MONEY APR/MAY 2013 ISSUE 18

BUSINESS | LIFESTYLE | DESIGN

The RETAIL issue Issue Issue 11 February/March 18 April/May 2013 2012

€5 WHERE SOLD

Dr Chris CARDONA on the economy Designed to sell

THE NAKED TRUTH Behavioural economics

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Welcome Once upon a time, shopping was easy. Actually, it wasn’t shopping as we know it – we bartered goods and services, valuing them according to necessity and scarcity.

Nowadays, shopping is what fuels the economy – manufacturing, taxes, design, employment and distribution all come together to create the retail experience. An economy booms when people spend – but when consumer confidence is on the low side, the whole supply chain falters.

In this issue of Money, we focus on retail. Our main interview is with the Minister for Economy, Investment and Small Business, the Hon. Dr Chris Cardona. Only a few months into his new role, Dr Cardona is confident that the local economy has a sound footing, thanks to the labour force’s skills, aptitude and readiness. However, there are issues to tackle, such as reducing administrative burden and attracting more foreign investment.

For months we have listened to comparisons between Malta and Cyprus and how we’re next in line for a financial crisis and an eventual bailout. Patrick Debattista dispels all the rumours and argues how our local banking system is much stronger than that in Cyprus.

Vanessa Macdonald charts our retail trends, based on the first Malta Retail Review carried out last year. Veronica Stivala acknowledges the LGBT community’s importance in economic development and asks whether Malta is getting its share of pink money.

In this issue of Money, we also showcase the art of display, do some long-haul travelling and discuss how behavioural economics can help consumers make wiser choices.

Read on and enjoy.

Contents

April /May2013 12 A positive outlook Malta and Gozo have the potential to flourish in all aspects of the economy, says Hon. Dr Chris Cardona, Minister for the Economy, Investment and Small Business.

15 OUR SPENDING HABITS How have retail trends in Malta changed, asks Vanessa Macdonald.

18 The next domino to fall Malta will not face the same Greek tragedy as Cyprus, says Patrick DeBattista.

22 Hey, gay spender The LGBT community is a major asset for cities to take the lead in economic development. Is Malta getting its share of pink money, asks Veronica Stivala.

25 Honesty for the economy Behavioural intervention can help consumers make wiser choices, Professor Liam Delaney tells Dr Edward Duca.

Editor Anthony P. Bernard Email: anthony@moneymag.me Consulting Editor Stanley Borg Email: stanley@moneymag.me Advertising Jamie Maher Email: jamie@moneymag.me Design Porridge Email: hello@weareporridge.com Printing Progress Press Distribution Mailbox Direct Marketing Group

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For information regarding promotion and advertising call Tel: 00 356 2134 2155, 2131 4719 Email: hello@moneymag.me

30 Turning the page Albert Mamo has retired from his executive position at GasanMamo Insurance. In his last interview with the media, he recalls his 47 years in the business.

37 Consumer confidence

Trust between consumers and traders is the sign of a healthy business environment, says Odette Vella.

40 The Japanese trap Meagre GDP growth, high debt levels and an ageing population – is the world’s third largest economy doomed, ask Chris Grech and Calvin Bartolo.

43 Retail revisionism Sean Patrick Sullivan proposes 10 techniques for saving independent shops from oblivion.

46 Shopped till it dropped It’s the shopping destination of the world. But after its 2008 crisis, is Dubai still selling, asks Money.

48 Designed to sell Design should enhance brands and enrich customer experiences, says Violet Kulewska.

58 The finer things in life Money can’t buy you everything. Actually, we can.

60 In the beginning This is what the first day in paradise must feel like, says Mona Farrugia.

62 The Bluesman’s blog The Bluesman survives the cold, and the guns, in the US.

Money is published by BE Communications Ltd, 37, Amery Street, Sliema, SLM 1702 All rights reserved. Reproduction in whole or in part is strictly prohibited without written permission. Opinions expressed in Money are not necessarily those of the editor or publisher. All reasonable care is taken to ensure truth and accuracy, but the editor and publishers cannot be held responsible for errors or omissions in articles, advertising, photographs or illustrations. Unsolicited manuscripts are welcome but cannot be returned without a stamped, self-addressed envelope. The editor is not responsible for material submitted for consideration.

10 - Money / Issue 18

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Interview

A positive outlook

Malta and Gozo have the potential to flourish in all aspects of the economy, says Hon. Dr Chris Cardona, Minister for the Economy, Investment and Small Business. Photos by Marc Casolani.

M Malta is the smallest economy in Europe and has limited resources and supplies. And while unemployment is low, female participation is also low. Any outsider would ask – how is Malta surviving?

CC Malta is surviving and to a certain extent doing well even at times when other EU states are performing badly. There are specific aspects that make our country not only safe but also business-friendly and attractive investors.

Our labour force aptitudes, their skills and their renowned readiness to learn and train, their languages abilities and their high productivity are among these main positive aspects. Then there are also other aspects such as our geographical location and our political stability.

However, there are a number of criteria which make us less attractive such as the effect of bad policy, whether in the economic, administrative or energy field. Fortunately, most of these criteria are man-made and therefore can be changed and that is what this government intends to do.

With regards to unemployment, this government wants to safeguard jobs and create new ones. We intend to achieve this aim by introducing a number of measures to increase workforce participation. Among these initiatives there is the introduction of free childcare services for families.

M One of the Labour Party’s electoral promises was to be more business-friendly. How will this be achieved?

CC This government is genuinely focused on improving the local business environment, not only by providing a safe environment but also by being business-friendly.

The current level of bureaucracy is overbearing. We will simplify procedures for business and also make sure that laws won’t create new obstacles for business.

Within every sector there are measures that can be taken to reduce bureaucracy. We will ensure that services are given

12 - Money / Issue 18

within reasonable times. Our attitude towards bureaucracy is that we mean business. We cannot afford that the regulators, whether these relate to planning or the use of the country’s resources, continue to fail us. This government intends to make these authorities transparent and accountable. We will take the same approach with all the departments – among them the VAT department – which in one way or another are vital to the industry in carrying on with its business.

This government is committed to start an unprecedented fight against bureaucracy. We want to get the message across that this is a business-friendly government that is guided by a clear and simple plea – let us work.

M For years, manufacturing has been on the decline in Malta – is it worth saving or should we focus more on the services industry?

CC This government believes in a diversified economy which focuses on more than one sector. We will not gamble any one of the sectors that contributes to our economy and that provides jobs to our families.

The manufacturing sector still has a role in the Maltese economy. This Government looks at manufacturing as an essential part of how the country brings investment and new jobs. Since my first day in office I visited various manufacturing companies specifically to emphasise and get this message across.

This government intends to work closely with our existing base of operators to support them in expanding their operations here in Malta, while striving to attract new investment by implementing changes that will boost our competitiveness.

Malta and Gozo have the potential to flourish in all aspects of the economy, from the manufacturing industry to services, from information technology to health and education services.

“The current level of bureaucracy is overbearing. We will simplify procedures for business and also make sure that laws won’t create new obstacles for business.”

M What can be done to attract further foreign investment to Malta?

Therefore I am quite confident that the outlook for small businesses in the next two years is a positive one.

CC First of all we need to constantly ask ourselves how we can be better at what we do and become more competitive and attractive to FDI. We are aware that often investors, including Maltese investors, have to face a lot of unnecessary barriers. This government will make sure that these barriers are removed.

M The Maltese economy always feeds off a crisis – from the opportunities which post-crisis Libya has opened to the growth of the maritime security sector following the rise in piracy. Does this confirm the savviness of Maltese businesses?

Malta Enterprise is undoubtedly a key player and that is why we will ensure that this authority is better structured and focused on attracting new FDI. Malta Enterprise shall be working in conjunction with the Ministry of Foreign Affairs and in particular our diplomatic representations so as to build a fully-fledged network that will serve as a platform to promote Malta. We want our embassies to not only be responsible for diplomacy but also to transform into hubs for the promotion and facilitation of international business. We will also improve the incentives offered to FDI and make them more pro-active and efficient.

M Small businesses are dogged down by administrative burden, high utility rates and a saturated market. What is the outlook for small businesses in the next two years?

CC This government believes that over the past four years the majority of the Maltese businesses managed to avoid the impact of the economic crisis through their determination and good management.

This government is well aware that administrative burden and high utility rates are hindering their operation and that is why these aspects are high on our agenda. We are confident that our energy plan is doable and we are determined to simplify procedure for business.

We will also expand and upgrade the Micro Invest, Jeremie Micro Credit, Micro Guarantee and B.START initiatives and facilitate the qualification process.

CC I would rather say that this confirms the entrepreneurial aspect of the Maltese people. This government intends to do its utmost to sustain the Maltese businesses’ aptitude for new opportunities. We will not just help them identify new opportunities but we will also help them achieve their objectives. We are committed towards working hand in hand with private enterprise to create new opportunities for economic growth.

The basis for this growth in the coming years shall be that of improving the competitiveness of the Maltese economy by encouraging local businesses to think global and to internationalise their business through the development of joint ventures and strategic alliances with international partners.

M The digital economy is also part of your portfolio – Smart City is the huge elephant in the room here. Without Smart City, will the digital economy suffer?

CC This government considers the digital economy to be a key pillar to ensure economic growth and that this reaches everyone. A successful Smart City Malta will definitely help in achieving this goal and that is why we will give the utmost co-operation for the success of this project.

We want to have a modern and robust economy where technology will be an important catalyst for the creation of high quality jobs. This government intends to continue to invest primarily in the necessary infrastructure and education, while at the same time taking all necessary measures so that more students continue to specialise in this sector.

Money / Issue 18 - 13

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Spending

Vanessa Macdonald is a freelance journalist in her spare time, covering a wide range of lifestyle and economic issues.

OUR SPENDING HABITS How have retail trends in Malta changed, asks Vanessa Macdonald.

VBC spokesman Reginald Fava says there were a number of reasons why its members were faring “not at all well”, ranging from the construction underway at City Gate and Freedom Square, to the reduction in parking spaces.

“To add insult to injury, the majority of the parking spaces available are coloured, thus inaccessible to shoppers,” he tells Money, noting however that pedestrianisation had a positive impact as people were able to shop with more comfort when they did not having cars whizzing by.

However, he is not convinced that development of alternative shopping centres like The Point and Daniel’s have affected Valletta.

T

he results of the first Malta Retail Review carried out in autumn last year did not surprise anyone within the industry – they merely confirmed what many retailers knew anecdotally. What they did is benchmark the situation, enabling policy-makers and retailers to monitor trends and to try to prepare for the future.

Retailing has been changing for decades, following the basic law that for each action there is an equal and opposite reaction – and there have been many forces at play. Supermarkets took over from the corner grocer, malls drew the crowds away from the high street, internet shopping drained book and record shops.

But there are also other trends which emerged from the Malta Retail Review, which was carried out by Deloitte with the help of consultancy firm EMCS, with sponsorship from Bank of Valletta, which assists in the compilation of many similar reports that help to monitor the state of the economy and its various

sectors. For example, franchises are faring much better than other operators – although franchises fared slightly better than non-franchise outlets, there was a marked move from high street outlets to mall outlets, with the former seeing a drop of 3.9 per cent and the malls seeing an increase of eight per cent between 2010 and 2011.

The shopping districts have changed drastically in a comparatively short time, thanks to demographic changes and other factors.

Valletta saw a considerable decrease of 10.3 per cent in the first six months of 2012 compared with a year earlier, losing sales primarily to Birkirkara (+9.8%), the Naxxar/San Gwann/Attard/Iklin area (+5.7%) and Gozo (+5.3%).

The Valletta Business Community has long been complaining about the downturn in business, with a number of factors adding to the trends outlined above.

“Valletta is the biggest shopping mall in Malta. The city has a lot to offer, not just shopping. However, there must be parking available for people to visit.

What we were expecting from the new bus service, in terms of punctuality and regular routes, did not materialise. The only big improvement we saw is in the environment. Other than that, not much has happened,” he laments.

He is also of the opinion that wellattended events like Notte Bianca are not as much of a boost to retailing as one might expect.

“They have an impact but not a longlasting one. People who gain a lot during such events are those in the catering business and not retailing. People who visit Valletta on Notte Bianca do so not to shop, but for entertainment. Such events do have a small impact, but definitely not a long-lasting one,” he said.

One other factor looming for retailers is changes to the Rental Law, which will affect retailers who do not currently pay

Money / Issue 18 - 15

News

commercial rents. A clause in the new law could mean that many of the retailers with contracts pre-dating 1995 could be automatically evicted within five years, a scenario that alarms the GRTU that represents them. If enacted, their rent could rise by five per cent of the current rent every year, and they would lose all rights to the property in 2028.

“Rental laws were the biggest social injustice in Malta. On the other hand, owners of premises who lease property to people in business must be reasonable and take more factors into consideration than what is incorporated in the law. Owners of premises should not adhere to the letter of the law. Changes in rental law were long overdue. Having said that, the rental laws as amended have now made people in business compete fairly with each other,” Mr Fava says.

Mr Fava, a prominent businessman, cites a number of factors which had a national impact and not one limited to the capital city. For example, the election, as expected, also had a negative impact, due to the feeling of uncertainty it instils within the population. This has always been the case with elections, and the last election was no exception, he says.

The increase in cost of utility bills also reduced spending power, which was also affected by the drop in second jobs.

Retailing is a vital sector of the Maltese economy and the insight provided by the Malta Retail Review, an update of which is expected in the near future, could not have come at a more opportune time for policy-makers.

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Record profits IIG Bank (Malta) Limited reported a very positive performance for the year ended December 31, 2012. The bank generated total revenues before tax of $1,449,174 made up of $931,582 in operating profit before tax and $517,592 in net gains on financial assets – an increase in total revenues before tax revenues of $1,049,139 or 362 per cent over the $400,035 generated during 2011.

The bank’s balance sheet also recorded substantial growth from its year-end net assets of $37.5 million in 2011 to $78.5 million in 2012, with increased activity in all areas of business. All the 2011 revenues attributable to the shareholder were reinvested in the bank in the form of Tier I capital while the board has recommended that the same policy is adopted in respect of 2012 revenues.

IIG Bank is an international trade finance bank specialising in pre-export finance of soft commodities focusing on the

16 - Money / Issue 18

emerging market economies of Latin America. Its customer loan portfolio increased from $25 million in 2011 to $40 million in 2012 while customer deposits rose from $17.6 million to $43.7 million.

Reporting on the bank’s performance, Raymond Busuttil, Managing Director and Chief Executive Officer of IIG Bank (Malta) Limited said, “The bank set out to establish itself as a niche bank which promotes a relationship-based customer service while seeking to grow in a consistent and sustainable manner, and we are surpassing our goals. We receive excellent feedback from our customers about our service, both verbally and through repeat business.

“Looking at the challenges ahead, we believe that trade finance, especially the soft commodity sector, continues to be resilient despite the crisis. In a world where economies continue to struggle, demand for basic foodstuffs is not diminished.

Prices for agricultural products do fluctuate, but typically these remain attractive enough to encourage export trade and demand for the financial support to do so. We are therefore positive that our loan assets will continue to expand in this direction while seeking geographical diversification.

“I take this opportunity to thank my colleagues for their dedication to deliver an excellent service and to our customers for their loyalty and support.”

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Economy

“The Maltese banking model is completely different, not to mention much safer, than the Cypriot one”

A The next domino to fall

s the dust settles on yet another tumultuous month for the eurozone, another victim has been claimed from within its periphery, adding further weight to the growing north and south divide that has engulfed the continent.

Cyprus, like Malta, is a small island economy situated in the Mediterranean. It accounts for 0.2 per cent of EU GDP compared to Malta’s 0.1 per cent. Both countries have strong shipping interests dating back thousands of years. The size of banking sector assets stands at roughly eight times the GDP level and the public debt to GDP ratio is 70 per cent for both countries. What’s more, the financial services industry serves as a growth driver for both economies.

Malta will not face the same Greek tragedy as Cyprus, says Patrick Debattista.

18 - Money / Issue 18

However, this is arguably where the similarities end. On the one hand, Malta is more rigorously regulated than Cyprus. The Malta Financial Services Authority has contributed to a sound regulatory environment and a safely diversified financial sector. The latter is shown by Malta’s success not only in banking but also in subsectors such as hedge funds and insurance, which offer an added dimension to the economy.

Patrick Debattista is reading for an executive MA in financial analysis.

Also, Malta is far less exposed to the vagaries of the euro currency and particularly to the recent troubles of Greek banks. By the end of 2010, when Greece was tumbling into depression, the two largest Cypriot banks held a combined €5.8 billion of toxic Greek government bonds – €1 billion more than they had held just nine months earlier and a sum equivalent to about one-third of Cyprus’s GDP. At the same time, the sole exposure that Maltese banks had to Greek bonds was some €9 million held

by Bank of Valletta. One may also point out Cyprus’s heavy reliance on dubious Russian clients, a weakness which Malta does not have.

The comparison of the relative size of both countries’ banking systems is also a misleading one. This is because the size of domestic banks in Malta represents around two times GDP, which is only 50 per cent of the average level within the EU. The rest of the banking sector, which amounts to six times GDP, is mainly composed of subsidiaries of EU banks which conduct very little business with residents, effectively by-passing the local economy. Therefore, the Maltese banking model is completely different, not to mention much safer, than the

Cypriot one. While Maltese banks are relatively small in both size and exposure, much of the banking sector in Cyprus is attributable to the largest banks – Laiki Bank and the Bank of Cyprus.

To put matters into perspective, all the Maltese core banks (Bank of Valletta, HSBC, Lombard, APS and Banif) put together hold assets worth 223 per cent of local GDP. In the UK, RBS alone holds 131 per cent of UK GDP. In France, BNP Paribas holds 101 per cent, and in Germany, the figure for Deutsche Bank is 84 per cent (source: JP Morgan). It is therefore no coincidence that the European Central Bank consistently places the Maltese banking system as the most solvent in the entire EU. Moreover, most of the exposure of domestic banks in Malta is to the government, local households and SMEs. Maltese banks have very limited positions in foreign government bonds.

They also hold more than enough cash reserves to cover their loan portfolio and adopt a very conservative approach to investment. This effectively means that, were local banks to suffer an extreme liquidity shock, government would either attempt to raise revenues

or reduce expenditure to pay back local depositors. Therefore, funds would remain within Maltese borders and no outside assistance would be required.

On the other hand, Cyprus’s significant holdings of Greek debt meant that, when this liquidity shock did arrive from its neighbour, banks such as Laiki were left with a gaping hole in their balance sheets and, as a result, no longer held control of their destiny. As early as June 2012, the European Banking Authority forced Laiki to replenish its coffers with an extra €2 billion. Under the new bailout deal agreed in March, this bank now no longer exists. A similar scenario in Malta would be hard to imagine due to these factors: the size (quantity) and exposure (quality) of local banks.

All in all, Malta has largely escaped the hardships suffered by its Mediterranean counterparts amid the eurozone debt crisis. It has followed an altogether different economic course and, as a result, carved out a name for itself as a reputable financial centre. For a tiny island with no natural resources to its name and a geographic isolation from the rest of Europe, this is no mean feat.

Timeline of a crisis June 25, 2012

Cyprus Communist former President Dimitris Christofias, makes first request for financial assistance to the Eurozone.

February 24, 2013

Nicos Anastasiades wins presidency after general election.

March 15-16, 2013

Cyprus obtains rescue package with the eurozone and the International Monetary Fund for a €10 billion bailout. It agrees to impose a one-off levy of 6.75 per cent to insured depositors (under €100,000) and of 9.9 per cent to uninsured ones (over €100,000). As Cypriots wake up to the news, panic sets in. Some bank cash machines run out of money as citizens try to avoid the levy.

March 16, 2013

Government forces closure of all banks.

March 19, 2013

Parliament rejects a redrafted levy on deposits that would have shielded savers with less than €20,000 but also fell short of fundraising target.

March 22, 2013

Parliament imposes capital controls and creates a resolution framework for winding down of banks.

March 24-25, 2013

Cyprus reaches new bailout agreement with eurozone and IMF. It involves winding down of Cyprus Popular Bank, the second-largest lender, and drastic reorganisation of Bank of Cyprus, the largest.

Insured depositors are protected, but savers with over €100,000 in the two banks stand to bear heavy losses.

March 28, 2013

Banks re-open after two-week shutdown, but capital controls and withdrawal restrictions remain.

April 2, 2013

Capital controls eased slightly but expected to remain for a long time. Uninsured depositors face a newly revised 60 per cent haircut, up from 40 per cent.

Money / Issue 18 - 19

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Shopping

Hey, gay spender The LGBT community is a major asset for cities to be the lead in economic development.

Is Malta getting its share of pink money, asks Veronica Stivala.

everyone equal regardless of their colour, orientation or religion. First and foremost everyone at the hotel is a guest and they are treated as such,” he says.

It has been argued that for a healthy economic development, the gay community is a vital asset. Richard Florida, leading American author on the rise of the creative class notes how cities attracting creative people, gays and young families to the neighbourhood are also top performers on the level of talent, technology and tolerance.

“G

ay men, we have learned from attitudinal and behavioural research, will travel more often, spend more out of home and give more attention to home design and fashion,” says Bob Witeck, chief executive of Witeck Communications, which specialises in analysing the gay and lesbian market.

Of course, this does not mean that gay men and women earn more money, but that they make different spending decisions, very often because of the fact that gay men will not have children. In fact, Witeck goes on to suggest that many gay people may end up in less-rewarding careers simply because these prove safer and more welcoming.

The term ‘pink pound’ was coined to refer to the purchasing power of the gay community. Also called pink money, the pink dollar or the Dorothy dollar in the US, the pink pound is often considered to be responsible for the high sales of specific products seen to be favoured by a large number of gay people. Think music sales of records by gay icons such as Madonna and Lady Gaga as well as travel, design, culture and other activities that encourage social interaction.

22 - Money / Issue 18

The pink pound is a powerful bloc and has a long reach – Witeck estimated the LGBT market’s buying power at around $790bn in the US last year. As a result of this companies and businesses are careful how they treat the gay community.

Statistics about the LGBT market’s buying power are less readily available for the European market and even less so for Malta. Indeed we are still far behind and there are hardly any businesses specifically targeted at the gay community save for a few gay and gay-friendly bars.

Because it is still too early in the day for official market statistics, I spoke to a number of people to get their views on the local businesses relationship with the gay community.

It is understandable how those working in the hospitality industry need to be extra sensitive to their clients.

Sven Fritzsche, general manager at the Kempiski Hotel San Lawrenz explains that the hotel staff is careful to react ‘normally’ and not surprised or awkwardly – no discrimination of any sorts is tolerated. “We do nothing in particular other than try to treat

Florida claims there is a correlation between the level of culture, creative jobs in a city and its gay population. A major factor is that creative gay people will relocate to cities that are open and tolerant and that offer an inspiring environment for their work. However, in order to facilitate economic growth, generating, attracting and retaining talent is not enough. This talent needs to be transformed into new ideas, new jobs and more sustainable development.

Toni Attard, creative economy advisor at the Ministry of Finance, transposes Florida’s ideas onto Valletta and argues how the city can benefit from a creative community, some of whose members are gay.

“With a high concentration of cultural infrastructure and inspirational beauty in the city, Valletta can benefit from temporary and permanent residency of creative people who appreciate, understand and are willing to contribute to a culture-led and people centred regeneration of Valletta. This area together with the Cottonera area are the ideal bohemian spaces that Florida mentions as necessary for the creation of a vibrant creative community,” he says.

Attard is one of the lead advisors behind The Creative Economy Strategy which proposes a number of initiatives to stimulate a culture-led regeneration in Valletta. These include tax exemption for the creation of artistic works in Valletta, creative studios, tax exemption on income derived from copyrights and

ensuring that investment programmes deliver a strong message of an open, diverse and inclusive culture.

Ray Calleja, artistic director at the Monaliza lounges in Valletta and St Julian’s notes how the attitude towards gay bars is slowly changing for the better. Whereas in the past gay bars were almost underground establishments, hidden away and looked down upon, social establishments for the gay community are slowly making a more prominent name for themselves.

Described as ‘gay friendly’ the Monaliza lounges have taken such establishments out from the gutter as it were and out onto prominent locations. This, he says, has been received very positively.

“People are so grateful that they have a beautiful place with stylish décor to hang out in,” he explains.

However, Calleja is adamant to point out that although the Monaliza lounges are gay-friendly, assigning such labels is not the best approach as it signifies exclusion. Bars, cafés and so on must be simply be open to all.

“Our policy at Monaliza is that our doors are open to everyone. We don’t want to create ghettos – we celebrate everyone,” he says.

Admitting that “we do cater primarily for the gay crowd”, Calleja confides that to limit the audience to gays would be financial suicide. “The business would collapse.”

He notes how the pink pound is still relatively elusive in Malta. Businesses specifically targeted at gays are few and far between – however there is a certain camaraderie and support among the gay business community, explains Calleja.

“We help promote each others’ events, parties and sell tickets,” he explains.

Both Calleja and Attard agree that any such initiatives cannot operate in a social policy vacuum. It is only with the introduction of civil union and more LGBT rights that a strong relationship between culture, creativity and the gay community can truly become a dynamic asset for Malta’s cultural diversity and economic development.

Show me the pink money According to photographer and architect Kris Micallef, a large percentage of gay men share a common interest in aesthetics, design, culture, travel, dining and other activities that encourage social interaction.

“I spend most of my money on travel, dining out, photographic equipment, clothing and fuel because I drive around the island quite often,” he says.

“One of the best things one can do to relax, meet new people, discover new things and make the most of life is to travel. Last year I went to Sweden, Holland, Spain and Ukraine. This year I already have plans to travel to Israel, Libya, Gibraltar, Spain and the UK. “Most of my travel plans are work-related – however I like to make the most of them by exploring the culture, going to exhibitions, meeting new people, taking pictures and trying out new food. I never regret my holiday spending – I see it as a great investment for a healthy, creative and adventurous lifestyle.

“I often end up in long discussions with friends regarding aesthetics and design – be it architecture, interiors, graphic design and fashion. Beauty is in the eye of the beholder they say – but I don’t think this applies to everything. Intelligent design is very important and I would not mind paying extra to own something that looks better, provided the quality is also superior. This applies to buying clothes, interior design, haircuts, grooming products, services and other everyday necessities.

“Locally we have some great architecture practices that are doing a brilliant job in introducing contemporary architecture and interiors and also promoting the upkeep of existing local historical gems. My only wish is that more large-scale projects that influence Malta on a national scale are given to these innovative architects as they have the knowledge and creativity to beautify our islands.

“Malta has great potential in becoming a gay destination. It’s easily reached, the

climate is great, the culture is rich, there is always something happening and the people are very welcoming.

“I think Malta is slowly gaining momentum with gay bars that have been established for a number of years, both those official and non-official (bars that are gay-friendly and welcome diversity), and also a few small event organisers that organise gay parties throughout the year, often attracting tourists to book a trip to Malta during that period.”

For blogger Alison Bezzina, currently there aren’t many businesses that specifically target the pink or blue pound.

“Except for a few clubs and bars scattered around the island, the gay community is not often targeted by businesses. And as far as services and products go I can see why.

Gay people don’t eat differently, wear different things or drive different cars. The gay community, like the rest of society, is made up of a mix of people with different tastes and needs.

“However, there is an untapped market out there – the first businesses to recognise the value of this community and their strong need for representation will benefit greatly. It’s one thing to feel accepted by a business, but it’s a whole new level of engagement if you feel that a business is either specifically catering for you, or is going out of its way to make your cause seem worthy.

“Being gay-friendly is expected in today’s day and age, but going the extra mile to make this a public value that your business treasures, is another. Doing so would make gay, gay-friendly and liberal people consider the services of that business over those of others that sit back and say nothing.

“Where do I spend my money? I have straight friends who live the same lifestyle as I do, and a lot of gay friends whose spending patterns differ greatly. I think it’s more a question of kids and family, rather than sexuality. Kids change your spending patterns – your priorities change and your earning power is usually also affected.”

Money / Issue 18 - 23

Dr Edward Duca is a freelance science writer, editor and communicator with a Ph.D. in Genetics.

Economy

Honesty for the economy Behavioural intervention can help consumers make wiser choices, Professor Liam Delaney tells Dr Edward Duca.

A

round 1,600 people died on American roads 12 months after the September 11, 2001 terrorist attacks.

Americans were fearful of airplanes, which are safer than car travel. “Would you like to supersize that?” was infamously linked to McDonalds till indie documentaries made it unpopular. The US ranked sixth most obese country in the World in a recent BBC global fat scale (Malta came ninth, above the UK). Many people in developed countries live on payday lending, borrowing short-term loans at high interest rates and paying it back at the end of the month.

At times people act irrationally, instinctively and only considering their shortterm goals.

Such irrational thought goes against traditional economic theory. In its strong version, it considers humans as effortlessly processing all data and making the

best choices for themselves.

Weaker versions consider that we make mistakes, but not repeatedly, or that market forces coerce us to act rationally. Clearly, the above examples stand out, so I meet up with Professor Liam Delaney (University of Stirling) searching for an answer.

“I think the notion of individual rationality doesn’t even make sense anymore […] without considering how options are being framed to them,” says Prof. Delaney.

Nowadays everything is framed for us: online shopping is rife with recommended listings, mobile tariffs, pension schemes and loans. Absolutely everything has options, upgrades, and other categories all seeking our attention. The consumer has little hope of rational choice.

“It’s not that people are irrational, or being stupid, […] it’s just not the way

that people make decisions, they don’t factor far off consequences.”

So what can be done to help consumers make better choices?

“We should more actively shape consumer choices and make the default options better,” suggests Prof. Delaney.

In pensions, some economists are advising “opt out instead of opt in” options, while “fast food outlets shouldn’t be asking you whether you want to upsize but framing it so that you take the lighter option.”

This technique is called behavioural intervention and can help shape consumer choice.

Prof. Delaney suggests another two options. These also come from the field of behavioural economics, which looks at the psychology of how people make economic decisions and how they affect markets. His speciality is

pensions, funds and any area that needs long-term projections. The other option is educating people to make the better choice. The final one is forcing mandatory changes. Simply put, do not allow people to buy these products because they are bad for them. Prof. Delaney suggests that regulation might be the best approach for the very big issues like obesity, pensions, the financial crises and so on.

“UK Prime Minister David Cameron has just set up a behavioural insights team in the cabinet — this is a group of psychologists, social marketers and economists and it’s a very innovative thing,” says Prof. Delaney.

But why should a conservative government introduce more regulations?

“Since budgets are limited, some countries are embracing that we have to come up with better ways to spend it, which could be very good.”

Money / Issue 18 - 25

Economy

In the UK, this team has already helped reframe how energy bills should be provided to people. In the UK, there are currently tens of thousands of tariffs – now they are regulated to provide people with the cheapest tariff.

“Both Malta and Ireland have public health systems, so if someone is getting more obese, more heart disease and diabetes, that affects everyone So, it’s not a matter of personal choice,” says Prof. Delaney.

If the UK has adopted this approach, should Malta follow suit? That’s an open question. The approach is new and tip toes between mandatory and nonmandatory. It could just make the market work better.

Personal choice clearly isn’t working. Malta ranked number nine on a global fat scale. Though these rankings change, Eurostat revealed in 2011 that Maltese women are the second most obese in the EU and men top the EU rankings. The Maltese are making some very irrational food choices.

“It makes people feel more secure,” says Prof. Delaney.

Companies already give consumers all the information they need. The problem is that most people cannot, or do not have the time, to understand hundreds of options.

“They should be explained to you in a way as if you’re explaining it to a 12-year old,” says Prof. Delaney. He’s not being derogatory – he is emphasising communication.

It is key, not only in marketing and advertising, but also for people to make the right health and financial choices.

Obesity is a huge problem and is an example why we need regulation. In the US in 2011, obesity cost individuals $6,518 to $8,365 more per year.

For the UK, obesity’s impact on the economy could reach £27 billion by 2015 according to a Foresight report.

Even Harvard is recommending prevention to stop excessive economic strain on countries.

“The food industry is starting to realise that this is something that could rebound on them if the public and politicians start to think that it is popular for the food industry to be seen as the bad guys.”

In the long run, companies could suffer excessive regulation. Most people already know what they should do: cut down on the pastizzi, fast food, and meat, eat more vegetables and fruit, and exercise and so on, but less are doing it.

The problem with obesity is evolution. We’re designed to love sweet, salty, high-calorie food to fatten up when times are good and burn it off when

crops fail. We have a lot of baggage from our evolutionary history. Fast food chains have only been around for the last few decades and it’s harder to make healthy food taste as good for the same price.

Against millions of years of evolution, what hope do consumers have?

Essentially behavioural economics argues for pilot studies. When introducing policies or regulations, governments (or other bodies) should be running small level trials, analysing the results and building on them. Liam explain, “there isn’t a perfect equation and

“Governments and companies need behavioural economics because it will help shape the most effective regulations for all.”

“This is were behavioural economics fits in, which traditionally has not been on that side. It’s traditionally been thought that people in public health should think about these problems not economists. If you think about it, it’s resource allocation and organisation of public spending. These are fundamental questions of economics,” explains Prof. Delaney.

Governments and companies need behavioural economics because it will help shape the most effective regulations for all, and the stakes are very high.

“It’s not the apples and organs tradeoffs we teach students, but this will shape the pattern of society in the next 10 to 20 years.”

still a lot of experimentation, some things work well and some things don’t work.

“We need to redesign our institutions to work towards the future. We just need to find political leaders who can look beyond a five-year cycle.

I don’t think it’s that utopian a vision, but common sense.”

I’m not sure if behavioural economics would prevent more car deaths or terrorist attacks but it could help solve the challenges of the financial market, health problems and pensions.

A longer version of the interview is included in the next issue of THINK, the University of Malta’s research magazine.

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26 - Money / Issue 18

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For more information contact Shireburn Software on 2131 9977 or sales@shireburn.com Money / Issue 18 - 29

Interview

Turning the page

Albert Mamo has retired from his executive position at GasanMamo Insurance. In his last interview with the media, he recalls his 47 years in the business.

and therefore this was the opportunity to embrace change in the light of our experience since then.

M What do you believe is the legacy you leave behind?

AM I leave a strong and cohesive management team that has all the abilities to take the company forward.

M What company culture do you

leave behind?

M What made you choose a career in insurance?

AM In reality the choice was made for

me – I started working in the family business on October 1, 1965 after 10 years as a boarder at St Edward’s College.

When I retired from my executive position on March 31, the day following my 65th birthday, I had been working 47 and a half years – a long time.

M How was your succession planned?

AM I first informed the Board of my intention to retire my position in 2011 – during the discussion it was agreed that Julian Mamo and myself, the two Executive Directors, were to prepare a paper proposing how the succession could fall into place to ensure that there was overlap in the structure that would minimise vulnerability for the company.

This paper was approved naming Julian as my successor – from there we worked together in taking this forward.

I immediately informed the MFSA and senior management of these anticipated changes and started the process to affect the changes. I also informed all the staff in my Christmas message as they had a right to know before it became public knowledge. During 2012 a number of appointments were made that endeavoured to ensure the strengthening of senior management – this took into consideration the substantial changes that have happened over these past 12 years in our sector, and those that are still due to take place in the coming years.

Our management model had not changed from the GasanMamo merger in 1999 30 - Money / Issue 18

AM I leave behind me a continuation of a culture of integrity, which I believe is a fundamental of life, but especially in your business life, and in particular in financial services.

M What have been the major corporate hurdles that you have overcome in your career?

AM The first was when I became Managing Director of Galdes & Mamo Ltd. in 1990, under tragic circumstances and with no hand-over. I was terrified and I remember one afternoon, shortly after, I was with a good friend of mine and I expressed my fears and he told me that he had no doubt that I would rise to the occasion. Those words were an incentive for me to take up the baton .

The second was when we lost our principal and we had very limited options for our future – one morning in early 1998 I received a phone call from Joe Gasan to meet for lunch and he proposed a merger of our two insurance agencies. We had four negotiating meetings, commissioned a technical report, agreed, and the rest is history.

The third was when in 2001, when we had just settled from our merger, our principal informed us that they had decided to pull out of most overseas markets. They gave us time and support to decide whether we wished their assistance to find another overseas principal or whether to take the plunge and become an insurance company, definitely recommending the latter. We took the plunge with effect from January 1, 2003. During these 10 years we have never had one moment of regret.

M How has the insurance market evolved since you started working?

AM I’m not going to go into the early days, so I will limit my comments to these past 22 years. Three things stand out most of all, the first being the drastic change in the number and type of insurance providers in the market, the second is the immense impact of ICT on our operations, and the third is the level of regulation.

The first change relates to the fact that in 1990 there was only one local company that still operated under the legal cession system whereby 30 per cent of any business underwritten by local operators had to be ceded to it. All the other operators were agency operations of overseas principals, predominantly British companies. Over the next decade many of these principals merged among themselves causing knock-on effects on the local agencies. In due course during the first decade of the 2000s the mold of today was finally set whereby a number of leading agencies, some following their own mergers, became principals in their own right so that today we have some 90 per cent of insurance business in Malta being underwritten by Maltese registered companies in their greater majority supported by Maltese shareholders.

The second is the impact of ICT. This has created an operation in itself and today we have eight people in the ICT department alone.

The third is the immense change in the regulatory regime which is today a task in itself. During the 1990s the legislation relating to insurance was twice changed and updated to what fundamentally we have today – this is a much more robust set of laws. This impact increased substantially once we became an underwriting company in 2003, then again once we joined the EU as they absorbed the EU directives, and will increase further once the provisions of Solvency II are in place.

As a company we believe in regulation – however we are also realists and the overall cost of compliance has become an important element of one’s budget. We must keep in mind that fundamentally it’s the integrity of the individuals in the industry that counts not the level of regulation.

M Do you believe that the local market reflects the larger international markets?

AM Fundamentally yes but with its own particular twists – what I say here is limited to the general business market not any other branch. I believe that the overall size of our market limits some of the products on offer due to the low take-up that would limit the financial depth of such offering making it uneconomical. This would therefore have to be counterbalanced by higher pricing or limited cover to be viable, making it uncompetitive.

Very often this is interpreted to be cartel-oriented behaviour when in reality it’s basic economic fundamentals.

We have a free and competitive local market that offers products at very competitive prices. What happens is that generally speaking people become more risk aware and therefore require more insurance protection. Furthermore the value of insured items increases due to inflationary trends – since insurance premiums are generally rate based, the cost will go up, but the cover is usually also wider.

This interprets itself as the cost of insurance ‘always going up’ which is true but cost and price are very different things. Generally speaking there have not been any upward price movements in over 10 years in our market – in fact it’s the reverse in many areas. This is the fruit of oversupply in the local market which in any market economy always works to the benefit of the consumer.

M Where do you see GasanMamo

going under such market conditions?

AM Growth in this business is

fundamental – when one considers that some 64 per cent of our budget is salary related, which together with most other expense items are always on an upward trajectory, this has to be made up by increased revenue. You can only do this by either increasing prices or increasing premium income. The first is difficult in the current market conditions, therefore can you achieve the second without winning business at uneconomic pricing?

In comparison to the EU average the local market demand is much lower therefore there may still be scope for

introducing some selected new lines of business. However, this will manifest itself slowly since demand for insurance is mostly in response to legislative or social change and in many aspects we as a nation change very slowly in both .

As a company we have during the last few years taken advantage of our EU membership and adopted a policy of trying to seek out small niche opportunities overseas. We see many proposals but accept very few as in overall EU terms we will always be a small player in a much larger pond and therefore have to be extremely cautious.

The problem with our business is that negative effects are not immediately visible until it’s too late to make amends, or if still in time they may have to be drastic. GasanMamo senior management have developed robust reporting systems that allow us to hopefully be able to see further than some of our competitors.

M In the past two decades you have been very active in the Malta Insurance Association – what was your role?

AM As a company we have a long history of involvement and support in the work carried out by the MIA. This is the principal trade body of the underwriting aspect of insurance in Malta and over its circa 60 year history has built up a reputation for integrity of purpose. It’s also an active member of InsuranceEurope.

The MIA today has an important function to dialogue with the Government and other State bodies that have a regulatory or legislative function to ensure that any changes coming out of Brussels, or indeed Malta, are managed effectively.

I have been privileged to have served three terms as President, the last time being extraordinarily extended to a third year by unanimous agreement of the members to enable the termination of a complex exercise in the restructuring of the MIA terminated two years ago. The MIA is one of those entities where for you to benefit you have to participate – as a company we do this willingly and apart from the fact that we are among the largest financial contributors we also have a number of our people who participate actively in, and indeed lead some of the various general or sectorial committees. This is worthwhile

investment and we are committed to it as we see this as an important instrument in the continued development of the local insurance market.

M Do you have any words of advice to young people joining the work force?

AM Whenever new members of staff joined our company I always made it a point to meet them within the first two weeks of their joining – during such meetings, I always told them that if they remembered two points from this meeting it would serve them all their life.

The first was that in the business of financial services, they needed to keep in mind that I was not their employer but it was the person sitting in front of their desk, or who was on the other end of a telephone line, who was their employer and who therefore deserved their respect and good service. The second was that in our business the key to their personal, as well as the company’s future, was their individual and our collective integrity.

M What are your plans for your immediate future?

AM I will remain a non-executive director of GasanMamo and will continue to be the driver of our Solvency II project since I now have the mileage for this. I have just been appointed an independent nonexecutive director of a company that is just about to IPO which is in a business that is totally new to me and which I believe will be an interesting experience. I will also for the moment remain chairman of a number of family companies.

I have also been accepted to join Din L-Art Helwa as a volunteer in connection with the restoration of the church of Our Lady of Victories in Valletta. I’m also on the Board of Governors and the Finance Committee of St Edward’s College which allows me to give something back to the place I practically called home for 10 years. I’m also involved in a particular committee of the MIA which has an expected life to June of 2014 when the annual general assembly of InsuranceEurope will be held in Malta for the first time.

I also want to dedicate more time to reading for pleasure and give more of my free time to my family. This should keep me more than busy.

Money / Issue 18 - 31

Retail

Celebrating excellence

Providing an exceptional shopping experience every time is a critical success factor, says Lionel Lapira, CEO Plaza Centres plc.

provides customers a seamless experience through choice and the service offering.

What have been your major milestones during these 20 years?

The Plaza Commercial Centre was the first of its kind in Malta – how has it developed since it first opened?

The company’s origins date back to 1957 when the site where the present commercial centre is situated was developed as the Plaza Cinema. In the late 1970s and early 80s, the number of cinema patrons fell dramatically and the directors decided to close their cinema operations in the late 1980s. After carrying out research we identified a niche in the market and developed the site into the country’s first managed shopping and office leasing centre.

The Plaza was inaugurated in December 1993 and has since earned a reputation as a one-stop shop for quality goods and services and its choice of local and international names. At first the average shop dimensions were between 50 and 100m2, with the exception of a department store that occupied an area of 900m2. Following the influx of foreign brands, demand changed and the outlet dimensions were modified to between 100 and 200m2.

From your experience, can commercial centres co-exist with high street and independent stores?

Commercial centres of various forms have existed for centuries. For instance, the Grand Bazaar in Istanbul, Turkey, has co-existed with open air markets for centuries – this shows that high street shops and commercial centres can co-exist.

During the past 10 years, Malta witnessed a dramatic increase in high street shops and in Sliema’s case, the opening of Malta’s largest shopping mall in the area strengthened the town’s position as the top destination for shopping and leisure in the country. Competition creates a healthy environment where consumers are spoilt for choice – the co-existence of shopping centres and high street shops

Our first milestone was to achieve and maintain high occupancy levels and a sustainable competitive advantage – this led the company to share its success with the public. In 2000, the company issued shares to the public and the offer was oversubscribed within 24 hours. The timing of the public offering was designed to coincide with the completion of the first extension to the commercial centre and the public shareholders shared the additional profits generated by the new extension.

Our company embarked on two further extension projects in 2008 and 2010, increasing rentable area by 4,000m2.

How have shopping habits changed in the past 20 years?

The need for a sophisticated approach towards managing and marketing shopping centres and retail outlets is greater than ever. The market is facing competitive rivalry and the threat of new entrants remains high, whether building new shopping centres or opening new high street shops. This does not necessarily mean that success is guaranteed. However, in this environment the bargaining power of customers is high and our company had to re-align and adapt its core competences to maintain a competitive advantage over competitors.

Shopping is also a means of socialisation and shopping centres have become a focal point for social contact. The online shopping phenomenon has spurred this industry to create the right environment to attract customers back to their centres.

To an extent, this was achieved through promotions, activities, interaction with customers and the social media as well as by offering customers live entertainment and rewards.

What do customers expect from a shopping mall?

Customers have become increasingly demanding and service-conscious – consequently, the provision of an exceptional service experience every time is considered a critical success factor.

The Plaza continued to build on its

achievements by improving the service offering and adopting a philosophy that a unique location must create an exceptional opportunity which would assist its tenants to achieve success.

On the other hand, achieving customer satisfaction and loyalty requires years of investment. Two decades after it opened, The Plaza and its tenants continue to anticipate, adapt and change according to the changing market.

To ensure a positive shopping experience, retailers and shopping centres need to understand their existing and prospective customers’ mindset. In the electronic world we live in, consumers utilise multiple channels to source products and services and enjoy the comforts of browsing, reviewing and purchasing with ease from home or mobile phone. In this scenario, the demands on shopping centres to develop effective customercentric strategies are greater than ever. To achieve this objective, centre managers and retailers utilise information obtained from various channels in their quest to understand their customers’ insight and then shape their strategies accordingly.

What added value do your tenants get from operating from within The Plaza?

Added value may be analysed from a number of aspects. Here, we will focus on the synergies enjoyed by our tenants.

Undoubtedly, a cohesive group of retailers forming part of a shopping centre offer more added value than the sum of its individual members. Plaza’s management is responsible for planning, managing, marketing, entertaining, maintaining, providing security, cleaning and addressing health and safety issues.

This allows our tenants more time to manage their outlets and focus on their marketing objectives. Plaza’s 20-year experience and reputation in the field is another benefit and our tenants are assured that their needs have been thoroughly tried and tested.

What do you have planned for your 20th anniversary celebrations?

On December 3, 2013, The Plaza celebrates its 20th anniversary.

We planned a number of initiatives throughout the year to thank and reward our loyal customers. More details will be announced as the date approaches.

Money / Issue 18 - 33

Banking

Looking to the future Bank of Valletta recently organised an intensive two-day workshop for 150 of its top executives to discuss the trends in retail banking. Vanessa Macdonald, BOV Head Media and Community Relations, explains how things have changed.

T

hink of a bank and what image pops into your mind? It is almost certainly a branch – however, look at the photo of CheBanca in Italy and it is a far cry from the bank branches of the past.

Technology and the internet have caused a major change in the way we use banking services. In the past, the bank branch was split between cashiers with long queues and the branch manager who presided over all the major decisions involving loans. Over the years, debit and credit cards took the pressure off cash and cheque payments, ATMs made it possible to withdraw cash and deposit into your accounts, and internet banking made it possible to pay your bills, transfer money and check your account balance.

The latest development is mobile banking which allows you to do these last three tasks from your smartphone.

Vendors can also get paid by a transaction on a mobile phone.

What does this mean?

Customers are able to do their banking and they can now also manage their finance from wherever they want to.

Some customers still go to branches to deposit cheques and withdraw cash but more and more opt for the

34 - Money / Issue 18

CheBanca

convenience of the alternative channels and only seek help from branches when they require a more complex service or personal advice.

The shift from cash handling to advisory focus has been swift in some countries, albeit ones with a very different culture to that in Malta. In 2009, one particular Scandinavian bank had 93 per cent of its branches as traditional fullservice branches – this figure fell to 18 per cent by the end of 2012 with the rest shifting to advisory services.

Some banks are taking active measures to help their customers adopt more convenient channels like internet and mobile banking.

An Eastern European bank increased the use of internet banking from 17 per cent to 21 per cent in just one month, merely by having a demonstration screen in the branch and an assistant greeting customers and advising them which of the services they required could be done online. As a result, the queues at the cashiers were reduced by 21 per cent.

More impressive is the situation in Sweden, where 78 per cent of customers use online banking, and only 19 per cent use branches (EFMAMcKinsey Study).

This shift has had some impact on the actual number of branches but one of the most interesting things is that this was not nearly as great as you would imagine. What has happened is that branches have focused on what the customer wants – advisory services. The Scandinavian bank mentioned earlier reported that in the new format, average time with customers increased by over 58 per cent, enabling them to understand the requirements, explain the options and build the relationship.

The key word is “relationship”. Nowadays, banks know that customers use several services and that what they want is a service that works around their requirements and not vice-versa. What they want is to have one person, the relationship officer, who knows their story and understands their requirements.

Branches are now more likely to be the second link in the chain, with the website being the first touchpoint and possibly the end point for the service being required.

What does this mean for Bank of Valletta? Branches were and always will be the lifeblood of the bank and relationship banking has

always been at the core of our operations, so we are well set for the future. We were the first in Malta to offer alternative channels – internet, ATMs and mobile banking – and we are improving our website and expanding our social media presence.

What customers will notice is a shift towards an even more personalised service. We are responding to changing customer needs, making sure that our service model reflects today’s realities. A number of investment centres are being opened to give investment advice, while the bank is restructuring the Home Loans Unit and Personal Loans Unit, in line with the approach that one customer may have multiple loans so he or she should have one reference point for all of them.

All this is being backed by innovation as IT creates seamless access to data and new functions are added to our internet and mobile banking services.

Bank of Valletta aims to be intuitive, intelligent, accessible and customisable, with the ability to add new products and services which will simplify our customers’ financial life and continue to shape the local financial services industry.

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Consumers

Odette Vella is a senior information officer at the Office for Consumer Affairs, Malta Competition and Consumer Affairs Authority.

Consumer confidence

Trust between consumers and traders is the sign of a healthy business environment, says Odette Vella.

T

he Malta Competition and Consumer Affairs Authority was set up two years ago, in May 2011.

This authority amalgamates the former Consumer and Competition Division and the Malta Standards Authority.

The primary objective of the authority is that of ensuring that markets function properly for the benefit of both consumers and traders. Trust between consumers and economic operators is imperative and crucial in attaining a healthy business environment that safeguards consumers’ and traders’ interests. Another major function of the authority is to promote customerfriendly business practices, and to adopt and co-ordinate standards and technical regulations in relation to products or services.

These objectives are carried out by the authority’s four independent entities, which are the Office for Competition, the Office for Consumer Affairs, the Technical Regulations Division, and the Standards and Metrology Institute.

The Office for Competition has the responsibility of promoting and enhancing effective competition in all sectors of the economy. This office is also entrusted in applying and enforcing the Competition Act. The Office for Consumer Affairs is mainly responsible for creating awareness of consumer rights by providing information and guidelines to the general public. It also assists consumers with complaints related to the purchase or hire of goods or services, and it enforces consumer protection legislation. This office also monitors trading practices related to the provision of goods and services to consumers.

The Standards and Metrology Institute has the main role of providing various technical services to industry, consumers, government and other interested parties. It is also responsible for the transposition of voluntary

standards and standardisation related services such as certification.

The Technical Regulations Division is responsible for the transposition and implementation of European legislation on products. It is also responsible for product safety and it must ensure that only safe products are placed on the market. The Market Surveillance Directorate within this division inspects and monitors the market in this regard.

This office has the authority to recall and withdraw dangerous products and to take legal action against operators who place unsafe products on the market.

Consumer confidence is another major objective of the MCCAA. Consumers buy and spend more when they feel that they can trust the trader. Consumers need to be assured that the seller from whom they are buying is selling them good quality products and services that give them good value for their money.

Consumers also need to feel confident that should a problem arise with the product or service purchased, the seller would assist them in finding the best possible solution with the least hassle.

Sellers and service providers also need to trust their customers. They need the assurance that their clients won’t pretend free of charge solutions to problems they have caused themselves through carelessness and misuse.

Consumers should be aware of their legal rights so as not to make demands for compensation they are not entitled to.

The Trust Mark Scheme facilitates the building of a good relationship between consumers and traders based on trust. The scheme enhances consumer confidence in genuine businesses and organisations that are willing to commit themselves to provide their customers with the best possible products and services.

Entrepreneurs and service providers who opt to subscribe to the Trust You

Scheme commit themselves to abide by the local regulations and also that they will be complying with the contents of the scheme’s code of conduct.

The code covers the whole service and product acquisition cycle. A sale starts from promoting and advertising the products and services for sale. The code of conduct stipulates that sellers must advertise and provide information in a way that does not mislead potential customers. The price plays an important part in the pre-sale information, hence the code specifies that sellers are to indicate or quote prices that are allinclusive.

The next stage is the negotiating stage where the seller and the buyer come together to conclude the sale. During this stage good communication with customers, before a sale is concluded, is fundamental. It allows sellers to understand customer requirements and hence provide them with the goods and services they need.

Then there is the actual purchase and finally the after-sales service. The latter is one of the main elements that can build or break trust between sellers and buyers. The code of conduct focuses a lot on after-sales. It states that sellers are to provide an adequate after-sales customer service. Sellers are to adhere to agreed commitments and in case of complaints must ensure that these are dealt with efficiently. Furthermore, they are to avoid if possible that disputes are referred to the Consumer Claims Tribunal by opting for resolution through mediation.

The Trust You Code encourages those signing up to the scheme to promote a customer friendly relationship and also to do their best to ensure that their premises are accessible and safe.

The Malta Competition and Consumer Affairs Authority monitors the behaviour of subscribers to ensure that

Money / Issue 18 - 37

Consumers

the code of conduct is properly observed. This monitoring is conducted through consumer complaints received and mystery shopping visits.

Participants who fail to adhere to the established code of conduct will be removed from the scheme. There will also be a suspension time before defaulting participants will be allowed to re-apply.

The Trust Mark Scheme is voluntary and is open to large and small enterprises, service providers, and nonGovernment organisations, that sell products or provide a service to consumers. To sign up participants need to fill in an application form and send it via e-mail at info@mccaa. org.mt or by post.

A certificate and stickers with the Trust Mark logo will then be sent to applicants and these must be displayed in a prominent place in the establishment where consumers can see them. Each year new stickers with the Trust Mark logo will be issued to indicate the current year.

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38 - Money / Issue 18

For more information about the Trust Mark Scheme contact the MCCAA at info@mccaa.org.mt or on 2395 2000. This article is intended for information purposes only. Any legal claim or action taken in the event of a dispute should be based solely on the legal texts concerned.

Going trans-Atlantic Emirates will launch a direct service between Milan and New York, the airline’s only trans-Atlantic service, from October 1, 2013. Linking Italy directly with America, the new route will allow Emirates to capitalise on the significant traffic flow between these cities.

Emirates has timed its flight schedule to ensure maximum connectivity for other key feeder markets. Customers will be able to maximise the airline’s frequent flyer partnership with easyJet, seamlessly connecting through Milan to New York. On arrival in the US, customers can then take advantage of Emirates’ partnership with JetBlue enabling connections across the US, including the West Coast.

Operated by a Boeing 777-300ER, the flight will be an extension of one of Emirates’ existing three daily, Dubai to Milan flights.

The service will originate in Dubai with passengers then able to enjoy a stopover in Milan en-route to New York. On the return flight, passengers will have the option of stopping in Milan before continuing on to Dubai.

Emirates flight EK205 will depart Dubai at 09:05hrs arriving in Milan at 13:50hrs, the flight will then depart Milan at 16:00hrs arriving in New York at 19:00hrs the same day. The return journey on flight EK206 will depart New York at 22:20hrs arriving in Milan at 12:15hrs the following day before departing for Dubai at 14:00hrs, touching down in Dubai at 22:05hrs.

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Market Report

The Japanese trap Meagre GDP growth, high debt levels and an ageing population – is the world’s third largest economy doomed, ask Chris Grech and Calvin Bartolo.

stimulus package focusing on public works worth $117bn, equivalent to 2% of current GDP levels. Abe advised the Bank of Japan to increase its inflation target to 2% and pushed its conservative governor aside. In his stead he appointed self-declared whatever-it-takes man Haruhiko Kuroda, the Japanese version of Mario Draghi.

Kuroda announced he will increase money supply sharply and broaden the range of assets the Bank of Japan will purchase, a move which is reminiscent of the quantitative easing programmes rolled out in Western economies.

T

he Japanese population has been living in a state of stagnation since their bubble burst on New Year’s Day way back in 1990. Japan is now cursed with sluggishness, deflation and a burgeoning government debt. In 2012, net debt in terms of GDP stood at 135% (Japan distinguishes between net and gross debt. Gross debt as a percentage of GDP includes amounts borrowed from government agencies.

Gross debt as a percentage of GDP reached 236% in 2012).

Even though the Japanese government ran deficits of roughly 9.5% of GDP between 2009 and 2012, the real GDP

40 - Money / Issue 18

on average grew at a meagre rate of 0.75% per annum.

The shift in demographics is Japan’s Achilles heel.

Japan applies restrictive immigration policies and its population is ageing very fast.

Indeed, the high debt levels are primarily driven by huge pension outlays and a series of failed attempts to stimulate a stagnant economy for the last 20 years.

Shinzo Abe, a right wing nationalist and the Prime Minister of Japan since 2012 set out ambitious plans to put the economy back on track. Abe announced a

The strategy appears promising. The Nikkei 225 index surged upwards and the Yen weakened, which consequently boosted exports. Abe then tactically asked the large Japanese companies to pay higher salaries and bonuses – which they accepted since Abe’s initial moves increased their profitability. In a deflationary economy, wages do not increase and consumers typically postpone consumption because products become cheaper by the course of time. Large corporations paying salary rises increase inflationary pressures and this should

induce consumers to spend now rather than later. If inflationary expectations indeed become entrenched in consumer behaviour, Abe might manage to pull out the Japanese economy out of its long stagnation.

However Abe’s strategy brings with it a number of challenges. For starters, the public works plan is only a political move. A series of administrations over the last 20 years have attempted to stimulate the Japanese economy on many occasions but all failed to kick-start it.

Indeed, Hida, et. al. (2008) estimate the fiscal multiplier of Japanese public investment programmes at 1.1 and this means that the effect of government spending in Japan does not create the desired ripple effect required to utilise unused capacity.

Many academic studies attempted to explain the reason behind such a low multiplier and even though inconclusive, reasons cited include the openness of the economy, a high propensity to save and crowding out effects.

Secondly, inflation will rob the elderly from returns earned on their current holdings yielding low fixed income returns. The yield of a 10-year Japanese government bond currently stands at 0.66% per annum and this

Chris Grech and Calvin Bartolo are co-founders of blackdigits.com.mt, a financial website which allows users to analyse the financial statements of local listed companies. Data is available for free. The aim of blackdigits. com.mt is to create a community-based website where users may share their views and knowledge on companies listed on the local market.

rate factors into consideration an expected deflation (i.e. the real return is 0.66% plus the increase in the value of money driven by deflation pressures). If inflation increases to 2%, a holder of a 10-year government bond would effectively lose every year since a return of 0.66% would not even cover the deterioration of investment eaten by inflation.

Inflation will not only

We analyse this aspect in Table 1 in which we set three scenarios. Scenario 1 captures the current situation whereas Scenario 1.1 and 1.2 simulate the effects of an increase in inflation and fiscal stimulus.

According to the Japanese Treasury website, the total issuance of government debt for 2013 is expected to amount to 170.5 trillion Yen and this accounts for 18% of the current government

inflation will increase the cost of servicing debt by 2.7% (135.4% x 2%) in the long term. If GDP levels do not rise, the increase in borrowing costs would push the government deficit to an alarming rate of 12.4%.

Paul Krugman, an economics professor best known for his work on international economics states that unless one can make a convincing case that fiscal expansion will increase demand, the only way to expand the economy is to reduce the real interest rate by creating inflation expectations. Krugman therefore backs Abe’s policies and given that fiscal stimulus in Japan

While the deficit for 2013 under scenario 1.1 increases marginally from 9.7% to 10% as a percentage of GDP, the result is not the same in scenario 1.2 where we

Debt as % of GDP*

Additional cost of servicing debt as a % of GDP

Deficit as % of GDP

Scenario

Description

Nominal GDP (Scenario 1 = 100)

1

As at 2012

100.0

135.4%

–

9.7%

1.1

As at 2012 + 2% inflation

102.0

132.7%

0.49%

10.0%

1.2

As at 2012 + 2% inflation + stimulus

104.2**

131.9%

0.54%***

11.7%

Table 1. Source data for Scenario 1: IMF, Ministry of Finance (Japan) * Government debt in absolute figures does not decrease but government debt in terms of GDP decreases as Abe’s policies are expected to increase GDP. ** Applying a fiscal multiplier of 1.1. *** Assuming that the fiscal stimulus will be financed by government bonds paying the current 10-year yield of 0.66% plus 2% to cover the cost of inflation.

hurt the financial wellbeing of citizens but might also have repercussions on government finances. The (net) indebtedness of Japan as a percentage of GDP is larger than Italian levels, and this situation is only manageable if Japan is able to service its debt at very low rates. If a 2% inflation substantially increases the cost of servicing debt then Japan might be positioning itself in dangerous territory.

debt levels. A hypothetical increase in inflation of 2% therefore should increase the cost of servicing debt by only 0.49% in 2013, which is acceptable given the possible benefits of this policy.

The cost of debt will however continue to increase as older debt matures and is replaced by new debt. For this reason, it is critical that this policy creates substantial growth because a 2% rise in

superimposed the planned fiscal stimulus. We believe that the cost of the stimulus outweighs the benefits.

Stimuli in the past did not work and so we see no reason why this time should be different. If the stimulus increases GDP levels of this year only, the debt would have increased permanently while the GDP reverts to its prior levels. The only result of this stimulus is worse government finances.

is ineffective as well as expensive, creating inflation seems a better remedy.

The success of this policy may however mark the onset of the next Japanese crisis.

For a number of technical reasons, Abe’s moves may possibly increase the cost of borrowing to levels paid

by Italy and Spain. If this happens, the world’s third largest economy is doomed.

The views and opinions expressed in this article are solely of the authors and do not reflect the views of the users of the website, its affiliates or of any financial institution. This article is published solely for informational purposes and is not to be construed as a personal recommendation, a solicitation or an offer to buy or sell any securities or related financial instruments.

Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. The authors do not accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report.

Money / Issue 18 - 41

MIM Publications Limited is the Publishing arm of the Malta Institute of Management. This arm was founded based on the success that MIM enjoys in the publications of technical books.

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Operational Programme I – Cohesion Policy 2007-2013 Investing in Competitiveness for a Better Quality of Life Aid Scheme part-financed by the European Union European Regional Development Fund (ERDF) Co-financing: 42.5% EU, 7.5% National & 50% Private Funds Investing in your future

Sean Patrick Sullivan, our North American correspondent, is an award-winning copywriter, cultural critic and creative consultant. His work focuses on the intersections of commerce, creativity and communication technology.

Retail

Retail revisionism Sean Patrick Sullivan proposes 10 techniques for saving independent shops from oblivion.

P

erhaps more than any other type of business, locally owned and operated retail shops are irresistible for actual and potential customers to critique and, if it feels deserved, condemn.

Surely, part of the appeal lies in their sheer visibility, exposed and accessible as they are, especially compared to the offices so often tucked overhead.

But only part, because far more encouraging of neighbourhood gossip are the bizarre antics and peculiar choices often made by retailers. From irregular hours and dusty displays to absent-minded attendants and dull-as-dishwater assortments, main street and town square shops often leave observers wondering how on earth some outlets stay open for business in the first place.

As anyone who has set up shop on their own will tell you, a fortuitous mix of personality, popularity, and persistence can keep the most undeserving, third-rate operations afloat for decades.

But banking on one’s sunny disposition is starting to feel like less of an option for today’s forward-thinking local retailers, who are acutely aware of the global retail giants now setting their sights on under-developed territories.

So, for a savvy shopkeeper, what to do to stay in business?

Here’s a little bit of retail revisionism with tips, tricks and techniques borrowed from (and used as a defence against) big-box competitors.

1. ASSESS YOUR SITUATION If you look at most ultra-profitable retail establishments, you’ll notice an unavoidable presence of a concept, identity or approach – one might even call it a brand experience – above and beyond what’s being sold.

By contrast, failure to form a – or worse, know one’s – brand is typically a recipe for disaster. So, whether your shop is brand new or decadesentrenched, it’s critical for you to ask yourself basic questions like: Where are my customers coming from and are they the customers I want? What do they say about us or do they say nothing at all? What do I sell the best and worst and does this line up with my concept? Even more critical is for you to listen to and act on the answers you generate.

Consider leaving confidential questionnaires on your counter or inviting your favourite customers to an informal after-hours nopunch-pulled focus group.

2. DEFINE AND REFINE YOUR MISSION The best salons focus on a certain type of aesthetic and the best restaurants focus on a certain type of cuisine – shops are no different. Resist your urge to be all things to all people and stop judging yourself for turning away potential sales that, in reality, aren’t happening. Instead, become more curatorial.

Narrow-focus your efforts on

the items you love the most and that you assess your customers want the most.

For example, the world doesn’t need another menswear boutique. But a menswear boutique specialising in sportinspired haberdashery, with an oh-so-editorial assortment favouring bright colours and power neutrals, plus accessories, furnishings, even books or gadgets to complete the picture and the lifestyle?

That’s a story that might actually help customers to find you rather than the other way around.

Learn to tell strangers everything they’d ever want to know about your establishment – clearly, specifically, and distinctively – in a minute or less.

“what has always been” into “how it must always be”.

But for those operating under the organising influence and defining constraint of a well-rounded brand identity, business owners tend to notice the little things that mean so much, like consistently applied colours, textures and graphics. They always seem to find ways to cast themselves as better than, different from, or in an entirely different category than the competition. The result is a personality greater than yours, with a life of its own that can keep working while you’re home resting.

Find an expert to help you strategise, optimise, verbalise, and visualise your brand.

3. BUILD YOUR BRAND

4. SHARE YOUR STORY

Most local businesses aren’t branded – and by that, I mean something far more significant than operating without a consistently applied logo. Many local businesses seem to run on the fumes of antiquity – a hazy, lazy addiction to the generic and entrenched, marked by a revenue-stifling collapse of

Too many small business owners depend on foot traffic for visibility. But in reality, when people are on foot, they’re increasingly on their way to destinations upon which they’ve already decided, thanks to the ultradirectional influence of social media. Get online and keep plugging away, even if there’s

Money / Issue 18 - 43

Retail

no immediate response. After all, you’re investing in your shop’s future customers.

Once these future customers start to materialise, take your communications to a new level of intimacy. Include thank-you cards with large orders, offer gift-wrapping services and make delivery sublime, take notes on beloved customers and their preferences for future reference and to support your team when you’re not there, and endeavour to create a visual consistency across every single thing you show or share. At bare minimum, this is an exercise in consistent logo placement.

This is an opportunity to establish signature gestures: a key colour, a consistent texture or finish, a recurring motif, a persistent tendency toward the rough and rustic, the sleek and futuristic, or the sophisticated and traditional.

5. UPGRADE YOUR SIGNAGE Nondescript signage? No longer acceptable. Make sure your brand-identity kit, whether crafted by a university intern or communication agency, includes not just logos but also their application to exterior and interior signage.

How much to invest? Just take whatever you feel comfortable spending. Now spend twice as much.

By the way, when posting hours of operation, honour your promise to your community. An establishment that consistently opens up late, or shuts down without warning, is an insult to the surrounding community.

6. WELCOME YOUR GUESTS When American retailer

44 - Money / Issue 18

Target refers to its customers as “guests”, it’s not just being adorable. Rather, it’s borrowing from the experience friends have of hosting, receiving and entertaining in their own homes. Lighting, versus other big-box retailers, is softer. Restrooms are more frequently cleaned.

Refreshments are sometimes served. No matter what you’re selling, greeting your guests warmly and unambiguously, then providing amenities that make it easier for them to relax and become receptive to a purchase, are essential.

Best of all, reward customers with unexpected gifts-withpurchase or a sincere “thanks for your business”. To make the shopping experience even more immersive, consider painting your entire space in two to four deep, rich, intense colours. Want to create local buzz in the process? Display three potential palettes, then allow customers and neighbours to vote on which one gets applied.

7. FURNISH AMPLE SEATING If your shop offers a product or service that inspires customers to bring friends, family or other parties – shoe stores and clothing boutiques come to mind – you must provide comfortable seating or some other appealing distraction. Otherwise, their interference, however wellintentioned, may prevent a sale from happening.

I once consulted with an organic spa, shop and salon that enjoyed generous walk-in traffic. Almost none of it converted to sales. After a weekend afternoon of observation, I noticed that most of our walk-ins consisted of young

couples. Invariably, because our assortment included hundreds of lotions and potions, one party would become obsessed with browsing, while the other (thoroughly bored) party would restlessly pout or whine, prompting an early exit by both. My solution was killing an under-performing line to make way for a seating vignette and iced-tea concession – this increased weekend sales by 1,000 per cent within the month.

8. REVEAL YOUR WARES If you put no effort into carefully strategising your assortment, or into attractively merchandising your inventory, you can rest assured that no smart shopper will ever put much effort into convincing himor herself into making a purchase. Energy attracts like energy. If you want people to value what you sell, then you must demonstrate that you value it first. Keep all displays dust-free, all items neatly stacked, all categories tightly defined and demarcated.

Don’t have an eye for visual display? Hire an expert to express your brand with charm and distinction while making your inventory shine brighter than ever.

minimally paid labourers.

One reason is that, when you pay more, you get more.

Another is that compact teams are easier to train, develop, and manage. Take internal education seriously – it’s the only way you’ll ever delegate with comfort.

10. TRIGGER THE SENSES In retail, the potentially gigantic impact of sensory stimulation is usually ignored. Don’t make the same mistake as the plainJane merchants sharing your street. Keep lighting soft and residential with theatrical emphasis upon key items.

Light candles infused with essential oils or otherwise infuse the air with a signature scent. Hire the music lover in your life to fill a device with various ultra-atmospheric playlists – jazzy, loungey, brunch-friendly and nuovodisco calm the nerves while rousing the spirits and motivating purchasing behaviour.

9. TEND TO YOUR TEAM You can have the most opulent visual display, the most sophisticated brand identity, or the most distinctive product assortment in the region, but if your team consists of people who are cold, rude, indifferent, or misinformed, none of it matters. In my experience, most shops do better when staffed by a smaller number of better-paid consultants than a greater number of

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Country Profile

Shopped till it dropped

It’s the shopping destination of the world. But after its 2008 crisis, is Dubai still selling, asks Money.

I

t rises out of the shimmering desert as an ode to man’s inventiveness in creating something out of an arid nothing.

The earliest recorded settlement in Dubai dates back to 1799. Fast-forward two centuries and the city was doing the impossible, from erecting the highest buildings in the world to building the first ski resort in the Middle East, the first seven-star hotel and reclaiming land to create artificial islands. Contrary to the common perception, Dubai didn’t become rich thanks to its oil – rather, it used its oil industry to fuel an economy based on tourism, real estate and financial services, for which it became a regional hub. Tourists flocked to experience this wonder and returned home laden with shopping.

Then in 2008, the worldwide economic downturn hit Dubai. Its real estate market declined after a six-year boom.

Dubai World, an investment company managing a portfolio of businesses and projects for the Dubai government, laid off 10,500 employees worldwide and asked for maturity extension.

The Dubai government announced a moratorium on Dubai World’s $59bn debt. Consequently, Moody’s and Standard & Poor’s heavily downgraded the debt of various Dubai government-related entities. Abu Dhabi came to the rescue with $10bn in aid for debt-laden Dubai World.

46 - Money / Issue 18

Yet Dubai has weathered the storm. True, there is still an abundance of empty apartments and commercial space – however, the economy is making a comeback.

One primary indicator of this is rising consumer confidence.

In the third quarter of 2012, Dubai’s Department of Economic Development reported that the Consumer Confidence Index was up to 129, well above the average of 100. In the same quarter, lending also grew by about three per cent.

Investors are also more confident – in fact, Dubai has seen a sharp decline in credit default swap, which is now 2.25 per cent, down from 4.5 per cent at the beginning of 2012.

After a plunge of nearly 60 per cent in prices during the financial crisis, the real estate market is also recovering. Emaar Properties, Dubai’s biggest listed developer, has increased its share price to a 51-month high while its profit increased by 18 per cent last year.

Tourism has also helped Dubai’s economy improve. Emirates doubled its first-half profit of its financial year and saw a 15.4 increase in the number of passengers. Throughout 2012, hotel occupancy was in excess of 80 per cent while Dubai airport handled 48 million arrivals in the first 10 months of the year.

DUBAI in numbers 2,106,177 Such encouraging performance is set to translate into GDP growth of 4.5 per cent, with this growth trend predicted to continue.

So how has Dubai managed to recover so quickly, especially when compared to Europe, which is still feeling the brunt of the economic crisis? Experts say that this is mostly down to the emirate’s service sector and its ability to compete effectively.

Still, there’s a long way to go for Dubai to repeat its 2007 highs. In fact, the emirate’s debt maturity profile is still well over $48bn, due between 2014 and 2016.

“After a plunge of nearly 60 per cent in prices during the financial crisis, the real estate market is also recovering.”

2014 is expected to be a pivotal year for Dubai, especially because government debt repayments of $20bn loom on the horizon – the $20bn were used to bail out Dubai World in 2009. The emirate’s ability to refinance will set the tone for the whole economy.

Credit rating agency Moody’s believes that Abu Dhabi will continue to support Dubai and that the debt will be rolled over so as not to create refinance pressures on Dubai.

Moreover, Dubai’s main advantage is its ability to fuel consumer confidence and foster investor confidence further.

For an emirate that has created its fortunes against all odds and has managed to adapt, anticipate and surprise, bouncing back shouldn’t be an insurmountable challenge.

Dubai has the largest population in the UAE and the second-largest territory by area after Abu Dhabi.

Jebel Ali port is the ninth largest port globally and the largest in the Arab region.

2 Dubai and Abu Dhabi are the only two emirates to have veto power over critical matters in the country’s legislature.

6% Revenues from oil and gas contribute less than six per cent to Dubai’s economy.

22 Dubai is the 22nd most expensive city in the world and the most expensive city in the Middle East.

3.5% It’s expected that Dubai’s GDP growth averages 3.5 per cent per annum until 2020.

During the building boom, 15 to 20 per cent of the world’s cranes were operating in Dubai.

45% Dubai has a young population – 45 per cent of Emiratis are less than 15 years of age.

Joshua Farrugia, Business Development Manager at the Royal Malta Golf Club (left) and Andrew Zarb Mizzi, Executive Director at RTFX Ltd.

Good business on the golf course The Royal Malta Golf Club signed a corporate partnership with international online financial services company RTFX Ltd. Featuring its unique asset management service, RTFX will be officially sponsoring one of the Royal Malta Golf Club’s major annual golf tournaments, the Wedgwood trophy, which this year will be held on May 4 and 11.

“We are proud of our corporate partnership with the Royal Malta Golf Club and sponsoring one of the Golf Club’s annual tournaments,” said Andrew Zarb Mizzi, RTFX Executive Director.

Joshua Farrugia, Business Development Manager at the Royal Malta Golf Club, welcomed RTFX. “We are delighted to have entered into this new partnership with a leader in its field. RTFX will play an integral role at the RMGC, assisting us with the financial backing to develop our 18-hole golf course and helping us reach out to their clientele.”

For more information visit www.royalmaltagolfclub.com and www.am.rtfx.com

Money / Issue 18 - 47

Design

Designed to sell Design should enhance brands and enrich customer experiences, says Violet Kulewska.

R

etail design is a fast emerging discipline in the field of interior design. Its main purpose is to create a shopping experience that is positive for potential customers by appealing to their senses, emotions and values.

SeaGull retail store - design by Violet Kulewska.

Nowadays, customers are savvier than ever before – they expect more than just being satisfied with the purchased brand or product. Not only do they look for personal, intuitive relationships with brands and retailers, but are also after an aesthetic experience inside retail outlets.

48 - Money / Issue 18

Store location, atmosphere, sensory stimulation and visual merchandising are contributing factors to the visual perception of the customers. They come to see, hear, touch, smell, and taste products on display as well as experience the surrounding context.

“The future of the retail experience should incorporate new technologies and systems such as mobile, motion sensing or touchscreen interfaces.”

When customers visit a retail store, they immediately make an association between the products sold in the store, their price, the store’s character and ambience and the retailer’s presence and identity. The future of the retail experience should incorporate new technologies and systems such as mobile, motion sensing or touchscreen interfaces.

Design should also enhance brands and create unique customer experiences led not only by custom design and installations but also by audio and video. Design has a huge impact on the retail experience and contributes to creating a memorable, successful, and attractive store environment.

Even details such as the fixtures are an important part of retail design where, either individually or integrated, they have influence on the retail environment. They must display the merchandise effectively, but they should also be practical and convenient for customers to use. The displays themselves should also reflect the aesthetic of the products that are being sold.

Another important part of retail design is lighting – this is an atmospheric tool which creates experiences which in turn influence customers’ mood and behaviour in commercial spaces.

The retail design and visual branding of a store is highly developed in cities like Japan, New York, Paris or London. On the other hand, it is still quite a new discipline in Malta.

I look forward to seeing more adventure design concepts of the shops. Also, I would love to see more local stores selling and promoting Maltese products. I can just picture a beautiful interior clad only in Maltese tiles, where the interior become the identity of the place.

My experience with retail design in Malta is quite diverse. I had the opportunity to design

an exclusive clothing boutique in Tigne shopping mall, but also a retail store situated in the busy shopping district of Hamrun, a town full of cars, commerce, bars and churches.

Seagull became the name of this small retail shop – the whole idea was to use colours and the seagull theme in a way that also deviates customers away from the busy town and mentally shift them to the coast.

The interior space was defined by multi-use floor to ceiling display and storage units made in plywood, which are arranged in patterns and interspersed with fitting rooms for clients. These have been completed with double height yellow fabric – this was a twist on the idea of a heavy theatre curtain where the client enters a stage. For the store in Tigne, I was mainly inspired by Maltese arches and village feast bulbs used to light up the churches.

As a designer, I am drawn to the idea that everything in the interior and exterior of the store needs to work together to create branded environments and experiences that influence a customer, but also to create a visual harmony.

Violet Kulewska studied Interior Architectural Design at the Academy of Fine Arts in Wroclaw and London Metropolitan University. She collaborated with and worked for several design and architecture practices, both in London (Robin Monotti Architects) and Malta (Chris Briffa Architects and Forward-Architects).

Now based in Malta, she designs under the name VK interiors & furniture. www.violetkulewska.com

Money / Issue 18 - 49

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Money / Issue 18 - 51

Fighting the big C

Today, millions of people have had or are living with cancer, says Andrew Grech. Reduce your risk by staying healthy. Money helps the Malta Male Cancer Awareness group in their cause.

T

he risk of developing various types of cancer can be reduced by changes in a person’s lifestyle, for example, by staying away from tobacco, limiting time in the sun, maintaining a healthy weight, being physically active and healthy eating.

There are also screening tests that can be done for some types of cancers so they can be diagnosed as early as possible and before they have spread. In general, the earlier a cancer is found and treated, the better the chances are for living many years.

There is no sure way to prevent cancer – however, there are things you can do to reduce your risks.

Many cancers might be prevented if people didn’t use tobacco. Smoking damages nearly every organ in the human body and accounts for some 30 per cent of all cancer deaths. Cigarettes, cigars, pipes and oral (smokeless) tobacco products cause cancer and should not be used. People who use tobacco should try to quit. Studies clearly show that ex-smokers are at a lesser risk of cancer than people who continue to smoke.

It’s best to never use tobacco at all and to stay away from second-hand smoke.

Drinking alcohol is also linked to a higher risk of cancer. Some people think that certain types of alcohol are safer than others – however, ethanol is a type of alcohol found in all alcoholic drinks, whether they are beers, wines or distilled spirits. Overall, it’s the amount of alcohol that is drunk over time, not the type of drink, which seems to be the contributing factor in raising cancer risk.

If you drink, limit your intake to no more than two drinks per day for men and one drink a day for women. This may help curb your cancer risk.

The combined use of alcohol and tobacco raises the risk of mouth, throat, voice box, and oesophagus cancer far more than the effects of either drinking or smoking on their own.

Ultraviolet rays and sunlight are linked to skin cancer. You can lower your chances of getting skin cancer by staying out of the sun between 10am and 4pm and by wearing a hat, shirt and sunglasses when you are in the sun. Also, use sunscreen with a sun protection factor of 15 or higher and don’t use tanning beds or sun lamps.

We know that our diet is linked to some types of cancer, but the exact reasons are not yet clear. The best information we have suggests a lower cancer risk for people who eat a lot of fresh vegetables and fruits, choose whole grains rather than refined grains and sugars, limit their consumption of red or processed meat and maintain a healthy weight.

To diagnose cancer early, while it’s small and before it has spread, adults should have regular tests called screening tests – these help doctors find common cancers before they cause symptoms. Talk to your doctor about which screening tests might be right for you.

If cancer is found early, it can be easier to treat. Survival also tends to be longer for those diagnosed early.

This information has been provided by Malta Male Cancer Awareness. The Malta Male Cancer Awareness Facebook page sources information from reliable sources and while its focus is on male cancer, the information is relevant for everyone.

For more information visit www.facebook.com/maltamalecancerawareness

52 - Money / Issue 18

The naked truth Money makes a statement on male cancer.

Photography: Kris Micallef, www.krismicallef.com Styling: Carina Camilleri / Andrei, student / swimmer Flower arrangements by Joseph Baldacchino, www.flowerarts.net, info@flowerarts.net, T:9926 0645 Special thanks to models from models.com.mt who contributed to this shoot.

Aidan, retail sales assistant Winged armchair. Available at Tanti Interiors in Sliema, www.tanti-interiors.com

Luke, student / goalkeeper

Robert, carpenter Vintage soft drinks wooden crate on wheels. Available at Tanti Interiors in Sliema - www.tanti-interiors.com

David, waiter Vintage leather footballs with a tie up lace. Available at Tanti Interiors in Sliema - www.tanti-interiors.com

Luxury

The finer things in life Money can’t buy you everything.

Actually, we can.

Travel in style

Cheers

The Clipper leather holdall by Mulberry is your travel companion of choice – it can hold all your fineries as you settle down in first class.

Macallan, distillers of premium single malt whisky, have collaborated with Oakley to come up with this limited edition flask made of aluminium, steel and carbon fibre.

58 - Money / Issue 18

The great outdoors Spring is here and it’s time to enjoy the sunshine – so pack this classic wicker picnic basket by C Wonder with goodies and head outside.

Lights on If you’re working late, this Akita desktop lamp can keep you company.

A design masterpiece in concrete, brass, copper and oak.

Power hungry The Bugatti Vela is the king of food blenders.

Stylishly designed, it has a glass mixing jar and steel blades which you can rev up at four speed settings.

Lounge lizard Chill out in style and give your feet a luxurious break with these paisleyembroidered velvet slippers

by Jimmy Choo.

Look here

Hats off

These limited edition binoculars by Leica come in calfskin with ostrichstyle embossed pattern.

Look good while looking.

A stylish addition to your spring wardrobe, this Borsalino fedora is a lightweight statement in cervelt and wool.

Money / Issue 18 - 59

Travel

In the beginning

This is what the first day in paradise must feel like, says Mona Farrugia.

I

n 1999 I was asked to cover the Maldives for a newspaper I wrote for at the time. The trip would take four days. It was the eve of my undergraduate exams. I could take anybody I wanted with me but contrary to what everybody thinks, in urgent situations like this one, nobody could come. I had every single reason to give up and not go. So of course, I packed a bag and did.

I was a guest of Kurumba, the original Maldives resort. This was before its refurbishment so it wasn’t exactly the hottest room design in the world. The pool was small and crowded with children playing, splashing and generally bruising themselves. The buffet wasn’t that hot – Maldivian theme night was all coconut and packed with Italians. I sunbathed, swam and studied. There were a few mosquitoes but it was the Maldives bug that bit me hard.

Since then I have been back more times then I care to remember. I have returned alone, with my husband, with my mother.

True, I have been to other paradise islands – the Seychelles, Mauritius and Northern Mozambique. Yet I have never found anywhere that compares to the Maldives.

Except for the Maldives.

60 - Money / Issue 18

So last year I decided that I would not bother with all this traipsing around and stick to what I know and love. There was one thing I was happy to experiment with, albeit on a limited basis and after much research – the resort. This year, I settled for Niyama because it offered the combination of natural beauty, food quality and price.

underwater club and their over-water restaurant, 500 miles by speedboat off the main island. I had asked for a quiet, overwater villa and had specified that quiet should include water noises. This may sound odd if you have never been kept up all night with fish and choppy seas splashing under your bed but I, and they, knew what I was talking about.

On the day after I booked I was chatting with a friend who runs hotels for a living. “I start as general manager at this amazing new resort in the Maldives tomorrow,” he said. It can’t be, I thought.

But it was. Which is how I came to be welcomed by the very Maltese Nigel Pace once off my seaplane trip.

Villa No. 92 is wonderful. The bed faces the ocean and your very own pool in which you can actually swim laps – then it’s down the wooden steps and into the glorious, shimmering turquoise ocean, every day, all day.

“Merhba Mona,” he smiled and a big hug eased me into island life. The last time I had seen him it was at my café and I was serving him. It was the warmest, best welcome I have ever had. I was home 7,200 km away from home.

It doesn’t take much to settle in at Niyama and I took it all in quickly – the clean and clear air, the crystalline waters, the limited spread of villas. From the seaplane I had noticed the architecture is discreet although I could already see their

What do you do in the Maldives, some people ask – I certainly did on my first visit. Over the years I have learnt to enjoy doing nothing. Maybe it’s a sign that I’m getting older. In fact I spend most of the year looking forward to it. I read, I swim, I snorkel, I sunbathe, I eat (in fact, I pig out), I drink much wine and champagne, I nap. Doing nothing never feels so good as when I’m there.

In fact, Niyama is quite funky in comparison to other resorts in that it offers things to do. I went shooting. Not animals, but in their indoor arcade. I got

Room at the top Food and travel writer Mona Farrugia runs Angelica in Valletta. www.angelicamalta.com

Nigel Pace has achieved top status in the international hotel industry.

41-year old Nigel Pace is a Maltese success story in the hotel world.

He studied at the Institute of Tourism Studies in Malta and gained experience at Gleneagles in Scotland and Marriott Hotels in the U.S. In 1995 he moved to South Africa, home of some of the best service in the world, and to Liz McGrath’s three Relais & Chateaux hotels for 11 years. After six years as General Manager of The Plattenberg in Plattenberg he moved on to transforming the outstanding Cape Grace Hotel in Cape Town. In 2011 he was recognised by Luxury Travel Advisor as Best General Manager for a Luxury Hotel Worldwide. At the beginning of 2013 Nigel moved to the Maldives with his wife Sarah, an interior decorator.

It looks like paradise but what does it feel like to be on the service side of it and on service 24 hours a day, seven days a week?

“The remoteness of the resort poses huge logistical challenges when it comes to delivering services which may be considered natural to a hotel in an urban area,” he says. “Power and fresh water are produced on the island, while food, drinks and just about everything else are delivered twice-weekly on our supply ship – this takes 10 hours to travel from the capital Male.

a taste for guns as I discovered I can aim quite well. I also had my eyebrows threaded and an outstanding massage at the 24-hour Lime Spa. Who would go have a massage at 2am, I wondered.

Apparently, a lot of people do. There’s no accounting for folk.

You see, Niyama is the kind of place that is well known to a few Londonbased Russian oligarchs and a handful of princesses. To these people, money is no object. I love people watching when on holiday. The oligarchs turned up with their beautiful, 20-years younger, women, two perfect children each and a live-in nanny. Everybody had their own villa. Staff did whatever the guests asked for. In one case this included nights when the barman would make non-stop cocktails for a 10-year-old boy just so he could watch him do it. They pay full-whack, of course – these are not the kind of people who will quibble about the mini-bar bill.

The princesses wanted an open-air cinema on their first night and Niyama did not have one. So they created it.

In two hours. On a beach. Then they wanted to race speedboats the next

day. So four speedboats were brought in. Nobody behaved like a diva. It was just a whole lot of fun.

The food was just lovely. The chef, I discovered, knew Malta well. He was executive chef here in a local hotel for three years. His expertise at Niyama, though, is well and truly a notch above what he was allowed to produce here in Malta. Together with the director of food and beverage they have come up with a wonderfully inventive menu.

Even the buffet constantly surpassed my expectations. Wine prices are ridiculously high thanks to the Maldivian 70 per cent tax.

It is incredible how quickly nine days speed ahead when you are doing sweet nothings. Whereas normally I would be on the verge of crying when being dragged away from my own stretch of private beach, or saying goodbye to my own adopted coral (which I named, surprisingly, Mona) this time I was looking forward to the seaplane ride over the turquoise waters. As Nigel came to bid me goodbye I turned to him and said, “Book me this time next year.

Au revoir.”

“The reality is that you are not only managing guests’ expectations. You are also managing a team of almost 300 employees from 27 different countries and every one of them left family behind when they moved here. Staff welfare is therefore critical in ensuring that service delivery to our guests is always top quality.

“I do get to relax. Since I spend most of my day interacting with guests and colleagues, I enjoy spending quiet time at home when I’m off duty.

During my time in the Maldives I definitely intend getting my diving certification.”

Nigel moved to the Maldives with his wife, an interior decorator – how has she managed to continue her business?

“My wife Sarah has managed to keep her interior decorating business in Cape Town up and running.

She is living proof that you can run your business via Skype and e-mail from anywhere in the world.”

Nigel has been away from Malta for years – however, he’s still proud to be Maltese.

“After 18 years in South Africa, I must admit that Cape Town is my adopted home. This does not change the fact that I am proud to be Maltese and my nationality comes up in conversation with almost every guest.”

He also has some thoughts about Malta’s tourism and hotel industry.

“During my visits to Malta over the years, I’ve noticed a vast improvement in the country’s infrastructure and an overall move away from a small island mentality. Having said that, I think that service in hotels and restaurants tends to be hit and miss, and the attitude of the people delivering the service certainly has some room for improvement.”

Money / Issue 18 - 61

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

The Bluesman’s blog

The Bluesman survives the cold, and the guns, in the US.

I

t’s a temperate climate we live in, in this part of the North East Coast. Does it mean it cannot be a little nicer sometimes? You bet. But overall there aren’t 20-foot snowdrifts – snow does fall but sooner or later, it melts, gets rained on, or is shoved away. Not so the biting wind blowing down from Canada. That’s why most of the street people move south to Florida, adding to the melange of transients Floridians call snowbirds.

Not all of them choose to leave – some stay behind and brave the chill. One such fellow is a guy who sits swathed from top to bottom in a coat and a sleeping bag against a grating right next to an old money private club where I do a lot of work. He doesn’t accept any money (he carries a huge wad on him) but will take an occasional cigarette. Last Easter Paul McCartney, who has a townhouse nearby, was seen giving him food. Speculation is that he’s a vet (ex military) but why he has chosen this lifestyle is not something he has shared.

Unlike the affluent travellers who have homes down south to go to, the homeless do not, so it’s out of a necessity beyond merely seeking warmer climes in senior years they head there.

Survival. And so they encamp in trailer parks, if they can afford an off-season rental, in cheap motels offering ‘efficiency’ rooms, or in the woods just outside towns and cities. They then ‘lurk’, in the local citizens’ perception, there with not much to do except worry about food, water, money... you know, luxuries.

I remember when we lived in Orlando the then mayor, Glenda Hood (unfortunate name I thought) concerned herself greatly about the homeless people panhandling in town and scaring off the tourists. Some sold match books in downtown Orlando and in her efforts at curbing this she had squares painted in blue on the sidewalks and all sales had to be made from within them.

Unfortunately some of Floridians’ fears have been justified from time to time as among this motley crew of vagrants lurked those living on the edge of sanity and legality.

My daughter is fond of saying that any horrifying crime that hits the headlines is usually in Florida. Man killer prostitute Aileen Wuornos (with seven victims under her belt), Black Widow Judith Buenoano (a trail of husband,

62 - Money / Issue 18

handicapped son, lover and an attempt on her fiancée), Gary Ray Bowles, the gay bar serial killer, and the brutally infamous, brutally handsome Ted Bundy.

All these are graduates of Starke State Prison death row. Ironically the prison is close to Jacksonville with the highest murder rate in the state. Florida may be fourth in population but it’s number one when it comes to sending convicted killers to death row, although Texas leads in actual executions.

Wry note: both these states had a Bush as governor.

The heart wrenching ones are those involving children, as highlighted by the recent Casey Anthony trial or 11-yearold Carlie Brucia whose abduction was captured on video at a carwash in Sarasota.

She was later found dead when law enforcement followed a lead by the man arrested for the crime.

Speaking of crime segues nicely to the gun control discussion – New York and Connecticut have already passed tougher laws, followed

by Maryland and other states, but the talk is all about what’s happening at federal level. Background checks have been the law for some time but loopholes exist primarily when it comes to gun shows. Your average trader behind a stand, maybe a militiaman down from his mountain fortress (although I exaggerate slightly – it might

be an encampment deep in the woods) is not going to have the facilities or the time to conduct a background check and send his customer off for a week’s cooling off period while it goes through the process. The National Rifle Association, the country’s biggest and most vocal gun rights advocacy group feels that this would infringe on the right to bear arms and argue that the best defence against a bad person with a gun is a good person with a gun. The fact that a background check would help to slowly eliminate the bad guys from carrying seems too subtle a point. But then this is a group believing, as their bumper sticker given a new lease of life by Charlton Heston in 2000, reads, “I’ll give you my gun when you pry it from my cold, dead hands.” Despite all this, headway is being made with assault weapons and limiting the number of bullets in magazines (clips not periodicals).

It’s crunch time in DC and yet there’s a slight thaw in the Republican Party’s stock attitudes, which might bode well for sense prevailing in the gun debate and beyond to the next issue – with John McCain publicly encouraging his party not to be afraid of debating the issue and the support for gay marriage by a trickle of Republicans and a general attitude of be tolerant but don’t endorse.

Amazing what being soundly beaten in an election will do.

the new di-ve.com – news, lifestyle and more The new di-ve.com is a news and lifestyle portal and much more: providing quality information through a multimedia platform. In a fast and media cluttered environment, di-ve.com says only what is useful. Our team has a practical and can-do approach through which clients and advertisers can benefit from bespoke solutions that can be tailor made to suit their requirements.

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