ECB as the single supervisor of the eurozone banking sector. The magnitude of these reforms cannot be exaggerated. Although national regulators will still play an important role, and will be the immediate reference point for local banks, the ECB will have unprecedented powers to scrutinise and intervene in the banking sector. For instance, it will be able to withdraw banking licenses, decide on mergers and acquisitions, police the levels of core capital held by banks, and be able to impose sanctions and fines. Even without the other provisions for a functioning banking union, such as a common deposit guarantee scheme to protect savers and EU rules on the winding up of broken banks, the creation of a single supervisor marks a huge transfer of power from national to European level. Meanwhile, a deposit guarantee scheme and system of living wills will probably not be negotiated until 2013

and 2014, will form the other key components of banking union, and will have major implications for all countries involved, Malta included. There are still a great number of as yet unanswered questions about what a banking union will look like - which banks will it first apply to; what will be the role of national regulators and their relationship with the ECB. The only thing that can be said for certain is that it is going to happen. After agreeing on the concept at the June summit, leaders agreed in October that the legislation would be in place by the end of 2012 - leaving government minister and the European Parliament’s Economic committee a matter of weeks to draft, negotiate and approve the most important EU legislative reforms in a decade.

“With the clock ticking towards decision time, the extent of the scope of banking union is unclear”

two regulations - to establish the ECB as a single bank supervisor for eurozone; and to expand the role of the recently created European Banking Authority - are not framed solely to take account of the needs of the biggest member states at the expense of smaller countries like ourselves. The debate about what is considered as a ‘systemic’ bank is a classic example. Most Europeans would identify the giant retail and investment banks in this category - the likes of Deutsche Bank, Credit Agricole, or Barclays. It is true that the collapse of these banks would wreak huge damage on the European economy as well as the individual countries concerned. But Bank of Valletta, for example, is just as important and ‘systemic’ to the success of the Maltese economy. Such considerations must be made to avoid a banking union that discriminates against the smaller member states. The eurozone is going through a turbulent time. The structure of Economic and Monetary Union was not designed to withstand a crisis of this nature, where the fate of private banks has been so systemically linked to national governments. Certainly, few could have foreseen such as crisis when we joined the single currency in 2007.

With the clock ticking towards decision time, the extent of the scope of banking union is unclear. All EU countries have the specificities of their own financial sector to think about. Germany, for example, is anxious to keep its regional Ländesbanks outside the scope of supervision. Smaller countries such as ourselves have to make sure that our banks are treated equally by the rules. One challenge for Malta will be to ensure that the

But there is little point in dwelling on the past. It seems highly probable that the economic policies and financial sectors of the 17 eurozone countries will become more tightly integrated in the coming years, with or without Malta. The challenge for us is to ensure that our voice is heard and the new rulebook takes account of our needs. Above all, we must make sure that we are not left behind.

Editor’s Note

Prof Edward Scicluna is a Member of the Progressive Alliance of Socialists and Democrats (S & D Group) of the European Parliament. He studied at the University of Oxford earning a Diploma with distinction in politics and economics. Profs Scicluna also holds a BA in economics from the University of Malta and was bestowed with First Class Honours, and the University of Toronto, acquiring a Masters and Doctorate economy. He was appointed professor and head of the department of economics at the University of Malta, served as Chairman of the Malta Council of Economic and Social Development (MCESD), Chairman of the Malta Financial Services Authority (MFSA), Electoral Commissioner, Central Bank director, director on the MIB Ltd), Chairman of HSBC Malta Bond Fund, Chairman of the Cottonera waterfront Group plc and a member of the National Committee for the changeover to the euro (NECC). Edward served also as consultant of the Commission of the European Union (EU), UNESCO, and United Nations Environment Programme (UNEP). He was appointed on the Audit Committee of the Bank of Development of the Council of Europe. He is an advisor on economic matters of the IMF delegation, and the Rating Agencies - FitchIbca, Standard & Poor’s, and Moody’s. He was appointed by the EU Commission as an expert on the Euro.

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Banking - currency sPecial

A New Era for

State of the

Economy Special Edition 2012/13

Following David Bloom’s epigrammatic presentation based on recent HSBC Global Research into Foreign Exchange we describe spot and forward contracts, revealing how Foreign Exchange can take many forms.

n the glory days of carry, the FX market had the luxury of a clear framework for understanding and trading currencies. It was clear, liquid and transparent. Today carry’s hold on FX has waned as global rates gravitate towards zero, forcing the FX market to react instead to the far more ambiguous implication of QE. By contrast, other asset classes, notably equity markets, provide a cleaner mechanistic link between a given view and a price. Spot Foreign Exchange refers to a spot contract currencies involved and which is a binding obligation to buy or sell a certain amount of foreign currency at the current market rate, for settlement in two business days’ time. Entering in a spot deal with HSBC you advise us of the amount, both currencies involved and which currency you would like to buy and sell. All companies who have foreign currency exposure may use a spot deal. But they are most commonly used by companies exposed to transactional risk. A spot deal will settle (in other words the physical exchange of currencies) two working days after the deal is struck. This “value date” reflects both the need to arrange the transfer of funds and, in most cases, the time difference between the currency centres involved. Forecasting exchange rates is very difficult – you cannot know for certain what the exchange rate is likely to be by the end of today. A company using only the spot market for its foreign currency requirements is using the simplest method, but at the same time the most risky. Identifying the Risk Businesses that trade or have operations overseas are likely to be exposed to foreign exchange risk

David Bloom, HSBC’s Global Head of FX Strategy, addressing business delegates and traders in Malta at the Hilton Portomaso.

arising from volatility in the currency markets. The most common cause of foreign exchange exposure arises from having to pay invoices for imported raw materials priced in a foreign currency or receiving foreign currency for your exported finished goods. However, exposure can also arise from:

Is the level of overseas business likely to change? Do you pay and receive in the same foreign currency – it may be possible to mitigate the exchange risk by using a foreign currency bank account?

Your competition having a cost base and/or selling their products in a foreign currency Assets located overseas Foreign currency borrowing or surplus cash balances of overseas subsidiaries Borrowing denominated in foreign currency

Point 2 – Understand the Products Do nothing and buy or sell your currency in the spot market. You act on the day you want to buy or sell your foreign currency. Lock in to fixed rates – as soon as you become aware of a need to exchange foreign exchange at a future date, you can fix the exchange rate by booking a forward exchange contract.

The impact that exchange rate fluctuations have on profitability will vary but in many cases it can be significant.

Use flexible products – a currency option will offer you the potential for upside benefit if rates move in your favour.

“Forecasting exchange rates is very difficult – you cannot know for certain what the exchange rate is likely to be by the end of today”

Point 3 – Develop a Strategy It may not always be best to adopt any one of the three alternatives in isolation to manage your foreign exchange risk. Point 4 – Implement It It is often tempting to defer a decision to implement your foreign exchange risk management strategy, perhaps in the hope that rates may move in your favour in the short term.

The Four Point Plan Point 1 – Understand your Exposures There is a raft of factors to take into account when assessing your exposure to foreign exchange rate risk, for example: What proportion of your business relates to imports or exports? What currencies are involved What are the timings of payments? What impact would an adverse rate movement have on your profitability?

For many businesses, the impact of exchange rate volatility can be significant. HSBC has a team of specialists available to advise you on developing an appropriate strategy for your business – please contact your HSBC relationship manager for further detail.

Editor’s Note

Effective cash management is about creating a strategy to handle your daily treasury needs, while focusing on your long-term goals. On the ground in more than 60 countries worldwide, HSBC’s Payment and Cash Management teams have the knowledge to help navigate local markets, the connectivity to offer enhanced visibility and control, and the technology to streamline global cash management systems. In recognition of this, HSBC has been named Best Global Cash Manager for Financial institutions in the Euromoney Cash Management Survey 2012.

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BUILDING AND CONSTRUCTION

State of the

Economy Special Edition 2012/13

Construction-easy Design by Charles Muscat

MCS Building Solutions was established in 1996 with an objective to bring the local building market and home decoration in line with other neighbouring countries.

s a project manager having experienced lack of materials that can withstand humidity, heat, water and fire, Technical Consultant Charles Muscat decided to fulfill his tasks and satisfy his needs by importing the right materials for the right jobs without compromising on quality. According to Charles, this “in return gives you lifetime enjoyment of your work”. Most of MCS products are meant for “do it yourself” jobs, saving on cost of labour, which can be invested in best quality minerals and technology, without requiring frequent maintenance. Eco materials with thermal and sound proofing are today’s most sought after products. MCS products such as the M-tec autoclaved lightweight concrete are indestructible.

The company introduced the cellular concrete technology lightweight providing pumpable concrete by Fabio Bertazzoni from M-tec-gmbh. Cellulose Fibre Cement has been in production for more than a 100 years with superior results that will not rot, burn or warp, making it ideal for internal and external jobs. Good-looking, sustainable, cost effective and constructioneasy design and building is the result of continually applying construction and material science knowledge to the development of materials and products.

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Employment

State of the

Economy Special Edition 2012/13

Has the

economic crisis

impinged on employment figures in Malta? by Angelo Farrugia

Despite claims by the Government that Malta’s economy was not hit hard by the European economic crisis, the employment figures for 2011 recently published by Eurostat show that Malta still has not experienced the expected leap and particularly in specific categories. Dr Anglu Farrugia segments the characteristics defining how our nation trails its EU counterparts by a significant margin.

ndeed, employment data in the female category for 2011 places Malta in the last position from the 27 EU member states. At 41%, Malta’s employment rate for the female category is a massive 17.5% adrift of the EU-27 average. Malta is one of only three countries with an employment rate below 50%, along with Italy and Greece. Without any doubt, this says something regarding the attractiveness of the domestic workplace to Maltese females and the difficulties they encounter to take the plunge. The results show that the schemes introduced by the Government in the last few years have not been successful, either because these were not well thought or else not properly implemented. The lack of child care centres at affordable prices and the perceived pro-male climate in the private sector may have deterred more female participants from taking the plunge. Moreover, the economic crisis has certainly not helped and the bottom line is that the

10%, from 80,000 to 88,000 in 2011. Arguably, this setback is conducive of the situation in the employment sector in Malta, and the situation could get worse, in view of the ever increasing unemployment figures, which have risen for the eight consecutive month in October this year.

Government failed to create the appropriate sustainable jobs to entice Maltese women to the workplace. Another sector where Malta is also lagging behind the other EU member states in employment rates is the “older workers” category. Once again for workers between the age of 55 and 64, Malta has ranked in the 26th place from 27 countries, and at 31.7% has a deficit of 16% from the EU-27 average. The Government schemes introduced locally have failed in their aim and this is an area where the country is experiencing a brain drain that will certainly affect Malta’s drive to improve its performance levels across its industries.

“At 31.7% has a deficit of 16% from the EU-27 average” The Government has the responsibility to take immediate action. The austerity measures introduced over the last two years are starting to take their toll on the Maltese citizens and the time has come for the Government to change its policies and invest more in the people. We firmly believe that the state has to come up with suitable initiatives to increase the employment rates across the board, as this is the only sustainable course to create economic growth and reverse the negative trend in the employment sector in Malta.

Unfortunately, the failure to entice more workers to the domestic workplace had a negative effect on Maltese people. Statistical data issued by the Eurostat in November this year revealed that in the period between 2008 and 2011, the figure for persons in the risk of poverty or social exclusion in Malta increased by

EDITOR’S NOTE

Dr Angelo “Anġlu” Farrugia is the Deputy Leader of the Labour Party, a Member of Parliament and Shadow Minister for work, workers’ rights and Parliamentary Affairs. Farrugia served on the House Committee of the Consideration of Bills as Chairman. He has served as Shadow Minister for Justice and was also appointed Opposition Spokesperson for Employment and Workers’ Rights. Farrugia was appointed as Head of Malta’s Organization for Security and Co-operation in Europe (OSCE) Parliamentary Assembly delegation in 1996. He has since served on a number of EU and OSCE missions as an international observer for various elections, including Georgia (1999), the Presidential Election in Palestinian Authority (2004), the 2004 US Presidential Election, the Montenegrin independence referendum (2006) and the Presidential and Parliamentary Elections in Zambia 2006. He is also a member of the OSCE Parliamentary Assembly’s Standing Committee on Human Rights.

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State of the

Competitiveness Report 2012–2013 Economy Special Edition 2012/13

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State of the

Competitiveness Report 2012–2013 Economy Special Edition 2012/13

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HSBC Bank Malta plc 116, Archbishop Street, Valletta VLT 1444 23802380 www.hsbc.com.mt infomalta@hsbc.com

Mediterranean Bank plc 10, St Barbara Bastion, Valletta VLT 1000 25574000 www.medbank.com.mt info@medbank.com.mt

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State of the

Economy Special Edition 2012/13

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State of the

Economy Special Edition 2012/13

Accountancy Profession

Shaping the Future by Anthony Doublet

Anthony Doublet underscores the growth of the Malta Institute of Accountants and its role in supporting the Accountancy Profession in a volatile and challenging business environment.

he accountancy profession worldwide collectively provides services of immense value and benefit to business and to the wider public. When I look back to my early days as a student accountant, over twenty seven years ago, I cannot help but be amazed at how far the accountancy profession has come. Today, thankfully for the country and the profession, Malta is a thriving International Financial Services Centre and clients, who come from all over the Globe, are being serviced by our members. Accountancy has become one of the most popular professions on the island. Together with the University of Malta, the Institute has played a very important role in that. Our profession, and our Institute, are probably the fastest growing on the Island. The numbers speak for themselves. From 56 members in 1965 when the Malta Corporation of Accountants and the Malta Institute of Accountants merged, today the number of MIA members has surpassed the 2,000 mark making it one of the largest professional institutes on the island. Students are practically guaranteed of employment as they are being approached by accounting firms from even their first years as students. Work opportunities are high given the fact that we are an IFRS jurisdiction and English speaking. The development of the profession was made possible due to the growing complexity of Malta’s economy and the growth of the financial sector. Nonetheless these times are not devoid of challenges. Indeed every which way we turn there is uncertainty. On an international basis, the Global economy is slow to recover. Closer to home, within the EU, we are facing an uncertain future for the Euro, with sovereign debt of certain

Editor’s Note

countries in the Eurozone at risk of being impaired. The Maltese economy has so far been spared the worst of the effects of this storm, but we are far from immune. Within this scenario, the accountant is continuing to have to deal with other challenges specific to the Profession such as the EU’s micro-entity regime and the EC’s Single Accounting Directive proposal, that would have a significant affect on an economy like that of the Maltese islands, where over 90% are micro-enterprises employing less than ten persons and where 98% of the total registered companies are SMEs.

“The Maltese economy has so far been spared the worst of the effects of this storm, but we are far from immune” The Malta Institute of Accountants played a crucial role in enabling our profession to face up to the resulting challenges, however, the Institute is changing and evolving – as should any organisation to remain relevant. In November 2012, the MIA held its seventh biennial conference that discussed the need for the accountancy profession’s rebranding in the light of the changing European regulatory landscape and debated with an open minded approach, the Institute’s reason for being. Throughout this conference we harnessed the insights of Members, business leaders, regulators and thought leaders into the continuing evolution of our Institute and the profession. The input that we obtained from the conference will be fundamental in shaping the Institute’s future strategy such that the Institute remains a relevant organisation to the changing profession that it is there to serve.

Anthony Doublet is the President of the Malta Institute of Accountants, a professional body which has been representing the Accountancy Profession in Malta for almost 70 years. Anthony’s term will come to an end in 2013. He is a long standing elected Council member of the Institute, serving since 1998. During this time, Anthony has also been active on a number of the Institute’s committees and for a number of years represented the Institute on the Council of the Malta Federation of Professional Associations. Anthony was made a partner of the Malta representative firm Arthur Andersen in 1994. In 2002 the firm’s merged with Ernest & Young. Anthony is Ernst & Young Malta’s National Professional Practice Director. 44

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event of the month

Giuseppe La Rosa, Sara Grech, Comm. Ray Bugeja and the Staff at don Serafino al Molo

State of the

Economy Special Edition 2012/13

Dr Vince Micallef, Marianne Grima and Semira Tabone Grech

of the don Serafino al Molo Restaurant

d Deborah DelRe and Benjamin Tabone Grech

Entrance to don Serafino al Molo

on Serafino al Molo, with its stunning interior design, and overlooking the spectacular Portomaso Marina and Hilton Portomaso environs, introduced Maltese diners to the exquisite skills of Michelin-star executive chef Vincenzo Candiano and his team, chefs Salvo Garfi and Angelo Bonomo, and chefs de partie Luca Giulino and Giorgio Drago. Presenting an eclectic array of fine Italian cuisine, don Serafino al Molo offers a unique dining experience, Italian style. Classic Italian and Mediterranean cuisine, homemade pasta and bread, together with a stunning open kitchen are among the features of this exceptional restaurant. Exquisite desserts and a superb selection of Italian and world wines were on display during the launch organised by the well-known business duo Comm. Ray Bugeja and Ms Sara Grech. The restaurant takes orders from 12:00 to 15:00 and from 19:30 to 22:30 (later on weekends and public holidays).

Martin Vella and Margaret Brincat

From left to right: Sara Grech, Comm. Ray Bugeja, Hon. George Pullicino and Mrs Pullicino

From left to right: Comm. Ray Bugeja, Conte Laurent Bernard De La Gatinais, Hubert Muscat, Giuseppe La Rosa, Vincenzo Candiano (Executive chef)

From left to right: Mrs Bencini, Anne Schaefer, Kevin Bencini and Benjamin Tabone Grech

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State of the

Economy Special Edition 2012/13

Electrical and Mechanical

Strategy and Execution by Ray Aquilina

Founded in 1988 RAICO established a strong reputation for quality, service, and timeliness in delivery of services, attributes which are key drivers behind the company’s continued growth and search for excellence.

he company has today expanded its operations to achieve greater objectives and its capability has also increased with its size. Today the company validates an impressive portfolio of works undertaken in the Maltese Islands in every sector of the electrical and mechanical field. The company provides services to the commercial, education, health, industrial, infrastructure, public building, retail, sport and leisure, as well as up market residential areas. The company enjoys a reputation for high levels of expertise, deliver projects on time and on budget. It is operationally structured to tailor its services to client’s particular requirements, whether for specific tasks or

QUALITY ELECTRICAL & MECHANICAL CONTRACTING DELIVERED ON TIME SINCE 1988

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large projects. Operating a professionally sound recruitment policy, the company employs only qualified and experienced personnel. The company is made up of equally trained and highly experienced and dedicated employees, operating within a set-organised structure, providing flexibility and capability to increase capacity according to the specific demands. Ray Aquilina Installations has set up a network of independent electrical and mechanical engineers, the services of whom are availed of to the company’s specifications. The company is committed to the very highest standards of customer service and performance excellence on projects through ongoing performance evaluation criteria and direct customer contact.

Being a family owned company the clients have direct contact with the Raico owners on every level, thus giving the flexibility required and individual attention to each project. The company’s track record in the electrical and mechanical sector has enabled it to establish relations with top-quality suppliers in the local and foreign market. The high standards of quality, workmanship, materials, implementation and back-up service it provides is tangible testimony of the knowledge and proficiencies making it a leader electrical and mechanical contractors in Malta. Tel: 0035621420794; Email: info@raico.com.mt Website: http://www.raico.com.mt

ICT

State of the

Economy Special Edition 2012/13

A Cloud that brightens the Business Environment by Carmelo Romano, Managing Director, Clever Solutions Ltd

The circle is almost complete. Up to the late 70s, it was unthinkable for most businesses to have a computer on their premises. During those times, large computers known as mainframes were so expensive that the CEO of IBM once said that the global computer market was of five computers. However, technological advancements reduced the size of electronics and the personal computer was born.

t first personal computers were like islands operating on their own. Then the concept of the network was developed and as time passed more computers started sharing information that was stored on servers located on the premises. The Internet was the next milestone. At first, information was shared on slow links but in a few years, the links became faster and more reliable. This connectivity created the possibility to have larger and more powerful servers located in Data Centres which led to what is now known as the Cloud. The Cloud hides the complexity and the power of the computers lying behind our Internet connection. It presents itself differently to Service Providers and End Users. For the service provider it is a means of making use of computing resources from a seemingly infinite source to provide a service to the end user. For the end user it means that previously exorbitantly priced services can now be used at much more reasonable prices. This is possible because the service provider does not have to invest in sophisticated hardware that costs a lot of money.

“For the service provider it is a means of making use of computing resources from a seemingly infinite source to provide a service to the end user” In Malta, there are several service providers making use of the Cloud to serve their local and international clients. These services include online systems for Accounting; Document Management; Customer Relationship Management (CRM) and other systems. The IT playing field is now more level as the infrastructure available to Maltese service providers is the same as that available to other businesses abroad. With all this praise towards the Cloud, there are still drawbacks to using these services. The greatest advantage of the Cloud can sometimes be a weak point as well. The current connectivity to the Internet gives us the ability to access our information from almost anywhere. Yet when communications fail, as they sometimes do, all our information moves beyond our reach. Another point to consider is security. In many cases, the security provided by the service provider is much higher than that usually found in a normal office. Notwithstanding that, it is best practice to

confirm and make sure that your data is secure. Service providers should provide information on the level of security for your data. Backups are another important consideration when purchasing cloud services. This is actually a positive point in favour of the Cloud. Many people regularly postpone taking backups only to be surprised with a data failure when they least expect it. A cloud service provider that does not offer daily backups should not be considered since your business depends on the data you have collected over the years. One final issue considered here is the ‘lock-in’ problem. A company may start using a service on the Cloud and a few years down the line decides to stop using that particular Cloud service. What happens to its data online? Will the company have to keep paying in order to have access to its data? Is it possible to get the data in a usable format? A local service company has come up with an innovative idea and offers its clients a way to get their data and keep using it. The data would be read-only, but that is enough for referencing past information. The Cloud has brought a fresh and interesting change to the way business data is processed. The global market for cloud services is growing significantly and Maltese companies are doing well with adopting cloud services to reduce their day to day costs and provide a better level of service to their clients. At the same time, caution must be practiced when choosing cloud service providers.

EDITOR’S NOTE

Carmelo Romano holds a Masters Degree in Information Security and is the Managing Director of Clever Solutions Ltd., an IT company that offers a combination of stand-alone and cloud services to clients in Malta and abroad.

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State of the

Economy Special Edition 2012/13

WORDS OF WISDOM

When the growing gets tough by Mark Dixon, CEO, Regus

Business is all about growth. If you don’t believe me, read any of the great economists, from Karl Marx to J.M Keynes, Joseph Schumpeter or Milton Friedman. Whether they are monetarists or political theorists, whether they concentrate on demand or supply, they all end up believing in some kind of business cycle. is how we set about growing again. And I’m convinced there’s no time like the present.

e may not be in great shape at the moment, but things will get better. This is not mere reckless optimism, but observation based on experience. The business cycle moves from expansion to contraction and back again – almost like breathing. You can’t have one without the other. It was always thus. Yet it’s extraordinary how timid people are when times are tough. Yes, we’re in some kind of a recession, whether people choose to call it that or not. Recovery may take a while. But so what? We’ve had recessions before, and we’ll have them again. We are where we are, and as far as I’m concerned, the only question worth asking

EDITOR’S NOTE

Aim high. Take a look at Warren Buffett, the most successful investor of all time, the man who presciently described derivatives as “financial weapons of mass destruction”, who helped to bail out Goldman Sachs when Wall Street was in full panic mode, who can be relied upon to talk common sense when others are behaving like headless chickens. What is Warren Buffett doing right now? He is buying stocks. That’s right. He is getting busy because he knows that there’s value out there, and if he buys the right stocks at the right prices, he and his investors will be sitting pretty in a few years’ time. It’s the same for entrepreneurs and businesses of all sizes. Now is the time to lay the foundations for growth. There has never been a better opportunity to strike bargains with suppliers. Everyone is desperate for business, so this is the moment to invest in the things

you need – and your supply chain is one of the keys to long-term growth. This is also the moment to look for new markets. If you have capital, put it to work now. Invest in expansion. Take risks. This doesn’t mean taking on more debt than you can afford. But if you do have to borrow money, there may never be a better time than now. Interest rates are low. Governments are desperate for growth and willing to hand out grants in the right circumstances.

“We are where we are, and as far as I’m concerned, the only question worth asking is how we set about growing again” You’ll still have to do most of the work yourself. Look around you. Where is the greatest scope for expansion? It might be in the public sector, or it might be the private sector. In the US, for instance, while overall growth was falling in 2010, there was a 33% growth in the number of firms working in government services. Many of these were in Washington DC, or in Virginia or Maryland,

Chief executive and founder, Mark Dixon is one of Europe’s best-known entrepreneurs. Since founding Regus in Brussels, Belgium in 1989, he has achieved a formidable reputation for leadership and innovation. Prior to Regus he established businesses in the retail and wholesale food industry. Recipient of several awards for enterprise, Dixon has revolutionized the way business approaches its property needs with his vision of the future of work. 48

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WORDS OF WISDOM

within easy reach of the capital; many were in IT, or in some way related to the military – hardly surprising considering US commitments overseas. Across the Atlantic, much of the UK public sector has fallen victim to spending cuts, but the government is about to remove planning restrictions in a way that is sure to create opportunities in the long-depressed construction business. Meanwhile, the spirit of private enterprise lives on – to such an extent that more than 200,000 new businesses were launched in the first half of 2010, the largest number in any year this century. Every sector is different, and so is every continent and every country. In South America, service industries are proliferating rapidly, from insurance and other traditional financial services to more IT-based services like customer relationship management. In Asia, where success has often sprung from the use of plentiful local labour to deliver established products and services, the new challenge is to create entirely new categories of products and services to cater for a rapidly expanding and highly educated middle-class clientele. But what works in Brazil may not work in Chile. And your clients in Shanghai may have quite different priorities from those in Delhi.

Business leaders need to keep themselves informed. You need to know what governments are doing, what people are doing, what the prevailing culture will permit, what is changing and how. Above all, you need to be aware of your surroundings and willing to try things out.

State of the

Economy Special Edition 2012/13

About Regus Regus is the world’s largest provider of flexible workplaces, with products and services ranging from fully equipped offices to professional meeting rooms, business lounges and the world’s largest network of video communication studios. Regus enables people to work their way, whether it’s from home, on the road or from an office. Customers such as Google, GlaxoSmithKline, and Nokia join hundreds of thousands of growing small and medium businesses that benefit from outsourcing their office and workplace needs to Regus, allowing them to focus on their core activities.

“Everyone is desperate for business, so this is the moment to invest in the things you need” For the brave leader or entrepreneur, it would be hard to find a more exciting part of the world right now then the Middle East. In the wake of the Arab Spring, a new elite is emerging, often well educated, entrepreneurial and longing to make up for their years of repression. It’s early days, of course. If you want to do business in Egypt or Libya, you need to know which way the wind is blowing. You would probably be well advised to work in partnership with someone who really knows the region, the politics and the culture.

More than a million customers a day benefit from Regus facilities spread across a global footprint of 1,300 locations in 550 cities and 99 countries, which allow individuals and companies to work wherever, however and whenever they want to. Regus was founded in Brussels, Belgium in 1989, is headquartered in Luxembourg and listed on the London Stock Exchange. For more information please visit: www.regus.com

But if you can get a foothold now, if you can connect with the decision-makers of the future, the rewards could be enormous. Wherever you go, you’ve got to do the research and make the connections. And don’t be afraid. If you want to make it big, you have to grow. It’s when the growing gets tough that the tough get growing.

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Azeta Limited 354 Cannon road St Vanera, SVR9033 Tel: (+356) 21 48 2536 - Mob: (+356) 7906 7912 Email: info@azeta.com.mt

Health & Fitness

State of the

Economy Special Edition 2012/13

Why do so many people suffer from

thyroid problems?

by Richard Geres

One question thyroid patients frequently ask is “Why are so many people getting thyroid disease?”

octors estimate around one in five people in the UK will suffer some form of thyroid disease by the time they reach 60, predominantly women. The thyroid is the largest gland in the neck and makes the thyroid hormone, which in turn regulates the body’s metabolism. Very limited epidemiology has been done on thyroid disease, and as noted, estimates tend to vary wildly, so it’s difficult to say if thyroid disease in general is on the rise, or more people and practitioners are aware of it and therefore getting diagnosed.

Chernobyl disaster was a major trigger of thyroid disease, and experts expect to see similar effects down the road after Japan’s Fukushima meltdown. People who have had medical treatments involving radiation to the head and neck area are also at increased risk of thyroid problem. Even multiple dental x-rays have been linked to an increased risk of thyroid disease. Viruses can attack tissues and organs, and trigger autoimmune diseases and inflammatory thyroid conditions.

We do know however from US studies that the majority of people with thyroid disease in the U.S. have an underlying autoimmune thyroid disease that is causing their condition. And autoimmune diseases are definitely on the rise. So it makes sense that with more autoimmunity, there will be an increase in thyroid disease as a result. One thing we also do know: thyroid cancer is on the rise. According to the American Cancer Society around 56,460 new cases of thyroid cancer (43,210 in women, and 13,250 in men) will be diagnosed in 2012. The chance of being diagnosed with thyroid cancer has risen in recent years and is now more than twice what it was in 1990. Some of this is the result of the increased use of thyroid ultrasound, which can detect small thyroid nodules that might not otherwise have been found in the past. Still, at least part of the increase is from finding more large tumors as well.

“The chance of being diagnosed with thyroid cancer has risen in recent years and is now more than twice what it was in 1990” Risk Factors What can be contributing to the rise in autoimmune diseases, thyroid problems, and thyroid cancer? Experts have a number of theories, but no hard answers. We know that chemicals and toxins in the environment are linked to increased risk of thyroid disease. Some of the culprits include perchlorate, pesticides, phthalates, used in plastic production, and thyroid-disrupting endocrine disruptors, also known as environmental oestrogens. Radiation and nuclear exposure are also risk factors that can trigger thyroid problems in some people. The radiation exposure that resulted from the

Other controllable risk factors that may be responsible in part for increasing rates of thyroid disease include the following: • Cigarette smoking • Gluten allergies, gluten sensitivity, celiac disease • Overconsumption of soy products Other foods that hamper thyroid function include refined foods, dairy products, wheat, caffeine and alcohol. Also try to avoid broccoli, cabbage, brussels sprouts, cauliflower, kale, spinach, turnips, soybeans, millet, pine nuts and peanuts. A diet containing vitamins A, C, E, B-complex vitamins, selenium and zinc improves the function of the thyroid because these nutrients promote the production of thyroid hormones. Foods containing vitamin C include citrus fruits, kiwis, strawberries and red and green peppers. Eat sweet potatoes, carrots and fortified cereals containing vitamin A. Whole grains other than wheat, fortified grain products, oats, potatoes, tomatoes and poultry contain B vitamins. People get selenium and zinc from seafood and organ meats. Exercise is also an important factor in the treatment of hypothyroidism. Exercise increases tissue sensitivity to the thyroid hormone and stimulates thyroid gland secretion.

EDITOR’S NOTE

Richard Geres is an internationally certified Personal Trainer and Nutrition Specialist specialising in weight-management and functional fitness. Over the last 18 years he has helped thousands of individuals achieve slimmer, fitter and healthier bodies through lifestyle modifications and personalised exercise programmes. He can be contacted for seminars and individual consultations through his website on www.richardgeres.com.

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State of the

ARTS & CULTURE Economy Special Edition 2012/13

by Martin Vella

The Property & Life Magazine interviews Maltese-based choreographer, Anchelique Fjoere, who has worked with some of the best talent: Whitney Houston, Gwen Stefani, Sugar Babes, Rihanna and Black Eyed Peas (just to drop a few names), Recently I had the opportunity to interview Anchelique and learned that she is much more than a gifted artist. She’s inspirational and passionate about spreading her love for dance. PLM: How did you get from small town In Norway to the bright lights of London? AF: Well, with a heart filled with fearless adventure and spontaneity. After I graduated from College, I took a year off studying before I decided to enroll in Psychology studies at Oslo University. To be honest, I am still very fascinated by the human psyche, behaviour patterns and different identities, but my calling for performing arts were stronger. I packed my stuff and went on a girly “try out a new Country trip” which were decided on tossing a coin between Stockholm, London and Copenhagen. 3 months later, we were on our way to Copenhagen. This is where I decided to follow my dreams and give it my all! After a year of intense training, it stood between USA and London, and I chose London :) PLM: How did you know that college life wasn’t for you and how did you get up the courage to drop everything you had known to move across Australia? AF: After 10 years in London, I was always tempted to try something different, life is pretty hectic and fast paced over there so my partner Daniel Lake and I both wanted to expand our horizon a little bit and knowing that Oz was a super healthy continent, with a booming economy, a great variety of work, training and study options, and the type of climate we always have seen ourselves settling down in, it was an easy decision. 52

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PLM: Once you got to London, then what? Did you get an agent, or did you just start going to auditions or how does it work?

PLM: How did you become an artistic director and choreographer, and also get involved in fashion and dance events?

AF: As soon as I arrived in London, I familiarised myself quickly with the dance schools Pineapple and Danceworks, and was in every class possible, trying out different styles, teachers and getting to know “the scene”. I was spoilt for choice, but quickly found a group with whom I identified with, who gave me support, a sense of belonging and security! I didn’t expect it as there’s a lot of competition out there, but it was possible to find places and people of mutual respect, openness and a genuine interest. I really felt lucky to have encountered so many amazing and inspiring people who helped me get better instead of feeling threatened. All of this was so important, as there are always two sides to a story, and life wasn’t always as hunky dory fighting for your spot at auditions. But first, you had to register on to the different agencies before finding out about the auditions and castings whereabouts. This happened gradually within the first six months. I quickly learned that not everybody would gladly pass you the useful information needed in the beginning. So I am glad I had the necessary desire to persevere.

AF: Love for what I do; entertainment is what keeps me alive, takes me on a journey, and inspires me. Years of experience as a performer, and on many occasions a co-choreographer gave me the privilege to be a part of massive music video and film productions, as well as live fashion and hair shows. It was a natural desire to one day be behind it all, and produce and organise a whole show from beginning to end. Together with my partner Daniel Lake, I established our company Anchelique and Lake Productions last year, putting a show together. This enabled us to create linking movement and stories to music, staging and lights, dealing with other artistic individuals, logistics and budgets. This is a challenge that drives me! It’s fun, intense and needless to say a lot of work and hair pulling, but so super rewarding and satisfying being able to use your creativity and experience. PLM: Explain the emotions of an audition. Are you panicked or is it old hat by now? Do you take the rejection personally and if not, how did you master that? AF: Nervy! It’s a mixture of excitement, anticipation, pressure, adrenaline rush and alertness, whilst trying to find a spot where

State of the

Arts & Culture Economy Special Edition 2012/13 you can actually see the choreographer. You want the job, and so does the other 2-300 other performers next to you, so the heat is on, and sometimes you don’t get a lot of time to learn what you will be judged on. And the bigger the job, the more people would attend, even if only one person was needed for the assignment. I would be lying if I denied It was devastating and frustrating at times, but you do learn to cope with it, and find a way of not taking it personally, because you love what you do. It’s the life you chose, everybody else has to go through the same thing so all you can do is your best, be prepared and give it your all. Your job is to stay strong, develop and fine tune your skills between the auditions, and sooner or later you will succeed.

“In a competitive world you sometimes forget to pay attention to the presence, always being busy looking ahead or back in time” PLM: A life of professional performance seems like it would be very demanding, competitive, and stressful. Is that true or is that only from the outside looking in? AF: That is true, but I think your desire, determination and perseverance will overshadow the negatives. The rewards of achieving your hopes and dreams by daring to follow your heart, is what keeps you going. And I Am sure these obstacles are lived in whatever profession you choose, and if that is of great enough value and importance to you. PLM: Where does Yoga come in all this and tell us about your set-up in Malta. AF: Ahhh...I love yoga!! my first curiosity about yoga happened in 2002, I was introduced to a beautiful studio in Primrose hill by a Choreographer who swore by it. At first I was attending ashtanga classes regularly, but I later fell in love with Bikram Yoga (90 minutes practised in a room heated to 40.6 C with a humidity of 40 % ). I think this discipline is what made me understand yoga more over time, where I opened up to how amazingly good

yoga is for you. I found it incredibly balancing, focus enhancing, and a beautiful way of keeping your body, mind and spirit in check. In a competitive world you sometimes forget to pay attention to the presence, always being busy looking ahead or back in time and yoga really taught me the importance of an attitude of gratitude, appreciating life on a whole new level. It taught and is still teaching me about, patience, strength, love, forgiveness, and how to reinforce positivity, trust and acceptance. I love the depth, and growth it keeps enhancing my life with, and that I am able to share that with my students. I am currently offering group classes in Sliema, as well as offering Personal Customised Training, at the convenience of your own home. We all have different goals, and I very much enjoy tailoring a complete individual plan, being able to make use of years of dancing, nutrition advice implementing a fusion of exercise that ensures your regime is safe, fun and result guaranteed.

motivation, weather it is yoga, a scenic walk around the many beautiful sights here in Malta, a silly dance in the living room or dance floor, or a full on interval session with my partner. PLM: What is the most valuable advice you have received from a teacher or mentor? AF: Follow your heart, be honest with yourself and let your integrity lead you to be the change you want to see.

PLM: What is the most challenging thing about your career? AF: Recreating and fine tuning yourself and your services. Staying in the comfort zone is not going to make you feel content or challenged. PLM: How do you keep yourself motivated and maintain creative thinking during your off time? AF: Making sure I surround myself with inspiring people and places, my partner and family. Being conscious of what I read, watch and fill my time wit., Regular movement is crucial for my

Editor’s Note

Anchelique Fjoere has been working as a performer in London for over ten years and is now a yoga alliance certified yoga teacher. She is also a professional dancer, having practiced dancing for the past eight years. After gathered valuable guidance from master teachers all over the world, she has travelled to India to participate in Bollywood movies in the past. Anchelique is also an artistic director and choreographer, putting up production in fashion and dance and any events that could use a bit more edge and entertainment. She loves styling, making people, places and spaces beautiful and full of atmosphere, offering customised personal training packages along with nutrition guidance.

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State of the

Economy Special Edition 2012/13

Newsmakers

Tumas Developments attends ’domexpo’ in Moscow, Russia

ollowing their success in various overseas property exhibitions, TUMAS DEVELOPEMENTS has just returned from DOMEXPO, an International Real Estate Exhibition, held in the centre of Moscow at Gostiny Dvor last October 2012.

This exhibition has become a trademark for Russian real estate, allowing potential buyers and investors to meet developers, realtors and industry professionals by giving them the opportunity to browse through the wealth of both local and international property on offer! Since 2003 DOMEXPO has seen more than 500.000 visitors and participants from more than 40 countries worldwide. DOMEXPO is held twice annually and is supported under the auspices of the Chamber Of Commerce and Industry of the Russian Federation with the support of the Moscow Government, Russian Guild Of Realtors and Moscow association of Realtors.

World Bank’s IFC speaks at CREDITINFO’S 10th Anniversary Celebrations

M From left: Andrei Chuprygin (our Russian collaborator ); George Bonnici ; Darryn Portelli. TUMAS DEVELOPMENTS has in the past participated in the Moscow Golf & Property Luxury Fair back in April 2012 and believes that the Russian market is really one to invest in and explore as Malta is what the Russian buyer, with a family & young kids, is looking for – schools in Malta based on British system, very secure, affordable, great weather, well connected with central Europe & Middle East with good connections for Russia & Schengen area and many other plus points that are the true allure of Malta! TUMAS DEVELOPMENTS showcased their three luxurious awardwinning property developments to the Russian market being Portomaso complex in St. Julian’s, Tas-Sellum Residence in Mellieha & Ta’Monita Residence in Marsascala. The feedback from the Russian buyer has been very positive & we believe this will grow further, having secured already a number of sales from this fair. Furthermore TUMAS DEVELOPMENTS shall be attending other property exhibitions abroad & shall be tapping into various other promising markets with the next being ‘A Place In The Sun Live’ property show held in London in March 2013 with others still to be confirmed. TUMAS DEVELOPMENTS offers unparalleled Luxury Living on the Island of Malta in the heart of the Mediterranean, at exceptional prices and levels of outstanding quality of life not easily found anywhere else! 54

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r Fabrizio Fraboni, principal Operation Officer and Credit Bureau specialist with the International Finance Corporation (IFC), a World Bank Corporation, was the main speaker in a conference organised by Creditinfo Malta. He dealt at length on Harnessing the Power of Credit Reporting within a Credit Bureau model. The message in the end was that the aim should be to develop a comprehensive credit reporting system within the national financial structure that covers both personal and commercial credit information from all relevant players. Mr Fraboni, went on to explain how Malta, as a result of such a Credit Bureau, would improve its world ranking in the credit sector from its current 102 position. Creditinfo Malta, organised a mini-conference entitled “Credit Bureaux – Reducing Risk by Collaboration” at Corinthia Hotel, St George’s Bay, on Wednesday, 14th November as part of its 10th Anniversary celebrations. Mr Simon Camilleri, Country Manager for Creditinfo Malta, opened the conference by introducing Mr Reynir Grétarsson, the founder of the Creditinfo Group and Mr Almar Hilmarsson, the CEO of Creditinfo International GmbH. Mr Paul Randall, Head of Business Development of Creditinfo International GmbH, described the workings of a Credit Bureau and its Concept and the relative Data Sharing complexities within Credit Bureaus. Finally, Ms Maria Rachel Pullicino, Credit Scoring Analyst at Bank of Valletta plc, explained how credit scoring was one of the earliest developed financial risk management tools. .

Creditinfo Malta would like to thank Bank of Valletta, APS Bank, Cloud Account and Deloitte for their support