MONEY MAY 2019 ISSUE 54

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TH E N E W BE G I N N I N G S EDI T I ON I SS U E 5 4

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COVER STO RY

Edward Hili

ROADMAP TO SUCCESS

10 Giselle Borg Olivier

ARE EU READY?

18 Dayna Clarke

UNDER THE INFLUENCE?

32 Federica Taccogna

KEEPING THAT CUTTING EDGE

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4 · MONEY

WELCOME

The news that Air Malta made an operating profit for the year ended 2018 is a texbook example of how not to impress people with your turnaround. The announcement, with all the fanfare associated with it, has blown up miserably in the government’s face and no amount of backpedalling or accusations of media inaccuracy is doing to reverse the damage.

ISSUE 54

COVER Edward Hili Read the full story on page 16

To start with, the full annual report was not available at the MFSA or on the airline’s website for scrutiny until mid-April, a red flag to any bull.

Then The Malta Independent revealed that Air Malta had paid its €15 million fuel bill to Enemed only after it had held its annual general meeting and drafted its annual accounts, hinting that the delay in payment allowed the annual accounts to show a turnaround that would otherwise have been a multimillion loss.

This did not come as a total surprise: the fuel issue first came to light back in August 2018 when the Times of Malta announced that the airline was accumulating millions in debt on its fuel bill. Air Malta rebutted the claim, saying it had a commercial agreement on the provision of fuel from Enemed and that the agreement terms “were being respected in their entirety by both parties”.

The situation grew even less convincing when, in March 2019, chairman Charles Mangion said that the company had turned an €11-million loss in the financial year ended March 2017 into an operational profit of €1.2 million for the year ended March 2018.

Inevitably, once the accounts were available, it became obvious that numerous factors had been casually glossed over, in particular one-off transactions like the €18 million revaluation of property, and the transfer of the airline’s lucrative landing slots to another company.

There is a considerable difference between a profit and an operational profit, and even auditors PwC pointed out that the airline was only a going concern if it managed to keep all its balls in the air.

The airline’s financial viability, especially in the long term, depends on far more than whether its flights are breaking even.

The smoke and mirrors treatment of its airport slots make the Air Malta financials even harder to assess. And contractual figures are not easy to pick out from the background noise of payables and receivables. Companies regularly hide unpleasant surprises, pretending that deals are viable when they know that there is not a hope in hell of their ever delivering a cent, writing them off in dribs and drabs when they can be better absorbed by the bottom line.

And auditors can rarely spot these tricks from the information they are given, so there is nothing – sometimes not even a note in the audit report – to raise any red flags.

That Air Malta was becoming operationally profitable has been known for years. Heaven forbid it was otherwise, given the efforts over the past years.

Whether it is overstretching itself with too many new routes too quickly, whether the value of the slots is to be eroded by sleight of hand in human resources contracts, and whether the fuel agreements are viable might not be known until it is too late.

The way in which the results were presented and the subsequent revelations raise more questions than they answered.

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CONTENTS

8 · MONEY

10

POLITICS

ARE EU READY? As the European elections are fast approaching, Giselle Borg Olivier speaks to several candidates who, despite never having served as MEPS, already have a good grasp of the EU structure.

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ISSUE 54

INTERVIEW

KEEPING THAT CUTTING EDGE Federica Taccogna will chair FinanceMalta’s annual conference for 2019, which has innovation as its theme. She spoke to MONEY about the context of the conference at this point in Malta’s economic development.

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S TA R T- U P S

VALUING START-UPS: ART OR SCIENCE? Valuing start-up companies can be tricky.

Patrick Debattista shares some ways on how best to value start-ups.

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INSIGHT

UNDER THE INFLUENCE Dayna Clarke speaks to Richard Muscat Azzopardi, chief executive officer of leading digital marketing agency Switch Digital, and Tamara Webb, a motivational lifestyle guru, on social influencer marketing and whether a business should invest in one.

ROADMAP TO SUCCESS MONEY interviews Edward Hili, executive director of Hili Company, on the company’s roots and the various sectors it operates in today both locally and internationally.

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TECHNOLOGY

INNOVATION IS THE NAME OF THE GAME

INSIGHT

STAY AHEAD OF THE GAME Elise Dalli hammers on the importance of keeping abreast with technological advances so that companies remain relevant.

BUILDING BLOCKS MONEY speaks to Jarek Bialek, programme manager and EIR for MITA Innovation Hub, on foreign emerging technology start-ups’ perspective on Malta, dubbed the Blockchain island and government IT arm MITA’s acceleration programme targeting such start-ups.

OPINION

A NEW DAWN WILL RISE Political analyst Manuel Delia argues that the shocking transition Malta is going through is not impossible and not necessarily disastrous but from the looks of it, there’s no long-term plan in hand and that can be catastrophic to say the least.

MACHINES WITH BRAINS Theo Dix, manager at EY Malta (which provides strategy consultancy and transaction advisory services) is supporting the Malta AI taskforce in its work to develop a national strategy on Artificial Intelligence.

52

COUNTRY REPORT

CURRYING FAVOUR WITH INVESTORS It will take weeks to complete voting in India, with 900 million people going to the polls.

Incumbent prime minister Narendra Modi is being largely judged on his economic performance. How has he fared? MONEY asks.

I N N O V AT I O N

When the power within an organisation is wielded intelligently, innovation flourishes, often leading to ground-breaking ideas and positive change. Sarah Kennard discovers which techniques to implement for a more innovative approach in your business.

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COVER STORY

S TA R T- U P S

54 56

L AST WORD

WIPED OUT Nuclear accidents and the use of nuclear weapons are preventable man-made disasters.

The Bluesman delves into what is the cause of major danger to man and the environment.

FA S H I O N

MATERIAL BOY From cotton to lightweight materials, summer is all investing in the right fabrics. MONEY showcases a summer wardrobe.

POLITICS

10 ¡ MONE Y

ISSUE 54

Giselle is a freelance writer, proofreader and social media marketer who lives on Instagram and cappuccino. She runs Content for Success.

Are EU ready?

As the European elections are fast approaching, Giselle Borg Olivier speaks to several candidates who, despite never having served as MEPS, already have a good grasp of the EU structure.

PETER AGIUS Partit Nazzjonalista (PN) www.peteragius.eu/

1 As an MEP candidate who is familiar with the EU, what is your experience of the place and the system?

The EU is a union of interests where every actor lobbies a cause. Having been on the negotiating table both in the Council of Ministers and in the European Parliament, I found that the size of a country is rarely the most relevant consideration in its success in pushing through change or adapting to EU policies according to its specific needs.

Competence, preparation and building allies are, on the other hand, imperative ingredients in achieving concrete results for the benefit of businesses and society. One factor to keep in mind when we think EU is that it is characterised by a live and let live way of thinking, where most actors will oblige to adapt to a particular need as long as it is properly explained and does not impinge on their own interests. This leaves a very good margin where a well-prepared MEP can deliver on many areas for Maltese sectors.

2 What do you think can be changed to make the EU more beneficial as an institution

and more beneficial to Malta as a member state?

We Maltese need to be even more present and have more foresight when it comes to proposed legislation which has an impact on particular sectors of society. This is not easy given our limited resources and lack of presence in Brussels by several key actors.

The Chinese have 500 journalists in Brussels while we have none. The French unions have offices in Brussels; we don't. To counter this, we must be much more efficient and channel resources to anticipate developments in key areas. This is imperative because intervening early can spell the difference between success and failure when adapting EU laws to the needs of Maltese businesses for instance. A second measure one must implement urgently is for all Maltese actors to coordinate better in Brussels – what we lack in numbers should be made up for by being more organised.

3 What are your expectations of becoming an MEP (should you be elected)?

I worked in the EU for the last 16 years and

negotiated legislation in several areas, including controversial ones with high stakes so I do know what the role of an MEP is and entails. I will commit myself to putting my bureaucratic insight of the system to optimal use by delivering results to Maltese sectors of society – from those who have been neglected, such as the farming community, to areas where industry-related opportunities have not been exploited, with more emphasis and empowerment on EU direct funds and a new drive for research and innovation in Malta. To cite an example, the next five years could be critical in terms of Malta's uptake of AI and robotics. We must be at the forefront of the digital revolution for us to exploit it to the full.

4 What are you most looking forward to should you be elected? And what are you not looking forward to?

THE NE W BEGINNINGS EDITION

POLITICS

MONEY · 11

ANTOINE P. BORG Brain, Not Ego (BNE) www.brainnotego.com

1 I worked in an EU agency – the European GNSS Agency – in a very high-tech role and environment that allowed for more flexibility than there would be with the European Commission, which is considered to focus more on the administrative side of things, and is considered to be overly bureaucratic… but it’s like any government in terms of bureaucracy. So, I have experienced different views, as an outsider to the Commission itself, while also existing within the rules and structure of the EU. I dealt with the Commission when I worked in IT and Communications because there were common communications’ events but different approaches; from the agency side, it was more dynamic, versatile, and agile.

For example, if we came up with an idea for a stand at a large aviation fair and someone in our team emerged with a better idea, that could very easily change the dynamics and we would have a completely different set-up by the afternoon. But when working with the Commission, it can be more challenging because there’s a process, and this process is designed for anything from paperclips to satellites, so one would need to work within the system to achieve results.

I am not looking forward to the Strasbourg circus. I have travelled to Strasbourg on EP plenaries over 70 times and I do not look forward to more of that.

However, I am ready to bear the burden if elected as I will then look forward to delivering concrete results to the different sectors of society. Over the last six months, I met owners of small businesses, industry leaders, students, fishermen, workers, and a myriad of others with whom I have built dialogue with promises to be kept. I count on keeping those promises as I always do.

5 How do you rate your chances of winning a seat? Who do you think deserves to win a seat?

A good number of colleagues deserve winning

a seat as many of them are running very good campaigns, engaging hundreds of people on the ground and intensifying their presence on social media. I believe that my colleagues in the PN have good reason to deserve a seat, given that our motivation is free from the burdens of having to protect mismanagement and allegations of corruption which are putting Malta's good name to shame.

As for my chances, I am totally committed to be the natural choice for thousands of discerning voters on 25th May. I am trying to earn this through the daily visits to factory floors, schools, piazzas, markets, bars, and public spaces while proposing studied solutions to several sectors through media and sectoral meetings. I cannot say whether I deserve your trust, but I will strive to gain it through my engagement and professionality.

When I was working in strategy I was very familiar with the rules of dealing with the European Parliament: from precise dates of budgetary approval, to deadlines for annual reports and work plans. I had to be the interface between the more dynamic and scientific rocket scientists on the one side, →

12 · MONEY

POLITICS

need for resources, funds, and so on and so forth.

to the more formal administration in Brussels; that gave me a good understanding of both sides of the spectrum. So, dealing with the EU inside, but not inside, yet outside, but not outside, gave me quite a distinct view of how things work in Brussels.

2 Nothing is perfect, there’s always scope for change. I think that a method to improve bureaucracy is not by eliminating any of it, but by automating a huge chunk of it. I recall, for example, that when I was working on strategy we’d get new forms or new templates for certain documents, but we’d be given a pdf file which we would then need to have transformed into Word form to be able to edit and create new documents of our own – and this is a stupid example, but stupid because you’d think that the person sending it out would know how to send a Word version which can be edited in the first place, and this would save a lot of time. When you consider that there are about 38 EU agencies which means 38 mandates, that’s almost two months’ worth of mandates work gone to waste, and this simply because someone sent a pdf file that cannot be edited.

This is a simple example, but it shows that the benefits you can get from a small change are significant to say the least. Once you start looking at the massive amount of data which is collected by the EU and what it takes to manage and administer, the benefit that you can get from automation is quite considerable. In this respect, if it starts to reduce its own demands and therefore the resources it needs, that’s a huge benefit to society in general because there’s less of a

I think that Malta can benefit more if it were more aware of what the EU is doing. Whether it’s the EU that should be communicating more, or the man in the street who should be searching for more information, or some kind of common ground is found, is possibly a secondary point, but I do think that there is a lack of general information available to the public from the EU that would benefit a large number of citizens and business people (Brexit is an example.)

3 There’s the usual prattle about representing the people, doing the best job, and so on and so forth, which, while being a bit of a cliché, is true. The expectation is that I’m going to be able to influence legislation – influence though, not because of my ideas but because it’s what the people whom I’m representing want. So even if it’s something that I personally disagree with, if it’s something which is beneficial for my constituents, then that is what should be done. My expectation is that I’m going to need to talk to civil society periodically, maybe more so prior to or during certain debates in parliament like, for example, when a specific legislation is being discussed. I can’t be an expert on all policies. So, if let’s say a new directorate is being proposed by the Commission about building regulations, I would likely need to turn to a group like the Chamber of Architects (in this case) or GRTU if it were a trade issue, and seek their opinion.

So, I need to be fluent in as many topics and themes as much as possible but I cannot expect to be an expert in everything.

4 I’m looking forward to the dynamic nature of the job. I thrive in an environment which is continuously changing; this was something which I loved when I was a business and IT consultant, so the fact that things change is good because it challenges me.

ISSUE 54

I look forward to knowing that today we would be discussing the budget and tomorrow human rights and the day after we could be talking about the lifespan of certain frogs in a particular habitat in Denmark.

What I am not looking forward to I suppose are the restrictions on my own time to allow me to dedicate myself to any one topic which I’m interested in personally. Because of the nature of the job and the amount of legislation, I know that (especially because I want to involve myself with civil society), I might not have time to follow up on something which is, for example, IT-related. I must draw a line and do what I have to do.

5 It’s very hard to say because, unlike any other job I’ve ever done, the quality and quantity of my work is not necessarily going to translate into a result; if I do a good job of gaining people’s support and encouraging them to vote for me, hopefully they would vote for me. But these same people could meet another candidate who will equally persuade them and I’d be forgotten – not because I didn’t do a good job, but because of the way politics works and because people may, or may not, remember what I did as much as others, among many other factors.

People have said to me: ‘You don’t have very good chances/you’re an outsider/this is very unlikely/established parties’ and I do understand why people think that this is a bit of a long shot. But having followed previous election cycles, I feel that this election cycle is one where more people are open to the idea of independent candidates and alternatives to the established parties. That is something which made me hopeful and made me believe that there is a chance, and, having now spoken to people and having met several associations, I’ve confirmed that belief.

I see a greater sense of ennui with the established parties and established candidates, which makes me believe that it’s not such a long shot. I can’t predict whether I’d be elected on the first count or the last but if one’s elected, then one’s elected – a win is a win no matter by how much. I think my chances are fair to middling, rather than completely rotten!

The kind of person who is prepared to represent the interests of the people living in

THE NE W BEGINNINGS EDITION

Malta is the sort of person who deserves to win the seat. That’s a very diplomatic answer and possibly one that ‘avoids’ answering the question, but I’ve seen several people who are very happy to openly state that they want to win a seat so that they can have resources to do things locally – which is not what being an MEP is all about; their heart might be in the right place, but the intention is wrong. I also see people who seem to thrive on making partisan political points at European level but frankly no one cares if you’re Labour or PN in Europe. In Europe, they care about your nationality and whether you’re going to vote according to one particular principle or not.

So, the kind of person who puts the party first is not the kind of person who deserves to be an MEP. Hopefully, that means I’m the only one left after you eliminate all of these candidates but there are people who do have genuine and proper intentions and I do see a number of them who certainly deserve to become MEPs. Whether they are up for the job, only time will tell.

POLITICS

MONEY · 13

MARTIN CAUCHI INGLOTT Partit Demokratiku (PD) www.facebook.com/martin.cauchiinglott

1 My Brussels experience covered matters concerning foreign policy, defence and security. Between 2008 and 2012, I served in the Permanent Representation of Malta as security and defence attaché, responsible for all matters related to the EU and NATO business, establishing Malta’s mission to NATO in the process. I was also senior advisor on Malta’s participation in military operations including counter-piracy operations off Somalia. Over and above these prime duties, I was appointed as a board member to FRONTEX, the European Border and Coast Guard Agency; the European Defence Agency; and the EU Satellite Centre. In 2012, I was seconded to the European External Action Service where I was responsible to establish and then run the division responsible for

outreach to international organisations and strategic partners including the United Nations, NATO, China, Russia and the United States. I retired in 2015 and become a consultant with Fipra International, a public affairs consultancy based in Brussels.

2 I feel that the EU is already very beneficial, but admittedly bureaucratic. This is because we made it that way. The EU does plenty of good daily but is ineffective in marketing its successes. It conducts projects all over Europe, of different scopes and nature, and even beyond its borders, of which we know very little. So, if I had any say, I would certainly promote the idea of establishing a small EU broadcasting station, where the European Parliament, the Commission and the Council could each be given airtime. This would allow citizens to witness parliamentary debates in action, and, why not, certain working groups too. Programmes could also be made outside European borders, where the EU actively works to alleviate poverty and bring stability through its security and development initiatives. The 40 or so EU agencies could also be assigned airtime, to give citizens the opportunity to witness their respective operations. Moreover, such a station could report on matters from different corners of the EU, where citizens could be interviewed about their concerns, such as human rights violations, or overdevelopment, apart from writing emails to the Commission.

3 My priority would be to form part of the LIBE Committee where I could apply the knowledge acquired when commanding the AFM’s Maritime Squadron in the migration domain, when I managed EU border control operations in the central Mediterranean.

Moreover, my experience in Brussels as a member of the FRONTEX Management Board has also given me the opportunity to experience, on a first-hand basis, the formulation of migration policy. My second priority would be to form part of the Committee on Regional Development →

14 · M O N E Y

in order to be able to participate in urban development policy and cohesion funding, two areas of incredible importance to Malta, as we witness our nation facing sustainability issues.

4 Having worked in an international environment for about 18 years, which I enjoy thoroughly, I would be keen to take on some leadership role in foreign policy or security.

But since I am also happy to be home after eight years in Brussels, I would fly down on a weekly basis, which is something I would certainly not look forward to.

5 To be honest, I have no idea, but polls do not appear to be one thing to go by in this day and age, the US presidential elections and Brexit being two examples. But ever since I announced my candidacy last November, not a single person has indicated that I made a mistake, apart from my father, but he is now my biggest fan and dedicated advisor.

I feel that any Partit Demokratiku (PD) candidate deserves to win a seat because we are the only party, represented in Parliament, which brings the nation’s interest to the fore on a daily basis, with dedication and passion. PD winning a seat will mean that the candidate elected will have a full-time job as a politician, with five supporting staff, plus offices in Malta and Brussels, plus operating expenses. This would be a huge advantage to PD which is currently dependent on volunteers and donations, in contrast to the major parties which have established media machines, large party headquarters with staff, and party clubs in most towns and villages.

POLITICS

ISSUE 54

4. ROBERT MICALLEF Partit Laburista (PL) www.robertmicallef.eu

1 As a diplomat in Brussels I gained direct experience of the dynamics and formulation of European legislation. As Council Representative, I have experience in negotiating with the European Parliament and I believe that this has prepared me well to be an MEP. I have also worked as an advisor with the European Parliament and as an economist with the European Commission.

During the Malta’s EU accession negotiations, I served as the economist of the EU delegation to Malta.

2 I think the work done at EU level should be communicated better with EU citizens to ensure a more effective connection between the public and the institutions. The main task of the European Parliament is to debate and vote on European legislation, just as the Maltese Parliament votes on national legislation. Most of the work is done in committees and more can done to ensure that the public is well informed about every development, most especially if it effects citizens. One other key point is that policies should not be devised with a one-size-fits-all approach, ensuring that the interests of small states like Malta are always protected.

3 My expectation is to hold a position in the European Parliament that carries influence.

When it comes to the detail of legislative or budgetary work, MEPs can be very effective, and I feel I have an advantage, that of already knowing how the system works. Maltese MEPs over the years have never held the position of Chairs of EP committees and I believe that since I have negotiated as Council Representative with EP Committee Chairs, I have a fighting chance

to be considered at that level, particularly since I have a good network of contacts across all the political groups in the EP. Whatever position or committee is assigned to me, I pledge to be a dedicated and loyal representative for all Maltese and Gozitans, irrespective of the political party they support.

4 I enjoy the technical aspects of the work at the European Parliament. MEPs go through draft legislation paragraph by paragraph, amending it and rewriting it and, although at times this can be tedious, the result is fulfilling, particularly when a compromise with Council is achieved. The downside is that sometimes the public is not aware of what is negotiated on their behalf. If elected, I will hold regular public consultations to share my views about ongoing developments in the European Parliament.

5 I have many years of experience on EU matters but I’m not the most well-known candidate and it is not easy to get visibility when there are so many valid candidates contesting the elections. Having said that, I am overwhelmed by the positive feedback I get wherever I go. I am going around the country engaging with local communities and meeting people and organisations to explain my approach and to listen to people’s concerns. I think the European Parliament should not be a battleground for divisive partisan politics but a forum where all MEPs could work together with the objective of representing the interests of all Maltese and Gozitans.

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ISSUE 54

COVER STORY

MONEY interviews Edward Hili, executive director of Hili Company, on the company’s roots and the various sectors it operates in today both locally and internationally.

Hili Company has been operating since 1923.

What explains its longevity?

The company’s roots do indeed date back to 1923 when my father’s uncle, Carmelo Caruana, set up his namesake company in commodity trading before venturing into ship brokering and chartering. He was intent from the start on rooting the business in a solid reputation with enough flexibility to explore opportunities.

Much has changed in the century since then. The company has evolved with the opportunities it embraced, both in Malta and overseas, as well as the challenges that came about.

What remained constant throughout were the key principles. And I believe that this was key for us to build an organisation for the long-term. We remain steadfast in our belief that reputation and credibility take years to build but can be lost in an instant. We put a lot of energy and thinking into the trust we nurture in our relationships with clients and stakeholders. This is what makes our clients come back to us again and again.

1 We are also true to our heritage of remaining nimble and flexible, ensuring that we give timely responses to an ever-changing environment. To do so we have crafted, and maintain, lean structures with a hands-on approach.

Your shipping terminals and logistics operations have now spread to various parts of Europe. How have you kept up with the advances in this sector?

Despite the shipping industry’s long history, the sector is by no means immune to change and, particularly, technological advances.

In the terminals and logistics business, technology is a key driver of our competitive advantage. It increases the efficiency of our operations and facilitates the quality of service that clients have come to expect from us. For these reasons, we have a vision and a rolling plan in place which guides our longterm technology strategy at all levels of our operations.

We have invested heavily in order to ensure that our operating companies are leaders in the regions where they operate. At BCT in

Latvia, for instance, we were the first container terminal in EMEA to implement the latest Navis terminal operating system. We are now in the final stages of implementing that same system at our terminal in Venice and plan to go live in the next couple of months.

One way local companies look for new beginnings is to venture beyond our shores. Although a few succeed to some extent, their core business remains in the local market. Hili Company, on the other hand, has become truly global.

What's your secret?

When the baton was passed on to my father and his brothers in the 1970s they soon recognised the need to expand beyond Malta’s shores. The firm gradually diversified, developing a portfolio of businesses in port

THE NE W BEGINNINGS EDITION

COVER STORY

WE BELIEVE THAT THE REDEVELOPMENT OF STRICKLAND HOUSE, THE FORMER TIMES BUILDING, IN VALLETTA, IS A TRULY UNIQUE OPPORTUNITY TO CREATE SOMETHING SPECIAL 3 IN OUR HISTORICAL CAPITAL CITY trustworthy and capable local partners. This and logistics activities, casual dining with the McDonald’s franchise, engineering, real estate and others.

In 2012, Hili Company was restructured, divesting it of certain businesses in order to sharpen the strategic focus on the port terminals and logistics business, and to develop the energy and real estate arms of the business.

That was the turning point which made Hili Company what it is today.

I believe that the key to our international success lies in our hard-earned competence and know-how. The port terminal business, for instance, is a 2 fairly niche area and one in which we have developed deep expertise which is globally recognised by the industry.

Our ability to learn and adapt is also important. Wherever we operate, we make the necessary investments, in monetary terms and time put in, to ensure a proper understanding of each country and region.

This entails developing the necessary networks and physical presence that are vital to success. We also work closely with

is an important element to develop a local presence, particularly in the early stages of a new venture.

Hili Company is venturing into the sustainable energy sector. Why and which specific projects are on the cards?

We recognise that in order to preserve the delicate balance of our planet’s ecology, societies must transition away from fossil fuels to sustainable and clean energy. If we are to achieve sustainable growth which does not compromise future generations, renewables are the most socially and economically attractive proposition. We are committed to becoming a significant player in this transition and have thus initiated our move into the renewable energy sector.

Currently, we have set two projects in motion, one in Malta and another in Croatia.

Locally, we have commenced works on the development of a 2.4 MW solar farm. This project is on track to becoming one of the country’s first solar farms approved under Malta’s National Renewable Energy Plan.

In the next couple of months we will complete works in Croatia on the first of what has the potential to become a series of biomass gasification cogeneration plants using woodchips. Croatia enjoys an abundant supply of this natural energy source thanks to its involvement in the paper industry. It is therefore logical to make use of this raw material as a source of bioenergy.

Another substantial new beginning for the

M O N E Y · 17

(1) Baltic Container Terminal, Latvia, is the only dedicated container terminal in Riga; (2) Terminal Intermodale Venezia, Italy, is the leading container terminal in the Port of Venice; (3) 2.4MW solar farm being developed with its joint venture partners in Malta

company is taking over of the former Times building in Valletta and its conversion into upmarket residential apartments. Can you elaborate on this venture?

We believe that the redevelopment of Strickland House, the former Times building, in Valletta, is a truly unique opportunity to create something special in our historical capital city. We will be developing residences of the highest specifications, with all the amenities one would expect of such a development, including facilities such as concierge service and underground parking.

Being located at the city’s highest point, the apartments will overlook the Upper Barrakka Gardens and the Grand Harbour.

At the same time, we are of course sensitive to the surroundings and will build in a style that befits the idiosyncrasies of Valletta’s architecture.

Is your company looking at opportunities beyond Europe?

We believe there are exciting times ahead for the company and are constantly on the lookout for opportunities throughout Europe and beyond. Specifically, we are assessing a number of prospects in the terminals and logistics sector where we will be able to deploy our core and long-standing expertise. There are a number of particularly promising markets in which we are pursuing opportunities. At the same time, we continue to invest in our existing markets, our recent acquisition of a distribution centre in Latvia being an example.

We are also keen to grow our energy business segment, focusing on a number of investments in renewable energy production. Whether in Europe or beyond, we approach our projects with the same strategic mindset, drawing on our company’s know-how and moving forward with the drive and ambition necessary to continue to grow our business.

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ISSUE 54

Dayna is a senior speech therapist by day and feature writer by night.

When she’s not busy fixing words, she is travelling the world to add to her fridge magnet collection.

Under Dayna Clarke speaks to Richard Muscat Azzopardi, chief executive officer of leading digital marketing agency Switch Digital, and Tamara Webb, a motivational lifestyle guru, on social influencer marketing and whether a business should invest in one.

THE

influence?

With an incredibly fast-paced market in developments of technology and use of social media, it is only natural that the means of targeting an audience have worked in parallel to supplement the changing trends. Digital marketing has fuelled careers which were inconceivable just 10 years ago. One such job is “Social Influencer”.

Last year The Guardian called social influencers “the new stars of web advertising.” Forbes rated the profession by categories and announced them a new economic value. Countless companies clambered over themselves trying to capture online stars to promote their brand.

Moreover, the numbers supported that decision. In 2012, there were 40 million users on Instagram. By 2018, there were a billion of them.

For those of you who may not be aware of the power of influencers, let us not forget 2017’s iconic Fyre Festival — the hyped-up fivestar event on a tropical island, which never happened. Kendall Jenner was reportedly paid up to $250,000 per post to promote Fyre through social media platforms. Despite the luxury event costing an eye-watering amount per ticket, it was sold out. Many social influencers snapped up the ticket of the year in return for free accommodation to document the lavish festival, yet the reality

couldn’t have been further from the truth.

The masses arrived in the Bahamas to find no such glamorous affair but tatty old tents for high-class accommodation, and no private luxury jets or gourmet food.

The organiser, Billy McFarland, is currently in prison for fraud. Social media has the power to make any topic viral, and not just influencers, festivals or celebrities. Last year a ‘humble’ egg broke the record for the most followed and liked image on Instagram, garnering some 53 million likes. It started as merely a marketing experiment.

One hotel in Ireland gained considerable attention for banning all social influencers after a 22-year-old YouTuber asked for a five-night free stay and broke down in tears when she was bluntly refused. Elle Darby, a UK-based social media influencer, with 87,000 YouTube subscribers and 76,000 Instagram followers, reached out to the owner of The White Moose Café, Paul Stenson, asking if he was interested in a possible collaboration.

The owner’s response went viral, stating who would pay his staff and bills. Darby received a considerable negative backlash and was accused by many of ‘freeloading’.

Over the pond, in the US, a popular Instagram blogger with 100,000 followers could earn up to $5,000 for a single ad publication. Everyone

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wants to be a social media influencer.

Bloomberg news nailed it: one-third of British children aged 6-17 expressed their wish to become YouTubers in a recent survey, which was three times more than those who wanted to become a doctor or a nurse.

Malta isn’t exempt from an influx of influencers either. Tamara Webb, a motivational lifestyle guru who documents her daily updates, from life and love advice to enduring personal health issues, has got some 30,000 followers. Blogger and TV presenter Grazielle Camilleri is another local Instagram success story, sharing everything from travel images and outfit photos to red carpet snaps with her 78,000 followers.

However, do you feel that social influencers are a good fit for your business?

Richard Muscat Azzopardi, CEO of leading digital marketing agency Switch Digital says: “We work with influencers for brands regularly. Brands tend to use them because they offer the opportunity of endorsement and exposure in one message. When you're paying an influencer to promote your brand, you're getting to their followers in a way that is natural to the influencer and with their explicit endorsement. It is a riskier route to take than regular advertising since you have the potential of bad publicity if an influencer goes rogue or if they do something that does not match your brand values, even when they're not talking about you. Therefore, we always advise our clients to be very careful with their choice of influencers. Having said that, we’re entirely behind the use of influencers as an agency, because, when used well it's an extremely cost-effective way of marketing for brands, informative for audiences and rewards influencers for their hard work.

“But I can understand why some may express some concern.

Influencer marketing

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has the potential of being exploitative and dishonest. However, it all depends on the influencer and the brand that's working with them. Regulation, and making sure that ads are marked as such, are not good protection from dishonest influencer advertising. Just like regulation does not stop dishonest advertising in any other medium. There are dangers, as with anything else, and it would benefit people if they could take more time to be aware of the content they come across in general and the agenda behind those who posted the content. Sensationalist coverage of the danger of influencers is naive and only helps to drive attention towards an issue that's a current symptom of a much larger problem.” →

INFLUENCER MARKETING HAS THE POTENTIAL OF BEING EXPLOITATIVE AND DISHONEST...

HOWEVER, IT ALL DEPENDS ON THE INFLUENCER AND THE BRAND THAT’S WORKING WITH THEM

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regarding the issue of authenticity and the collaboration between the household brands she works with.

“To be honest, in my case it was always being authentic with whom I am primarily, meaning that I love collaborating with brands that fit in with my lifestyle. It all happened so quickly. I've never imagined this could ever be something you can get paid for. Having said so, it is a lot of work. You must be dedicated and above all passionate to share and create content. I have grown to understand what my followers aka “Queens” love to follow.

Ultimately, I'm incredibly glad that they love to follow what I also enjoy following. I can come across as a real-life series on Instagram — that's what I do. I share my life with all the obstacles I might face.”

Essentially, transparency across the board is key; consumers must understand when they're absorbing an advertorial rather than editorial content. This notion is particularly important when applied to the social media accounts of individuals who may use their account for a mixture of personal posts (at the gym, dining out, or humble-bragging) and paid-for posts.

A company should also be wary of fake followers. An influencer can purchase fake followers, making them appear to have a much larger fan base than they do. When picking an influencer, first ensure their followers were obtained organically. Although this can be done manually, it is much easier to use a tool that checks for you, such as InstaCheck. The tool is designed to detect fake accounts by analysing their engagement, spam and overall activity.

He adds: “One pivotal issue with influencer marketing is that the commercial relationship is not always appropriately disclosed, making it difficult for consumers to distinguish between editorial content and advertising. In response to this, within the UK, the Competition and Markets Authority (CMA) launched an investigation into the failure of influencers to properly declare the promotional or paid-for nature of some of their social media posts. Within the Maltese islands, it is not apparent if any such regulation is currently in place.

Tamara Webb shared her opinion

Equally, social influencers have a considerable level of responsibility in maintaining honesty in their partnerships and upholding an image in line with a given brand goal. In most instances, they are expected to sign a contract of terms with the brand in question. So, if you are considering using an influencer for your brand, demand greater authenticity and invest in influencers only if you are confident that they will bring about results. Ensure the influencer’s content aligns with your overall image. Don't forget to prepare alternative ways to attract more customers to enhance your campaigns.

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The development will house over 44,000m² of mixed Grade A office and commercial floorspace, surrounded by 6,000m² of open landscaped areas with ample parking facilities available.

The Quad offers an outstanding real estate investment opportunity or business re-location possibility in an exceptional smart environment.

Visit www.thequad.com.mt to find out more

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T. 2778 8124 E. enquiries@thequad.com.mt A Tumas Group & Gasan Group development

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ISSUE 54

Sarah is a public relations consultant and magazine editor who spends too much time looking up recipes. An avid reader and summer worshipper, Sarah survives the winter months by escaping to Gozo as often as she can.

When the power within an organisation is wielded intelligently, innovation flourishes, often leading to ground-breaking ideas and positive change. Sarah Kennard discovers which techniques to implement for a more innovative approach in your business.

Innovation is the creative process, application and successful exploitation of an idea and is vital to the success of any business. So, while no idea is necessarily an original one, how it is manipulated to suit your business, can be.

If Apple Corp. had not innovated, there would be no iPhones and without an innovative approach, Microsoft would never have given the world Windows operating systems. Even going further back in time, if manufacturers had stopped innovating, we would all still be driving Model Ts and calling each other on brick phones that need operator assistance.

Often just one innovative and revolutionary idea can turn an industry on its head; think AirBnB which has disrupted and reinvented the hospitality industry or Uber which is reinventing the road transport. But it is usually the combination of the little things that a business

owner or CEO does, or stops doing, that brings about its ability to truly be innovative.

Through research for this article, it became quite obvious that what sets the superstars of innovation apart is not just creativity and brilliant ideas. While Nikola Tesla, the Serbian engineering genius, may have been more brilliant than Thomas Edison, it was Edison who had huge successes that changed the world, while Tesla died penniless. What Edison, along with many current success stories seems to have had in more abundance, is a combination of strengths from powerful connections with other leaders and a healthy network, skills needed to lead and, perhaps most important, an ever-growing record of making big new things happen. So how can you be more innovative when it

comes to your business? Here are some of the techniques adopted by some of the most successful businesses.

It starts at the top A good CEO or manager knows that to sustain meaningful success and growth, forwardthinking and innovative processes and policies need to be introduced and implemented. In other words, look at the big picture not just

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what’s needed in the short term: a long-term vision over a short-term gain or quick fix.

Intrapreneurship A good leader knows that he or she is only as good as the people who surround them.

Intrapreneurship inspires every individual employee to think like an entrepreneur, encouraging risk-taking and giving a more powerful platform to their ideas. In this

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environment, creativity will breed because employees who work with the mindset of an entrepreneur will utilise all resources when problem-solving and will bring out-of-the-box and industry-disruptive ideas to the table.

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idea. But while it may be a prevailing technique, the loose format of open brainstorming does not necessarily translate into a game-changing idea, because, ironically, people need a little bit of structure to think outside of the box.

Brainstorm through rabbit holes If two heads are better than one, then brainstorming is the obvious step to the creative process which leads to an innovative

Instead of keeping the session on topic, encourage your team to go off track and down different 'rabbit holes' to address high-level problems or questions. →

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INNOVATION HAS NOTHING TO DO WITH HOW MANY R&D DOLLARS YOU HAVE. IT'S NOT ABOUT MONEY. IT'S ABOUT THE PEOPLE YOU HAVE, HOW YOU'RE LED, AND HOW MUCH YOU GET IT. — STEVE JOBS

Non-traditional approaches Innovation calls for creativity and risktaking, in other words a less traditional approach and a new way of thinking. Cue negative (or reverse) brainstorming, where those participating discuss ways to cause a problem rather than looking for ways to solve it, reversing the problem statement and dissecting those ideas as a result of this approach.

business model and your supply chain. Then keep it up to date.

Idea 101

Imitation is a form of flattery

Coming up with ideas is already hard, coming up with good ones is even more of a challenge. A tried and tested technique to encourage a freer flow of ideas and thoughts is to challenge a brainstorming session to making a list of over 100 ideas. As the focus moves towards quantity over quality and the pressure to come up trumps eases off, your thinking becomes less inhibited and often yields a germ of a great idea.

Most often the best ideas for innovation come not from your own industry but from other industries around you. Interestingly Henry Ford got the idea of his famous moving assembly line from the meat processing industry, changing the dynamics of automobile industry. Always be open to ideas taking shape around you – while no idea is original any more, how you manipulate or edit it can determine a new source of business or an improved one.

Strategise Invest Develop an innovation strategy detailing how you will improve your products or services, your processes, your marketing strategy, your

If people are your capital, then this is where you invest heavily as well as in

services and tools which will improve your competitiveness like information and communications technology.

Successful survival in the competitive environment of the 21st century depends on several elements. But suffice to say that developing and offering a new product and services simply isn’t enough to survive.

In today’s new world, companies are also having to modify or completely redesign their entire business model to create more competitive advantages and experiences to offer their clients.

Ultimately there is no substitute for hard work and no magic in innovation — it comes through combined sustained efforts and thinking, and happens when cultural mindset is tuned to finding solutions to problems in a creative way.

FOCUSING ON TRADITIONAL INVESTMENTS, BOTH ON THE LOCAL AND INTERNATIONAL MARKETS

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Elise is a creative writer by trade and a literature graduate by degree. She works at Switch Digital and Brand as a copywriter and trend-watcher, and likes keeping herself up to date with everything digital, internet, and informational.Â

OF THE

Elise Dalli hammers on the importance of keeping abreast with technological advances so that companies remain relevant.

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Market disruption is not a new development but the rapid pace of technological advancement means that it is becoming an ever-more prevalent possibility. Large corporations such as Apple and Netflix, which are considered market innovators, are also the vanguard for creating technology that is disrupting not only competitors’ pre-existing markets, but also their own considerable profit kingdom. In a sense, market disruption has become a nearly essential way of continuing to adapt and build a society that is growing more and more technologically connected by the day.

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spread throughout the United States, there will only be one in 2019, which will close very soon. Streaming services such as Netflix, Amazon, and Hulu took what was already a practice — the method of watching videos or DVDs in your own home — and removed the hassle of going out, driving to a location with a select amount of purchase items available, renting the item, and then having to remember to return it before the rental charges start increasing. By removing the middle-man, streaming services undercut the Blockbuster stores.

Market disruption as progress

What is market disruption?

In plain terms, market disruption (as its name implies) is the creation of an innovative experience or product that changes an existing market, or leads to its destruction.

Partially, this is due to changing societal factors: as society connects itself to technological advancement, companies need to innovate in order to keep up. Companies that fail to do so will no longer be capable of matching the march of progress.

The term was first used by Professor Clay Christensen, from Harvard Business School, and changed the way that people thought about innovation-driven growth. Usually, disruptive players enter the market in small numbers, and build a sort of ‘cult following’ that only gets more popular gradually. While initially the innovation is considered lacking by the larger market players, it serves the customers whose needs are basic and lowend, and builds a greater following gradually.

Momentarily, however, when the innovation appears in the market it is not considered a threat by other market leaders: the new technology or service being promised is too immature to pose a threat and market leaders will remain confident that what they offer their clients is superior to the infant innovation. Gradually, this innovation grows to such a stage that it can offer the same level of service as up-market leaders, and then begins the process of disassembling the existing market leader.

An easy example is the disappearance of bigchain DVD rental stores such as Blockbuster.

Where there were once over 9,000 stores

Apple launched its Apple Pay service in 2014 to act as a faster and more secure way of paying online, purportedly to replace the chip-and-pin or credit card methods.

Furthermore, it didn’t need a dedicated point-of-sale terminal, but would work with any contactless point-of-sale device and any merchant that accepted contactless point-ofsale transactions.

In 2014, the contactless credit card hadn’t quite caught on, and the convenience offered

by Apple Pay caught on quickly. Countries got Apple Pay at different points in time, but the fact that it was a safe and quick way of paying for goods and services online without triggering hidden charges proved popular with consumers.

Additionally, Apple Pay also offered their service with the same level of security as their two-factor identification, which meant that it was difficult to hack or defraud; considering that 2014 was the year when three major companies were hacked, the appeal of an ‘un-hackable’ method of online purchasing was undeniable. The ease of applying for an Apple Pay account was also a considerable incentive: some banks have strict guidelines on who can apply and be a holder of a credit card, which can put off consumers who don’t want to be tied to the bank’s structure.

However, Apple Pay’s progression as an innovator is limited: its profit is directly tied into the functionality, and while it was an innovative process in 2014, the ensuing five years have led multiple companies to bring out their own form of secure contactless payment. →

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Apple Pay has collaborated with banks to keep itself relevant, and exhibits similar capabilities as other virtual banks such as Revolut: its benefits are mostly anchored in the fact that Apple Pay is known to be very secure. This could explain its long-term popularity.

Furthermore, Apple has also introduced its Apple Card, which will be available in summer. Apple Card, the latest extension to Apple Pay, is a titanium card designed with Apple’s trademark minimalism which you control through the iPhone’s Wallet app. It allows you to keep track of your spending with more accuracy and instantly rewards you with ‘daily cash’ for every purchase you make.

This will probably convince a lot of people to switch to Apple Card, thanks to its benefits over traditional credit cards, such as no fees and the ‘daily cash’ reward system.

Apple Pay is also keeping itself relevant by a slow roll-out. Only certain countries have Apple Pay available to them, and each year, the number of countries increases. As new users are introduced to Apple Pay, their revenue climbs; however, it could yet reach a point where Apple Pay can no longer enter new countries, or innovate, as the future for the innovation of virtual payment could well outweigh its cost.

That said, Apple Pay has increased its parent company’s profit margins substantially: in 2018, Apple Pay transactions accounted for a 27% increase in revenue in September.

Figures are predicted to keep rising.

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expensive to ship, and the development of DVD technology seemed to be the answer.

They tested out shipping DVDs to addresses to see the viability of the exercise, and the success of that experiment lead to Netflix opening up as an online DVD rental store.

It used Blockbuster’s pay-per-rent concept and similar rates to start off with, however they quickly changed over to the format that Netflix is best known for: its monthly subscription service, with unlimited rentals and no risk of due dates or shipping and handling fees.

At the time, Blockbuster was still Netflix’s major competitors, and the company was struggling to turn a profit when it mostly relied on the US Postal Service to deliver its products. Blockbuster made an offer to purchase Netflix, and the company resisted, remaining until 2007 as a relatively unknown enterprise.

By 2007, data speeds and bandwidth costs had improved sufficiently that Netflix made the move to start offering movies online.

Consumers could purchase a Netflix box that could download movies overnight and leave them available for consumers to watch the day after; however, once noticing that YouTube and other streaming services such as Weibo were immensely popular without the high-definition capabilities, the idea of marketing a software device was set aside; instead, people could purchase an unlimited streaming package that would give them immediate access to movies and television series; they just needed the bandwidth to support it.

Market disruption as reduction of profit Netflix has been around since 1997, and has taken on multiple forms. The most ubiquitous and well-known one is today’s Netflix streaming service, which offers instant television and film-viewing options for people subscribed to its content service. It is widely considered as one of the industry’s most disruptive innovations. However, Netflix’s market disruption has not only cut into the profits of other market competitors, but also its own.

The first reiteration of Netflix wanted to be an e-commerce site like Amazon, but for videos. VHS tapes were too bulky and

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At the time, Netflix was still selling DVDs. Their online rental rates witnessed a drop between 2006 and 2011, but Netflix had started to move away from the DVD market and was devoting more of its time and profits to streaming services.

Today, Netflix no longer sells DVDs, and it is widely considered one of the major death knells for the video rental industry, and a main disruptor of the video rental market, which used to net some $16 billion, a revenue that Netflix now makes on its own.

Furthermore, Netflix has now extended its reach to content creation, changing the preconceptions over the limitations of

…MARKET DISRUPTION (AS ITS NAME IMPLIES) IS THE CREATION OF AN INNOVATIVE EXPERIENCE OR PRODUCT THAT CHANGES AN EXISTING MARKET, OR LEADS TO ITS DESTRUCTION…

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content providers. Several of the Netflix originals available on the platform have had critical acclaim, and since its first original content debut in 2013, Netflix has increased its original work database exponentially.

not an enemy to revenue, but a necessary way for the market to continue growing and adapting, developing new technologies to keep up with the plethora of advancements that are hitting society from every angle.

It is likely that the future of Netflix will involve Netflix streaming only self-made content — however, this is most likely going to be the future of streaming regardless. Following Disney’s decision to take away distribution rights for its movies and series in preparation for launching its own streaming service, Netflix is definitely preparing to future-proof its existence by heavily leaning on its revered original content. Netflix’s chief content officer, Ted Sarandos, has stated that the long-term future of Netflix will be exclusively original content, to protect itself in the likelihood that content providers keep their productions for themselves or start their own streaming services, like Disney.

During Netflix’s initial rise, nobody considered that streaming services such as YouTube would become the worldwide phenomenon that it is today. It is certainly due in part to Netflix, having pioneered the movement of streaming directly into the comfort of our homes, and offering unlimited products for a flat rate, something that Blockbuster and other video rental companies could not support or match. And it’s something that Netflix’s DVD branch could not support either and thereby needed to be removed for the company to remain floating. It is likely that Netflix’s innovation was going to happen as a matter of course, the way people moved from paying for material goods with credit cards instead of cash, and now with online payments instead of credit cards, and that if Netflix hadn't made the move, some one else would have.

Is market innovation worth the while?

The case of Netflix and its overnight boom is particularly telling of how the market is going to change and adapt in the coming years. As Christensen outlined, market disruptors are

Market innovation is necessary. Companies are steadily seeking more ways to engage and

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undermine their activity, and to show their product as superior to their consumers. To fulfil the demands that are placed on them in a society that is increasingly interconnected, increasingly more a way of technological advancement, increasingly more aware of what goes on behind the scenes, market disruption needs to happen. Industries that refuse to modernise and move forward will go down the same path as Blockbuster: a steady decline of stores, until it vanishes from existence and becomes a footnote.

This has happened before: with cars, instead of carriages, flights instead of ships for travelling long distances, and with mobile phones instead of pay phones. It will continue to happen, and as it does, companies need to decide whether they will sacrifice some of their profits to disrupt the market, and hope for the best — such as Netflix did — or to innovate only slightly, to draw consumers away from the tried-and-tested methods of doing things, and take the profit for themselves, like Apple Pay. The only thing that’s for sure about market disruption as it stands is that it will keep happening.

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PROMO

Banking on NextGen payments MONEY interviews Charlon Scicluna, managing director at Credorax Malta, on the support it offers to online merchants and payment service providers to collect and manage payments in a fast-changing world where online shopping is no longer a fad but a lifestyle.

Can you tell us who you are and what services you provide? When was Credorax founded?

Credorax is a licensed Merchant Acquiring Bank, providing cross-border smart acquiring services to global merchants and payment service providers. Essentially what that means is that we enable ecommerce merchants to collect and manage the money they receive from customers paying by credit cards and other payment methods.

Credorax was founded in 2007 and today we have roughly 250 employees around the world. We have two headquarters – Malta and Israel – and with banking licences in Europe, Japan and the US, we are the first hi-tech firm to become a fully licensed global bank.

We provide NextGen, cross-border payments processing, gateway and PSP connectivity

and acquiring for point of sale, ecommerce and omni-channel payments.

I presume your clientele are mostly online merchants. What are the needs of merchants in this case and where does Credorax step in?

We can also actually support in-store and point of sale commerce. However, it’s true that with the evolution and convenience of online shopping, more and more businesses are selling predominately online. This means that merchants can reach more customers in more places, but it also adds a layer of complexity that we can help with. Once customers get to the shopping cart on a website, the payment process needs to be swift and smooth, so that customers don’t get discouraged and abandon their cart. That’s where we come in.

Credorax helps merchants ensure that customers reach the payment finish-line smoothly, by offering the currencies and payment methods that their customers around the world want. And then we collect those funds for our merchants and remit them in

their preferred currency – that’s the nature of acquiring – and we can do that all with one technical connection.

Additionally, we have advanced data and business intelligence tools that help merchants optimise their conversion rates, so they are seeing the highest levels of transaction authorisations, and we help merchants stay protected against fraud while also remaining fully compliant with all the regulations that come with accepting online payments. Perhaps most importantly, we have a strong customer-centric approach and we work closely with our merchants to make sure they have the right support and ongoing assistance.

One of the services you are pushing seems to be NextGen digital payments. Can you tell us what it's all about for those out there who are not so accustomed to tech talk?

NextGen systems are cutting-edge technology platforms that were built from scratch by hi-tech companies. Some of the older, more dated technology systems often have legacy problems and are less stable and harder to maintain. Imagine, for example, the difference between constructing an entirely new building from scratch, versus renovating an old one by fixing all the problems that come about one after the other.

In today’s fast-paced world, and especially with online commerce, merchants want to be sure to partner with a payment company that has the most innovative and advanced technology available, with NextGen systems that offer stability and speed.

Does Credorax operate differently in terms of the systems used when compared to traditional banks? If so, how?

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PROMO

ADDITIONALLY, WE HAVE ADVANCED DATA AND BUSINESS INTELLIGENCE TOOLS THAT HELP MERCHANTS OPTIMISE THEIR CONVERSION RATES … WHILE ALSO PROTECTING THEM FROM FRAUD Credorax performs banking services using the cloud-based Temenos T24 Transact core banking software, which operates end-to-end on the Microsoft Azure cloud. This all-digital banking platform provides many advantages for delivering new products and services, while adhering to the requirements from networks and regulators.

relationships with our merchants, so we can ensure they have what they need. We are in constant contact with them, to ensure that their payments are as optimised as possible, and if our merchants need something that we don’t have, we can build it for them quickly. That’s the benefit of being a NextGen payments processor and acquiring bank.

Typically, ecommerce merchants hold multiple accounts with various banks. They use a full-service commercial bank to manage their traditional business, such as payments, payroll, taxes and more while also using an acquiring bank to collect the funds they receive from their customers via credit cards and alternative payment methods.

How many currencies do you deal in?

Transferring the funds from one bank to another can be an inconvenience and requires additional resources to manage the funds.

With our banking licence and advanced platform capabilities, Credorax can offer merchants both types of bank accounts — one for their income from sales and the other to support the typical treasury management functions businesses require. And these services can be offered through our platform, via an open API, making it easy to integrate with.

If you were to mention something that makes your company stand out from the rest, what would that be?

It’s hard to pick just one thing, but I think two of our best features are that we are an agile NextGen company with a boutique approach.

Our agility enables us to continuously develop new products and services, while our boutique approach leads to close

We offer merchants the ability to accept a wide range of cards and alternative payment methods and to process payments in over 120 currencies, while receiving settlements in their currency of choice. This is incredibly important, as often merchants want to sell to customers around the world, but at the same time, they want to receive their funds in only one or two main currencies. We can help merchants offer customers the payment options they want, while also simplifying the process for the merchant.

How would you describe your working culture? Is it a fast-changing environment, and do employees get to change roles from time to time as a result?

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Pictured: Charlon Scicluna — Malta managing director, Credorax

The payments and acquiring eco-system is extremely fast-paced because of constant technological innovations and changing customer expectations. Because of this, our working culture is that of a fast-paced hi-tech company – we must be agile and swift to innovate, to keep up with the trends and consumer demands. With that also come great opportunities for our teams to grow and develop professionally.

At Credorax, we enjoy high employee retention rates, and many of our employees have held multiple roles within the company as they’ve developed their careers with us.

In fact, just last month, we held an internal celebration to recognise over 26 team members who have surpassed the five-year mark with our company, and that’s in Malta alone.

We’re also proud to be an extremely diverse company with 21 nationalities, and we’re also proud to be one of the only global FinTech companies with over 51% female employees throughout the entire organisation, including mid and upper management levels.

Credorax is a licensed NextGen merchant acquiring bank providing cross-border processing for ecommerce and omni channel payments. Our core gateway technology, SourceTM, has been developed in-house to provide a streamlined payment experience so smart, that merchants can reach their full business potential simply by better managing their payments. Credorax merchants process in over 120 currencies, accept a wide range of alternative payment methods, and get paid in their currency of choice. Our merchants also enjoy approval rate optimisation, advanced fraud protection, business intelligence and a host of other value-added services and products adding up to a payments experience unlike any other.

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INTERVIEW

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KEEPING that CUTTING EDGE Federica Taccogna will chair FinanceMalta’s annual conference for 2019, which has innovation as its theme.

She spoke to MONEY about the context of the conference at this point in Malta’s economic development.

You have provided consultancy services to a number of jurisdictions around the world.

How important is innovation and what does Malta offer that could set it apart from its competitors, who are all trying to do the same?

Innovation is critical to the future of Malta; being able to support innovation, in a regulatorily safe and bureaucratically nimble environment, is crucial to attracting investment and achieving growth.

I try, though, not to use the term ‘innovation’ for its buzzword-value only. One meaning of the word particularly close to home for me is ‘adaptability’: possibly a product due to my working in the ever-changing world of regulation. It is undeniable that the characteristics (business models, systems, operating structures) required to exist in business today are different from those five or 10 years ago. And much of this change is due to regulatory evolution.

I believe successful firms, in the medium and long term, are those capable of constantly adapting. This means developing skills, structures and systems that are not just ‘good today’, but also capable of being ‘good tomorrow’ with minimal effort.

For example, most organisations have struggled through multi-year transformation programmes in order to be ready for MiFID II, by and large, succeeding by deploying new cutting-edge (innovative, one could say) systems or fundamentally upgrading existing ones.

But... the scope of MiFID II is quite oddly defined; it excludes, for example, loan products. Were the scope of MiFID to expand to such products (and the possibility is not to be excluded entirely), all those new systems and upgrades will suddenly become insufficient if they were not built in an adaptable manner.

And very often the firm may have had — all along — data and other systems that it could have adapted — thereby achieving innovation, compliance and perhaps even cost saving.

In another area — financial crime — firms are increasingly realising the crucial importance of robust transaction monitoring to identify behaviours indicative of money laundering or terrorist financing, and run to buy the shiniest, most expensive tool they can find in the market.

My initial introduction was about a year and half ago. A few individuals were interested in hearing a ‘global perspective’ on regulatory and compliance matters and I was only happy to discuss topics I am passionate about.

That tool is often built with a ‘typical transaction pattern’ in mind, which, without heavy customisation, does not meet the needs of the average firm and fails to detect anomalous behaviour.

THE THREAT OF FINANCIAL CRIME IS REAL AND THERE IS NOTHING TO BE GAINED FROM EITHER UNDERESTIMATING IT OR PLAYING IT DOWN

How did your involvement in Malta start?

What reassured you that you could make a difference?

Being able to make a tangible difference to the present and future of an entire jurisdiction is a unique position.

I would lie if I said that reputational concerns were not raised at the initial stages of my involvement with Malta. As I grew to know the individuals and environment, though, my doubts were largely cast aside. Undeniably, there is a widespread desire, in Malta, to ‘do the right thing’.

In respect to negative coverage in relation to Pilatus and other financial crime scandals, I have never perceived any attempt to deny shortfalls (that exist in Malta like in a large number of other jurisdictions globally), but rather, a desire not to generalise and condemn an entire jurisdiction for the wrongdoing of a few bad actors.

And, provided this is accompanied by a serious investment in enhancing and

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improving the weaknesses that allowed those situations to happen, this is the only constructive way to approach such events.

The threat of financial crime is real and there is nothing to be gained from either underestimating it or playing it down.

Malta is at a crucial stage in its evolution.

On one hand, cases such as Pilatus Bank have contributed to creating negative media attention, both locally and internationally and are likely to put the local financial services market and its regulators under increased scrutiny by central bodies. On the other hand, Malta’s geographical and economic position, the local market of highly skilled, English-speaking resources, the presence of technology firms, the robust business portfolio and entrepreneurial spirit represent a competitive advantage.

The role of all players in the financial services industry in the next months and years will be crucial to ensure that opportunities are maximised, and that Malta is positioned as a strong alternative to other jurisdictions, especially in light of Brexit.

My advice to firms that already are in Malta is to take the time to understand the financial crime threat – how it applies to them; how they can be exploited by criminals.

A number of MLROs, head of compliance, CEOs and other financial services professionals (not just in Malta, sadly!) cannot even describe a basic pattern of money laundering. Often they claim to have received training in the topic; however, theoretical knowledge is only the starting point.

True understanding comes from ‘experiencing’ through practice; my recommendation is to ‘get your hands dirty’ with case studies, simulated scenarios and real (but anonymised) data.

As far as firms that are considering coming to Malta are concerned, the degree of risk involved in the move has to be measured against the investment they are prepared to make to build resilient compliance structures.

The regulators and the government are investing in scrutinising and protecting the

INTERVIEW

industry, but each firm has an individual responsibility that must be taken seriously and embedded into business models, budgets, operating structures and systems.

The financial sector deals with huge flows of money, which inevitably make it a target for those wishing to move money for illegal purposes. How can the sector remain one step ahead of the criminals looking for loopholes?

The financial services industry’s ability to fight financial crime rests on two pillars: strong due diligence and meaningful transaction monitoring, supported by real expertise and intelligent use of technology.

For example, let’s imagine that I am a criminal — a kleptocrat of a small country, at the fringes of Europe, who has made her money through corruption, control of the judiciary, taking bribes and manipulating the public procurement process. What do I do with all this money?

There is little I can do with it in my country and all the things I want (luxury goods and property, mostly) are overseas in Europe – so close and yet so far! Depositing it in a bank might open me up to being asked how I came to be in possession of the money… unless I hide the fact that I own it behind layers of shell companies and nominee directors across multiple jurisdictions, orchestrated and set up by very clever lawyers who specialise in these kinds of set-ups.

So, I make sure that I pick one or more banks that will not ask too many questions as part of their due diligence process – those that will stop at the first layer, without identifying that I am behind all those companies. Once the money is in the bank accounts, I start using it, aiming to strike a balance between buying all those things I want, and not attracting too much attention. Once again, choosing a bank that is good at monitoring transactions and detecting anomalous behaviour might not be a clever move on my part!

With this oversimplified story I am simply suggesting that criminals will attempt to take advantage of vulnerabilities. And the two main vulnerabilities (and defences) when it comes to financial crime are due diligence

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and transaction monitoring. Well-performed due diligence enables firms to weed out the unwanted and build solid foundations for transaction monitoring. Due diligence does not mean, however, obtaining a passport or verifying an address. Real due diligence means understanding who the ultimate beneficial owner of a company is, how the layers of ownership are built and for what purpose, how entities and clusters of entities relate to one another in complex networks (a clue: they are not visible to the naked eye!).

Surprisingly enough, achieving this due diligence means hiring experts.

A firm’s obligations do not end with understanding its customers, rather, that is where they start. The real difference is in the monitoring of actual transactions.

Most approaches to transaction monitoring I see, both in Malta and elsewhere in Europe, are basic, weak and ineffective. Very often have I heard that transaction monitoring means stopping every transaction in excess of (for the sake of argument) €5,000 and comparing that to the ‘expected profile of the customer’. This does not even start to scratch the surface of what transaction monitoring really means and what technology can achieve in relation to it.

A static profile alone is hardly capable of defining an anomaly. Much more effective to this end are patterns of behaviour and statistically-defined, dynamic profiles. It all sounds very fancy, but even a simple database is capable of doing this.

In this sense, fintech firms have an advantage; their entire business proposition is built on technology; they simply need to extend it in a way that enables them to achieve compliance objectives, not just commercial ones.

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MONEY · 35

In your interest Retirement may seem far off to some of us but saving for a rainy day or to have some extra income when we retire is vital, so why not tuck away some money for the future?

Why is it important to save and when should we start?

With so many expenses and activities to pay for during a lifetime, savings can be really hard especially at a young age when income is pretty low. Unfortunately, people around the world, especially at a young age, tend to think that saving money is a boring thing to do and end up saving only at a late stage in life just before retirement.

In actual fact, according to a 2016 study done by Statista, 7 out of 10 Americans have less than $1,000 in their savings account. In the same year, data from Eurostat showed that the household saving rate was 10.8% in the EU-28 and 12.2% in the euro area of all citizens’ disposable income.

This article, which was compiled by Zenith Finance Ltd, does not intend to give investment advice and the contents therein should not be construed as such. Zenith Finance Ltd is licensed to conduct investment services by the MFSA. For further information contact Zenith Finance Ltd on 2133 2200 or send an e-mail to info@zenithgroup.mt

At what age should I start saving money and how much should I save?

look for alternatives when it comes to longterm saving.

The practical answer is any age. Irrespective of whether you have just started your first part-time job today, or you have been working full-time for a couple of years, saving should start as soon as possible. It's good practice to start putting away at least 10% of your income. To successfully save money, your best bet is to create a budget or track your spending.

As an alternative, one can opt for Investment Saving Products which provide an element of safety and at the same time increase your investments over time due to attractive returns.

What money savings products should I turn to?

Well, a traditional savings account is a way to start of course. The problem with these accounts is that the percentage return you get is low and would surely not be enough to cover inflation.

Basically, you would still be able to save a small amount (e.g. €100), like in the case of a savings account, every month (or any period you choose), but this money will be invested in a diversified portfolio in order to achieve a good return. The investment chosen would of course be in line with your financial objectives and risk appetite.

Don’t forget that if your savings rate is 0.2% per annum, and the current inflation rate in the EU stands at 2%, you are actually losing 1.8% on your purchasing power per annum!

Therefore, although it is important to have one for your daily liquidity needs, it is best to

Concluding, although pension age might seem miles away, it’s always good to think about all eventualities. Remember, even putting a small amount aside every month can make a difference over the course of a long period of time.

These products would enable you to reach your goals and at the same time provide the required flexibility.

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TECHNOLOGY

MACHINES Theo Dix, manager at EY Malta (which provides strategy consultancy and transaction advisory services) is supporting the Malta AI taskforce in its work to develop a national strategy on Artificial Intelligence.

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Theo is a manager in EY’s Transaction Advisory Services team and the firm’s local FinTech lead.

The words Artificial Intelligence (AI) draw up connotations of a sci-fi world for many.

Yet, this broad and emerging field now intersects with our lives multiple times every day without us giving it much thought. From curating our newsfeeds on social media, to predicting what we search for and the messages we type on our phone, AI is now truly the mainstream and these examples are just scratching the surface of what is yet to come.

AI is widely considered to be a generalpurpose technology. In other words, it has functions and characteristics which can generate and spread incremental and radical innovation and business growth across different fields, activities and sectors, and will transform both household life and the way we work. There have been fewer than 30 general purpose technologies across human history. The wheel, the internal combustion engine, electricity, cars, computers and the internet are some of them. AI has now joined this exclusive set of historical milestones, highlighting just how big we expect the impact to be.

Some of AI’s most impactful applications revolve around how it can be used to achieve positive outcomes for society. The emergency response call centre in Denmark is using an AI assistant to listen in on emergency calls to diagnose and alert dispatchers to heart attacks, from words, the tone of voice and other background sounds such as breathing patterns. A study carried out by the University of Copenhagen, the Danish National Institute of Public Health, and the Copenhagen EMS, outlined that AI-based software correctly detected cardiac arrests 93% of the time vs. 73% for human dispatchers. The AI solution was also quicker, spotting signs of a cardiac arrest across an average 48 seconds compared to 79 seconds by humans.

In the healthcare field, the number of AI use cases is vast. Other popular areas of application include assistance to improve

the detection and diagnosis of various forms of cancer, outpatient monitoring and the personalisation of treatment plans.

AI is also being used to help the visually impaired to navigate their surroundings via a smartphone and to identify objects or convert handwriting and printed text into spoken text. Various countries are using artificial intelligence to help prevent traffic jams and manage traffic flows. An AI network introduced in Pittsburgh claims to have reduced travel time for drivers by 25% and time spent idling in traffic by 40%. It was also estimated to reduce emissions by 21%.

In the education field, machine learning is being used to help teachers provide feedback on students’ homework, thereby somewhat relieving teachers burdened with excessive workloads. It is also being used to enhance early childhood vocabulary development, learn and practice foreign languages, and assist with personalised learning content outside of the classroom.

THE DOCUMENT, TITLED ‘MALTA: TOWARDS A NATIONAL AI STRATEGY’, SETS OUT A HOLISTIC VISION FOR MALTA TO BECOME THE ULTIMATE AI LAUNCHPAD

The benefits that AI will bring about are vast, but the technology also creates various risks that need to be addressed and appropriately managed. Various studies undertaken by leading universities, research institutes and government bodies have attempted to estimate the impact that automation will have on the world of work. A 2013 study by Oxford University study predicted that 47% of total US employment is at risk of being computerised. A separate study by the OECD in 2016 using the same dataset put this number at 9 per cent for the 21 OECD countries. The sheer variance between these two numbers highlights just how difficult it is to predict the future. Meanwhile, a McKinsey report published last year highlights that while hundreds of millions of jobs may be at risk, an even bigger number may be created through technology. The net impact of automation is therefore opaque.

The OECD research highlighted that jobs involve a mixture of tasks, and although AI might be better at doing a couple of them, in most instances, it is unlikely to be able to automate all of them. Furthermore, another factor not considered is that while AI could potentially automate jobs in certain instances, it may not be desirable to do so for both ethical and social reasons. Across many job roles, AI is expected to augment human labour, allowing us to complete tasks more efficiently, and dedicate more time for creative, high-value tasks while automating more repetitive ones. In Malta, it is expected that AI may help alleviate some of the tightness in the current labour market (effectively, full-employment across most sectors) and increase output without increasing headcount. What is clear is that the future of work will change and people will need to learn how to adapt and develop new skills.

AI also raises profound concerns around ethical application, privacy, automated decision-making and algorithmic bias.

In the 2016 US presidential election, →

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Cambridge Analytica rolled out an extensive, AI-enabled advertising campaign to target persuadable voters. In the 2017 UK general election, bots were used to spread fake news on social media. There have also been high-profile instances of AI-based chatbots adopting racist and sexist behaviour, and companies training models on biased data sets that then go on to impact the decisions these solutions offer. Furthermore, machine learning models, an application of AI that provides systems with the ability to automatically learn and improve from experience without being explicitly programmed, relying instead on patterns and inference, normally operate as black boxes that leave their designers scratching their heads to explain why the AI arrived at a specific decision.

It is against this backdrop that Malta has embarked on developing a National Strategy on Artificial Intelligence. A high-level policy document, released in March for public consultation, lays out the blueprint and the key areas of focus for the Strategy, which will be released in October this year. The document, titled ‘Malta: Towards a National AI Strategy’, sets out a holistic vision for Malta to

TECHNOLOGY

become the ultimate AI launchpad, creating the conditions for AI solutions to springboard from Malta, to the world.

The document maps out how the government will look to use AI to boost the Maltese economy and drive both investment and innovation. A robust legal and ethical framework is proposed to shine a light on how AI can, and should, be used responsibly.

It also outlines an intention to build on Malta’s pioneering framework for Innovative Technology Arrangements (ITAs) and explore the set-up of a regulatory sandbox to test AI applications in a safe and controlled environment.

Actions to equip our current and future workforce are also identified. These include the formation of a think tank to assess, monitor and plan for how vulnerable skills and jobs in our society today may be impacted, the creation of national reskilling programmes and the exploration of how Malta’s education system could be enhanced to better prepare young people for their future. Building transferable skills, such as problem-solving and critical thinking, alongside domain knowledge will

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be a key pillar of the educational aspects contemplated. The identification of new subjects that may be introduced in school curricula such as coding and robotics will also be given importance.

Policies to drive public and private sector AI adoption are also identified. Health, education, traffic management and public services are highlighted as priority areas for AI-related government projects to be taken forward.

The ‘Malta: Towards a National AI Strategy’ document includes the explicit aim to put Malta among the top 10 nations with the highest impact national AI programme. With AI projected to underpin $15.7 trillion of global economic growth by 2030 and impact nearly every economic sector and facet of society, it is good to see the field being given the level of focus it deserves.

The policy document and further information related to Malta’s AI vision can be found at www.malta.ai

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S TA R T- U P S

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Patrick has worked in the financial sector for 10 years. His job as private equity associate includes evaluating new investment opportunities and optimising portfolio performance. Patrick holds a CPA warrant and is a CFA charterholder.

VALUING START-UPS: Valuing start-up companies can be tricky.

Patrick Debattista shares some ways on how best to value start-ups.

As at 2016, there were around 300 million persons worldwide trying to start 150 million businesses in the countries covered by think-tank Global Entrepreneurship Monito1.

Assuming one-third of these operations were formally launched (a conservative assumption), this translates to 137,000 new businesses per day.

Unfortunately, much of what we learn in finance and economics is based on the premise that companies are mature and stable. This means that the realities of at least 150 million businesses worldwide (per annum!) are being largely ignored by our textbooks.

In this article, we will try and bridge this gap by understanding how start-ups differ from other businesses in terms of their valuation.

The concept behind a start-up Most start-ups share a set of common characteristics: they are innovative, they are formed on a (usually) ground-breaking idea, and there is no prior track record precisely because they are brand new. All of this makes their valuation more challenging than traditional, more mature companies.

One of the first concepts that a start-up valuer must understand is that the company’s key assets are likely to be intangible. Back in 1994, Jeff Bezos (pictured) started Amazon in his own small garage with nothing but a computer, a desk and some million-dollar 1 This is according to Dr Paul Reynolds, Director of the Global Entrepreneurship Centre’s Research Institute.

2 Zoox is currently valued at $3.2 billion in some quarters.

Source: Bloomberg.

ideas (i.e. intangible assets). The company is now worth almost $800 billion and, as a result, Bezos is the world’s richest man.

These intangible assets could be disruptive ideas, perhaps supported by a technological platform. Equally, they could be their entrepreneur’s creativity, their capacity to endure the difficulties of initiating a business, and the continual development of ideas.

Several now-mature businesses once shared all these characteristics back in their start-up days. Google, Facebook, Apple and Microsoft are the most obvious examples of this.

The valuation of start-up ventures usually varies with competition for capital and the business cycle. For instance, some sectors have more capital chasing deals than others, while investors are less inclined to provide equity if the economy is in recession or if a slowdown is on the horizon. An abundance of capital would drive valuations upwards, while a recession or potential slowdown would lower them.

Valuation multiples (market or firmspecific multiples) One method to value start-up companies involves applying a multiple to one of the firm’s operating metrics, e.g. sales, earnings or cash flows. This multiple could be based on what publicly-listed comparable firms are trading at in the stock market. However, the difficulty here lies when there are no listed comparables to our start-up operation.

For example, how would one have valued Facebook back when it decided to go public?

How would one value Zoox, a self-driving taxi company2?

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ART

S TA R T- U P S

OR

SCIENCE?

Another approach used is to capture a firm’s specific “story”: the more credible and attractive its story, the higher the multiple that investors would be willing to pay for it.

Some typical questions that are asked by venture capital investors when evaluating start-up companies to finance include: 1. Is the product/service catering for a unique need in the market?

2. Is the opportunity disruptive enough to attract future investments from other early stage investors?

3. What is the potential competition in the market? Is there a “Blue Ocean” opportunity (i.e. limited to zero competition)?

4. Does the company have a specific competitive advantage? Is there a special technology, an accepted patent, a team of experts or a network of contacts?

5. Is the business model driven by higher margins or mass volumes?

6. Is the revenue composition more onetime or recurring in nature?

7. Does the team have a deep understanding for metrics driving company valuation, such as Average Revenue Per User (ARPU), Contribution Margin, Retention rate, and so on?

As you might understand, the final multiple obtained is often based on negotiations rather than any particular, “scientific” approach.

Discounted Cash Flow (DCF) technique For most start-ups – especially those that have yet to start generating cash flows – the bulk of value rests on future potential. The

Pictured: Jeff Bezos — founder, chairman, CEO, and president of Amazon.

DCF approach involves forecasting how much “free cash flow” the company will produce in the future (the “return” measure) and, using an expected cost of capital (the “risk” measure), calculating how much those future free cash flows are worth today. A higher cost of capital is typically applied to start-ups (thereby lowering their valuation), as there is an added risk that they would fail to generate sustainable cash flows. →

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START-UP COMPANIES ARE LIKE FINE ART: THEIR VALUATION CAN VARY SUBSTANTIALLY FROM PERSON TO PERSON The trouble with DCF is that the quality of the valuation obtained depends on the analyst's ability to forecast future market conditions and generate accurate assumptions about long-term growth rates.

For many start-ups, projecting sales and earnings beyond even one or two years becomes especially challenging. Moreover, the value that DCF models generate is often highly sensitive to the expected rate of return and growth rates used for discounting cash flows. Therefore, DCF should ideally be used in conjunction with another method.

One potential approach to applying a DCF valuation would be as follows: 1. Estimating the total market value for the start-up’s product or services and its expected growth.

2. Projecting market share acquisition over a timeline.

3. Forecasting cash flows by identifying the start-up’s potential free cash flow generation.

4. Determining: (a) an exit value if the founders envisage exiting their position after a number of years; or (b) a terminal value based on reasonable assumptions on cash flow growth to perpetuity.

5. Discounting all these cash flows at today’s cost of capital, bearing in mind the elevated risk borne by start-ups, and preferably considering comparative analysis with mature firms within the same sector.

There are several other valuation methods for

start-ups which seem to be gaining traction by industry practitioners. However, these methods are often variations of the multiples and DCF techniques.

Conclusion Start-up companies are like fine art: their valuation can vary substantially from person to person. This poses significant challenges for the independent valuer. However, the use of a combination of methodologies instead of a single one, as well as applying a valuation “range” as opposed to one fixed value, can help mitigate some of the risks inherent in valuation.

Malta:

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financemalta.org/conference-2019

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BLOCKS MONEY speaks to Jarek Bialek, programme manager and EIR for MITA Innovation Hub, on foreign emerging technology start-ups’ perspective on Malta, dubbed the Blockchain island and government IT arm MITA’s acceleration programme targeting such start-ups.

It’s still 7am when Mikayel Khachatryan, founder of Wirestock, starts his work day in one of the office buildings of SmartCity Malta. His Armenia-based co-founders are already two hours ahead of him, waiting for a call to coordinate the tasks for the day.

Wirestock is a one-stop shop platform for stock photographers, using Blockchain for content authentication. It is one of a cohort of five start-ups selected to participate in the YouStartIT acceleration programme, run by

the MITA Innovation Hub. The programme offers a grant of €30,000, all equity-free.

The main attraction is clearly the fact that Malta has been dubbed the Blockchain Island.

The Malta Information Technology Agency (MITA) recently concluded its fourth edition of the acceleration programme, targeting startup projects based on emerging technologies such as Blockchain, AI, IoT or Big Data. The

1

programme is open to a global community of digital entrepreneurs, willing to launch their products from Malta, as long as they

2

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This spread: (1) A Temporary Shop; (2) Wirestock; (3) Cryptic Legends Overleaf: (4) Alex Borg, MIH manager

to be attributed to the momentum Malta has managed to build as a Blockchain-friendly jurisdiction. “You want to be where the big players are,” argues Mikayel, referring to Blockchain giants like Binance and OKEx who made their famous move to Malta last year.

3 already have a properly tested and scalable value proposition with a solid team behind it.

There is nothing less than hard work waiting for them in Malta. On conclusion of the four-month long programme, the start-ups will have gone through countless meetings and workshops with mentors, advisors and consulting companies, always refining their business model, pitches and presentations to reach market readiness.

In parallel with that, the start-ups need to fulfil a mini CSR function, that of giving back to the community that is funding them. Through this function, called the Social Impact Agenda, the start-ups are asked to be proactive by organising several activities, such as workshops, meet-ups or lectures, giving as much as possible knowledge and inspiration to local founders

and tech enthusiasts. The activities are designed in such a way to push the founders to step out of their comfort zones, and even face rejection if need be. After all that is the life of the entrepreneur.

The YouStartIT programme is the first and so far, the only, government-backed initiative of this kind in Malta. It has been created to support national policy on digital innovation and emerging technologies, and therefore create synergies between foreign and local tech talent and entrepreneurship.

YouStartIT is currently going through its fifth edition. The five start-up projects that graduated from the fourth edition were selected from among over 170 applications received from more than 40 countries including Malta. A part of this interest needs

“Working with Blockchain is so exciting. It brings hope for the future and there are so many new business models to be discovered.

So, for this to happen successfully, you need to network and compare notes with lots of like-minded people and peers facing similar situations. To grow a business like mine, it helps to be part of a community that’s moving in the same direction.”

The growing strength of the Maltese community is not necessarily coming from the angle of tech competence. It is its diversity which makes it unique.

Nemanja Avramović, founder of Cryptic Legends, another of YouStartIT participants, who is from Serbia, said: “We’ve been exposed to several people with different business and legal backgrounds. They helped us cover areas vital to our project. These ranged from incorporation and →

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IP regulation, business modeling and communication, accountancy and taxation.”

It is a collectable hero management game, using Blockchain to store its characters as non-fungible tokens, so they can be used on the open market and eventually in other independent games. “Most of the people we spoke to had already been exposed to Blockchain due to the great buzz in Malta about the topic,” Avramović added. This network keeps growing with the number of specialists relocating to Malta and the small size of the country makes them quickly interconnected. Local and foreign mentors are key assets of the YouStartIT programme, and they can be influential in brainstorming ideas, structuring the next phases of development or suggesting the most optimal solutions. As in a classic, mentor-driven startup programme, they are directly involved, and sometimes even drive some of the programme activities.

What makes Malta unique and attractive for early stage start-up founders is, paradoxically, its small size. “Here we managed to achieve more objectives, with a much faster pace, than we would have in our home country,” stated Jurij Dreo, founder of BrainTrip, a Slovenian start-up developing a small, lightweight, head-wearable device that can monitor the electrical activity of a wearer’s brain. This device allows wearers

DEALING WITH BUREAUCRACY HAS BEEN A MAJOR DISTRACTOR IN PURSUING OUR BUSINESS IN MALTA, BUT IT HAS TO BE DONE AS IT IS PART OF THE LIFE OF AN ENTREPRENEUR

4 to interpret data from their activities and therefore address issues ranging from mental focus to addictive behaviours.

For most projects, Malta is an ideal test bed, since it offers faster access to various customer segments and feedback. This allows several iterations of the developed solution to be tested before eventually launching to international markets.

The life of an entrepreneur is not all roses of course. All the start-ups must register themselves as a company, which is mandatory to participate in YouStartIT. Grants are paid out only after incorporation is complete, and if the start-up has performed well and attained its project objectives agreed beforehand with the MITA team managing the accelerator. The process of company formation itself can be quite cumbersome if the team still doesn’t have a clear vision of the management and control it wants to exercise on the company, and how it wants to distribute its shares.

Something which Pierfrancesco Onis, founder of ATemporaryShop, knows well.

This Italian start-up created a platform that matches shop owners with empty shelves available, with artisans and other makers of hand-made products such as clothes. The purpose is to offer these makers a physical space to showcase their products and in so doing greatly extending their market using a hassle-free transaction system. “Dealing with bureaucracy has been a major distractor

in pursuing our business in Malta, but it has to be done as it is part of the life of an entrepreneur,” says Pier.

To pursue its initial market presence, any new, digital venture must focus on rapid experimentation, market testing and often several iterations of the product. From a foreign founder’s perspective, this is quite a challenge because not only the culture is different, but also the legislation. While Malta is fast becoming a very technology friendly destination, there still are a few challenges to be addressed. Among them are a more streamlined process for the opening of bank accounts for foreign founders, opportunities for further funding through angel investment, and the need for a startup visa, like other countries such as Italy, Canada and the Netherlands. Fortunately, these issues seemed to have been picked up in the highlevel policy document, ‘Towards a National AI Strategy’, recently issued for public consultation by the Parliamentary Secretary for Financial Services, Digital Economy and Innovation.

If small players are being attracted to Malta’s innovation-friendly legislation in a bid to contribute to the socio-economic shift towards an innovation economy, it is in Malta’s interest to give sufficient reason to the Mikayels, Nemanjas, Jurijs and Piers not only to start their businesses in Malta, but also to stay, flourish and scale up.

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OPINION

48 ¡ MONEY

Manuel is a political blogger who writes for The Sunday Times and manueldelia.com.

A new dawn will rise Political analyst Manuel Delia argues that the shocking transition Malta is going through is not impossible and not necessarily disastrous but from the looks of it, there’s no long-term plan in hand and that can be catastrophic to say the least.

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At the end of every long night, a new dawn rises.

A new dawn must rise over the long, cold night of inadequacy that we shiver under. It may need to get worse before it gets better, but the symptoms of terminal crisis for the global state of play are inescapable.

At the turn of the 18th-century politics was still a sub-discipline of religion. The exercise of power was the business of asserting the supremacy of one’s own preferred dogma and esoteric understanding of the fine nuances of faith.

The ‘light’ of modernity changed the scope of politics making it a sub-discipline

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of economics. The business of public administration became the competition of methods to enable the generation of wealth for some or for many, depending on the economic dogma you upheld. Materialism or, as someone called it, the immanentisation of the eschaton became, and still is the central scope of political affairs.

socialist sun rises over a fair and egalitarian society.

‘Immanentisation of the eschaton’ is a phrase that will do miracles in dry spots of your social conversation. All it means is that the objectives of religions (heaven, the arms of Abraham, Nirvana and so on) are shifted by modern economy-based politics from the afterlife to the present. The eschatology is no longer left to eternal salvation but to the end of year profit and loss account or for when a

Our very own darling in the US Democratic Party primaries, Pete Buttigieg, reminds us that his generation will need to deal with the ‘business end’ of climate change. The choice of words is grounded in the conventional wisdom that all problems of the world can be resolved transactionally. But what he’s also saying there is that the ways of the old generations of solving problems on the back of purely economic considerations is just not going to be enough to turn the tide of our habitat’s utter destruction.

‘Greed is good’, however, seems now to be entirely dysfunctional. The imperatives of today’s economy create gross inequalities and an unsustainable ruination of the only planet we know of that we can live on.

The next sunrise will not be lifted by growth statistics. Admittedly, we still don’t know how to do most things without money but we do know that money cannot buy all we need. We need to create the currency for sustainability, for inclusion, for integration and for a cultural growth that touches depths of the human experience that greed distracts us from.

If religion or economy will not be enough to feed the 5,000, it’s unlikely that philosophy alone can bridge the gap.

Here are some of the fields that await us after breakfast.

Malta’s infrastructure needs rethinking.

If Malta is going to be a city of 2 million or more, our design is woefully inadequate and we’re already way behind the times in getting ready for sustainable growth. Such a shocking transition is not impossible and not necessarily disastrous. But it would be catastrophic if it isn’t thought through. And it already feels like close to collapse. →

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THERE IS NO PLANNING MASTER PLAN, NO STRATEGIC TARGETS FOR ECONOMIC ACTIVITY, NO RESERVATION OF SPACE FOR CONSERVATION AND RELAXATION, NO PARAMETERS THAT GUIDE THE COMMUNITY TOWARDS A GREATER SENSE OF ITSELF AND WHAT IT WANTS TO BE DOING NEXT

Our paralysing experience of transportation, the mismanagement of our waste, our insensitivity to conservation and our pathological inability to place human experience at the centre of our town planning, such as it is, highlight most starkly how growth and greed-driven policies are for the short-term and ironically reduce our readiness to prepare for a different future.

There does not appear to be a long-term vision or unifying goal that the resources of the country might be driven to work towards.

There is no planning master plan, no strategic targets for economic activity, no reservation of space for conservation and relaxation, no parameters that guide the community towards a greater sense of itself and what it wants to be doing next.

But this incoherence is reflected in more than the haphazard manner of our construction or the non-existence of town planning.

Consider the fact that no one seems to be working on understanding the way the shape of our society is changing and will be

changing. To say race relations in Malta are strained would be a complete misunderstanding.

There are no race relations. People live in parallel existences with an inability to cut across divides that reflect their origins.

There is no dialogue – cultural, economic, social or even personal – between people of different race. And yet numbers continue to grow.

This is as unsustainable as rampant concreting of the countryside.

Consider also the new distances created around an aging population, increasingly made of elderly persons that are detached from any form of community life. Loneliness and isolation are an increasingly overlooked reality. People live longer outliving, but living with, physical illnesses that are no longer

terminal and mental illnesses that are only inevitable in a country with more people and less conversation.

This too is unsustainable.

Consider also the thinning of our social cohesion. Our racial inequalities graft a caste system on jobs, reserving the fulfilment of satisfactory employment to white people and holding black people to work deemed unsuitable for whites. That is an economic reality that emphasises the social cleavages described above.

But they do more. In a context of a masterslave society, white people and natives trapped in poverty or homelessness (in ever

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MONE Y · 51

A new education must teach us there’s more to life than money.

greater numbers) add the indignity of social stigma to the suffering of downward social mobility.

It will become harder to explain to poor people that it is not other poor people with a different skin colour that make them poor, but an unequal and greedy social norm that seeks the rewards of aggregate growth where their inclusion is irrelevant.

What politics can address these unsustainable realities?

We need a re-invention of the meaning of citizenship: how people are not merely awarded a membership of society but rather expected to engage in the shared and

selfless responsibilities of democratic life. In other words, a citizenship that is not merely extractive or exploitative but responsible and driven by the shared interests of the whole in balance with the interests and motivation of the one.

This is not a legal change, or even an economic one. It is a cultural change of the same transformative scale that turned people away from fighting wars over the nuanced definitions of divinity and instead thinking how reason, science and tolerance could get the job done of living and letting live.

That change – sometimes called the Enlightenment – sprouted from its roots in books, in teachings, in other words in education that taught people there’s more to life than debating the nature of the Trinity.

Responsible citizenship relies on a reinvention of social solidarity, or an ambition of cultural integration without assimilation; a new democracy that finds itself in argument, debate, dissent but also reason, compassion and, for want of a more specific term, humanity.

Responsible citizenship goes beyond the legal bounds of a contract with a State and the powerful that govern it. It is also a more fundamental contract with the planet we live on. This contract is not about power that governs our community and our rights as individuals. It is the contract that regulates the very existence of our species and other species with whom we share our home.

A new dawn will shine brightly on the inadequacies in the way we run our affairs today. Unless we are smart enough to see them for ourselves and get ready for a brighter future.

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COUNTRY REPORT

CURRYING FAVOUR with INVESTORS It will take weeks to complete voting in India, with 900 million people going to the polls. Incumbent prime minister Narendra Modi is being largely judged on his economic performance. How has he fared? MONEY asks.

ISSUE 54

Things are not looking too bad for the $2.9 trillion economy Indian economy – at least on paper. After all, the International Monetary Fund is forecasting GDP growth of 7.3 per cent in 2019 (downgraded by 0.2 percentage points), beating even China’s forecast of 6.3 per cent.

Is that going to be enough for 68-year-old Narendra Modi to win another term as prime minister?

One of the main criticisms being levelled against him is the high unemployment. He knows full well that he needs to promise the earth: just a week or so before the election, he promised to solve the unemployment – particularly youth unemployment - by spending more than $1.4 trillion on infrastructure over five years (now why does that sound so familiar?). Much of that would go towards metro trains for 50 cities (which would also help the crippling pollution) and extending the network of national highways.

Will it, however, be enough to soak up the one million Indians who enter the workforce every month?

In an effort to close the gap between rich and poor, his government also vowed to help rural development by earmarking $300 million for this sector and its poverty-stricken farmers

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Like many other countries, India also had to keep an eye on its banks, which had some of the highest levels of bad debt in the world. The central bank’s powers to step in were increased, and two years ago, it approved a $32 billion recapitalisation plan to help state-owned banks clean up their portfolios.

India may be looking at greater GDP growth than China but there is still a major production gap between the two. China produced at $3.6 trillion in 2017, compared to India’s $392 billion. And the trade figures are similarly depressing: The World Bank reports that China had $2.3 trillion in exports and $1.8 trillion in imports, while India exported $298 billion and imported $447 billion – a fivefold difference.

Indian Finance Minister Arun Jaitley sees this as a positive rather than a negative, focussing on the amount that the economy can still grow. He is forecasting a massive GDP of $10 trillion by 2030, which would put it in third place globally, behind the US and China.

who are unable to clamber out of their debts.

The right-wing BNJ Party has also factored in emotions and has tied 2022 to the achievement of 75 targets to mark the 75th anniversary of the end of British colonial rule. Catchy – but is it feasible?

Of course, incumbents have the advantage of being able to promise largesse, but they must also overcome voter fatigue and suspicion.

After all, when he was fighting the election five years ago, he had also made enticing promises. For example, in 2014, he promised that he would create 10 million jobs a year, which resonated with young voters.

The stark reality is – according a newspaper report – that unemployment is its highest since the 1970s: 6.1 per cent in 2017/18.

AFP reported that just a year ago, there were 19 million applications for 63,000 positions at Indian Railways. Demographics are not helping the challenges. The current population of 1.3 billion is still growing, set to China’s by 2024.

Modi had also promised to tackle the black economy but his solution backfired

miserably. He banned high denomination bank notes, virtually overnight, making little inroads into illegal money but causing untold misery for millions.

He did fight corruption and India actually rose three places in Transparency International’s Corruption Perception Index, to 78th position.

Government spending was to be matched by foreign spending and Modi promised to cut the red tape involved with doing business in India, which mostly succeeded. FDI in India rose to nearly $62 billion for 2017-18 and the government forecasts $100 billion annually within two years.

One way to make business easier was by cutting down on the administrative burden by having a single tax on goods and services, the GST, a national tax replacing various state taxes and levies. The reform, which had to be tweaked a few times, boosted the World Bank’s “ease of doing business ranking”, pushing the country up 23 places to 77th position between 2017 and 2018. He also took on the outdated insolvency and bankruptcy laws.

All the growth and wealth mean little – particularly at election time - unless it is more equitably distributed. In 2011, 268 million people were surviving on less than $1.9 a day, but the figures due to be issued in June should show that this has gone down dramatically: The World Data Lab believes the figure could have dropped to as low as 50 million.

All this augurs well for Modi – all he has to do is wait and see.

L AST WORD

54 · MONEY

ISSUE 54

The Bluesman is a Maltese sound engineer working in New York.

Nuclear accidents and the use of nuclear weapons are preventable man-made disasters. The Bluesman delves into what is the cause of major danger to man and the environment.

Darren ducked behind the rusted remains of what possibly had been a Hummer-type vehicle. His mind trying to process the information his ears had detected. Was that a whisper or the sound of the wind as it picked up dry leaves and scattered them along what used to be a blacktop. The silence was so intense it would have been almost painful to one who had not grown up in it as Darren had.

Darren wasn’t sure if his name was Darren.

He thought the people he assumed were his parents called him that but they might not even have known it themselves. They were there at the last skirmish in the area that killed a number in the little group he belonged to, including, possibly, his parents.

The hostiles suffered their own casualties but the survivors were not seen or heard of again.

Twenty years had passed and it was just him now. It wasn’t a whispering voice that caught his ear he determined so he started heading back towards the cache of canned food where he currently foraged. He often spoke to himself in a low voice, it was comforting.

Intolerance. That’s what started it all.

Opinions based on very little, if any, information. Religion took both those traits and ran, ran, ran with them. Why should anyone care what another’s thoughts regarding ‘the meaning of life’ were, the age-old question, a quasi joke, a comedian’s vaguely stereotypical fallback line. These

divisions solidified into tribalism and then extreme nationalism. The trouble was that nobody delved into history anymore. People felt that apologies had to be made for incidents that occurred hundreds of years prior. It became something simpering students thought insensitive to discuss.

It was only a matter of time. Hate begat clash, clash begat death, death begat escalation. Darren made his way along the cracked tarmac to the storage bunker he had discovered some years ago with the remnants of the group. There had been some emergency preparations and supplies stashed by municipalities as the world humours had ebbed and flowed eventually settling on the yellow bile of the four which catapulted humanity about 50 years earlier to the madness of M.A.D. The perishables had long gone of course and when the power gave out, so did cold storage. Before the escalation there had been movements to step away from energy produced by refining oil but old habits die hard and too many people had their hand firmly in pockets that yielded much lubrication to the machinery that kept the black stuff flowing. These same, who wielded deciding power, tended to not give public credence to warnings that polluted skies and polluted seas were choking the planet so

NO SURPRISE THEN THAT PEOPLE HAD GROWN SUSPICIOUS OF, AND HAD MANY CONCERNS ABOUT, THE TRUSTWORTHINESS OF NUCLEAR PILES SIMMERING IN PRESSURE COOKERS alternative methods of generating electricity were dismissed as fanciful crackpot ideas and thus wind and solar energy farms were relatively few and far between.

Certainly, nuclear plants vaunted since the 1950 would have been capable of producing power cleanly for longer except for the dire consequences when things went wrong through poor maintenance or malfunction, and when they did it was in a big way.

In Cumbria, England in late 1957, a heating problem developed causing a fire with the subsequent release of sizable amounts of radioactive iodine into the atmosphere.

Much backpedaling and minimising as the then government attempted to hide the full extent of the event, although they did ban

THE NE W BEGINNINGS EDITION

L AST WORD

the sale of milk for several weeks. Not nearly enough time for a safety margin and one is led to wonder how the cows fared. To this day the ‘clean-up’ that was started in 1980 and expected to end in 2015, hasn’t been completed. The latest forecasts hope it will be done by 2040.

Since then there have been far more incidents than are generally known of. The headliners like Three Mile Island in Pennsylvania [40 years a month ago] and the big daddy [bear?]

Chernobyl coming up to 33 years ago in a few days, overshadowed some that didn’t.

For instance, the one that occurred close to Kyshtym, deep in the Russian Ural Mountains in 1957 and kept quiet by the Soviets.

Well over one hundred nuclear accidents and incidents have been suppressed over the years. Fukushima in Japan, amid quake and tsunami, hit the headlines in March of 2011. No surprise then that people had grown suspicious of, and had many concerns about, the trustworthiness of nuclear piles

MONEY · 55

simmering in pressure cookers. Maybe there would have been more sources that were safer, more sustainable and easier to maintain and maybe the world would have moved away from such a destructive force just waiting for a bad actor to harness it. Too late now. We recoiled at the collapse of towers and spires yet neglected to close the door on alpha, beta and gamma rays.

Darren let his eyes get used to the darkness and stood inside the entrance. At a certain time, there was enough light streaming in for him to not have to carry his makeshift torch - it was smoky and hampered his work.

He moved towards the open boxes that were his current hunting grounds. A movement caught the periphery of his vision. There, a shape. He gripped the industrial can opener he wore tied to his waist. Then the shape materialised into a face. It was a boy, maybe he was 8 or 10 years old. The face mirrored Darren’s; surprise, anxiety and a hint of joy at the encounter. Darren’s hand slowly went up in the universal sign of peace.

FA S H I O N

56 · MONEY

material boy

ISSUE 54

Wool-jacquard polo shirt PRADA / €790

Jordaan horsebit burnished-leather loafers GUCCI / €595

Oversized printed cottonjersey t-shirt GIVENCHY / €370

3cm black full-grain leather belt SAINT LAURENT / €395

Logo-print loopback cotton-jersey hoodie VERSACE / €795

From cotton to lightweight materials, summer is all investing in the right fabrics.

MONEY showcases a summer wardrobe.

THE NE W BEGINNINGS EDITION

FA S H I O N

MONEY · 57

Slim-fit embroidered cotton-piqué polo shirt ALEXANDER MCQUEEN / €350

Webbing-trimmed logoprint nylon and tech-jersey track jacket GUCCI / €1,480

6cm striped knitted silk tie MR P. / €110

Aviator-style gold-tone and acetate sunglasses GUCCI / €310 Checked cotton drawstring shorts RHUDE / €475 Ballon Bleu De Cartier automatic 42mm steel and alligator watch CARTIER Available from Edwards Lowell Co. Ltd — T: 2138 4503

All items available from mrporter.com

58 · MONEY

NEWS

Investing in Real Estate: a REITs Framework in Malta

Largest property site in Malta uses AI-powered search The problem with looking for a property to buy or rent in Malta is that most people simply don’t know where to start from. Between estate agents’ offices and websites, classified sections, MaltaPark, magazines and leaflets; where should you begin?

As the largest real estate database in Malta, Gallarija.mt uses an artificial intelligence engine that scans the internet and gathers real-time information about all property listings in Malta into a single website.

Launched in mid-April 2019, Gallarija.mt has already garnered a sizeable and loyal user base. The founders’ goals are now to grow this audience and develop the website to be of even better service to its users.

Additionally, Gallarija.mt is looking to reach out to the industry to assist stakeholders with meaningful data about what property hunters are searching for, be that price, size and type of property, location, and much more.

Gallarija.mt charges zero listing fees, zero commissions, zero referral fees, and there are no ads on the site. You don't need an account to use the site.

ISSUE 54

Shireburn appoints Nathan Farrugia as CEO John de Giorgio, the founder of Shireburn, will take on the role of Chairman and will continue to hold a strategic and advisory position within the Group, while Director Franco Galea will continue to execute his current role as Operations Director. Other appointments have been made to further strengthen management including Christian Agius as Head of Technology, Charles Mifsud as Head of Products, Kenneth Agius as Head of Financial and Adam Buttigieg as Head of Customer Services. Nathan has already been working with the senior management team for the last 18 months as a business coach. These enhancements all form part of Shireburn’s management succession plan and ensure business continuity for all its customers, both locally and overseas, and its staff. This decision also strengthens the foundation of the company for further growth locally and internationally.

Nathan Farrugia outlined his vision for Shireburn. “I’ve had the privilege of working with the Shireburn team over the past 18 months and am impressed with their competence and commitment, so leading the team is going to be an absolute pleasure. Our aim is to take the organisation through its next evolution, capitalising on the significant recent investments in people and technology to create even stronger products and services for our local and international clients. Our goal is to keep Shireburn at the forefront of its market and continue to enhance our clients’ businesses through our products. We will continue to invest in our people and their skills to ensure the company remains a leader in the technology space and continues to attract talent; and I expect it to be a very interesting journey.”

Investment in real estate has always been a priority for investors holding a welldiversified portfolio of assets. In the 2019 Budget speech, the Maltese Government announced its intention to create a regulatory regime for Real Estate Investment Trusts (REITs). With the introduction of this new legislative framework, Malta will join 35 jurisdictions across the world that have already established a regulation for REITs. REITs are investment vehicles that essentially own property that creates rental income, which is in turn distributed to shareholders.

REITs allow individual investors to indirectly access the real estate market with a limited exposure to financial risks. An investor can buy REITs shares which require a much lower capital expenditure than purchasing an entire property, as well as being far more liquid, and shares may be sold far more quickly and easily than an entire property.

Within the context of a booming real estate market in Malta, the much-anticipated legislation regulating REITS in Malta will offer attractive investment opportunities to investors. In this regard, the Malta Stock Exchange has already initiated the processes to develop REITs in Malta and has engaged Chetcuti Cauchi to advise on the legal changes to the regulatory and legal framework that would effectively see the introduction of REITs in Malta in the coming months. For more information, please visit: bit.ly/REITS

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