MONEY OCT/NOV 2012 ISSUE 15

THE FINANCIAL ISSUE Issue 15 October/November 2012

€5 WHERE SOLD

Europe’s North-South divide

Investing wisely

Collecting your credit MANAGING AN SME

Contents 8 Investing in protection

Veronica Stivala learns about the rights people have when investing in funds and the responsibilities of financial institutions and banks when selling these funds.

13 North to south

The Scandinavian Business Forum aims to bridge geographical distance and create business opportunities between Scandinavia and Malta, says Andrea Faye Christians.

17 In the balance

The eurozone crisis has uncovered a divide between Europe’s North and South. How can Europe regain equilibrium, asks Patrick Debattista.

21 New markets, new opportunities Put Islamic Funds on top of the agenda, says Reuben Buttigieg.

23 Having a global mindset

Bruno L’ecuyer explains how Malta is emerging as an international financial centre.

25 A threatening diversity?

Under pressure, will the European Union morph into a federal state, ask Chris Grech and Calvin Bartolo.

29 Fight or flight

Welcome Simon Camilleri explains what leverage to use in order to claim your due.

37 Managing your debts

David Galea outlines measures to reduce your finance cost.

40 Watch this space

The city of watches is never late.

Money keeps the time on Zurich.

42 Conquering time

Cyrus the Great inspired Laurent Lecamp, CEO of Cyrus watches, to build an empire on innovation, exclusivity and identity.

45 A journey through space

Interior Architectural Designer Violet Kulewska combines sustainability, creativity and artistic freedom.

49 A great day at the office

As Dex launches Vitra, Romina Vassallo explains how this new brand focuses on the work environment while enhancing motivation and productivity.

61 Capital investment

33 Saving for the future

64 Moving in

10

YEARS

6 - Money / Issue 15

In theory, Europe is united, but in financial reality, it isn’t.

Patrick Debattista investigates the divide that the eurozone crisis has uncovered – on one hand, there are the debtor nations of Portugal, Italy, Ireland, Greece and Spain, and on the other, resurgent countries like Germany. How will the equilibrium between north and south be addressed?

One way to bridge this divide is further collaboration between the north and south of Europe. Andrea Christians interviews Dr Mark Fenech, who was instrumental in setting up the Scandinavian Business Forum with the aim of tapping into the potential that a healthy relationship between Malta and Scandinavian regions can generate.

In this issue of Money, Chris Grech and Calvin Bartolo update you with the latest market report. We also track Malta’s efforts to establish itself as an international financial centre, outline the benefits of Islamic Funds, and reap the rewards of good investments – luxury gifts and travel.

Read on and enjoy.

Money helps you break your budget on these luxury items.

How does one go from hating a city to almost loving it?

Mona Farrugia finds out.

of quality publications

In this issue of Money, we interview Geoffrey Bezzina, director of the Consumer Affairs Unit at the Malta Financial Services Authority.

Bezzina gives precious advice on how to invest wisely while limiting risks and being aware of our rights and the responsibilities that financial institutions must carry.

58 What money can buy

Sean Patrick Sullivan reveals his 10-point plan for small businesses to survive constant crisis.

You can improve your financial outlook by strengthening your savings behaviour, says Jason Zammit.

Stocks, shares, currencies, funds, credit, deficit, bond yield – no, we haven’t swallowed the dictionary.

Rather, we’re updating you on finance, which makes the world go round, or stops it in its tracks.

35 The cheque is in the post

Editor Anthony P. Bernard Email: anthony@moneymag.me Consulting Editor Stanley Borg Email: stanley@moneymag.me Design Porridge Email: hello@weareporridge.com

Money’s properties of the month.

Printing Progress Press

66 The Bluesman’s blog

Distribution Mailbox Direct Marketing Group

The Bluesman giddies up on a horse with a name.

Cover Credit photography: Kris Micallef, styling: Luke Engerer, model: Kyle

Hand delivered to businesses in Malta, all 5 Star Hotels including their business centres, executive lounges and rooms (where allowed), Maltese Embassies abroad (UK, Rome, Brussels, Moscow and Libya), some Government institutions and all ministries.

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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.

JAZZMASTER SEAVIEW AUTOMATIC SWISS MADE WWW.HAMILTONWATCH.COM Jos Debono Jewellers - 151 St.Lucia Street, Valletta Tel: 2124 4839 Pavillion Jewellers - 43 Republic Street, Valletta Tel: 2124 9222 Pavillion Jewellers - Independence Square, Victoria, Gozo Tel 2156 3219

Interview

Never put all your eggs in one basket. Don’t invest at your first meeting with a financial planner. Go home and digest the information you are given.

8 - Money / Issue 15

Geoffrey Bezzina, Director of the Consumer Affairs Unit at the MFSA.

Investing in protection Beware greedy investors, inexperienced gamblers and easy money schemes. Veronica Stivala learns about the rights people have when investing in funds and the responsibilities of financial institutions and banks when selling these funds.

Photo by Chris Sant Fournier.

Y

ou’ll be familiar with the parable of the three talents. Let me jog your memory – before leaving home to travel, a master entrusted his property to his servants. On his return, the master asked his servants what they had done with the talents – two had put their money to work by investing it while the third had buried his. He was punished.

As parables often do, this one reads well for today’s economic scenario.

If you invest your money wisely you will be rewarded, but if not, things can go horribly wrong. Of course, the caveat is that there is always a certain element of risk in any investment.

Online investment has made it easier to open up the world of investment to the inexperienced layman, as well as to the swashbuckling pirates ready to nab green investors. However, a lot can be avoided with some proper advice.

First things first – who is responsible for validating companies and siphoning out fraudsters? That would be the Malta Financial Services Authority. This

organisation is responsible for licensing and regulating collective investment schemes such as funds. It does not issue a licence unless the person applying qualifies to do so.

can’t understand how a product works, then better put your savings in a bank account rather than taking a risk with an investment which may not be suitable for your circumstances.”

Checking whether someone qualifies to apply involves a rigorous test which requires senior staff and potential and existing licensees to demonstrate competence, integrity and solvency, that is, that they have sufficient capital in all their dealings.

“No type of investment fund is easy money,” he warns. The worth of a business you invested in can decrease as a consequence of market prices (this is called capital erosion). Indeed during times like the current economic crisis, many companies embark on restructuring drives so as to cut losses and to adapt to the new economic realities. Moreover, there are investment products which are complex, such as investments in bonds or funds whose performance is linked to life insurance policies or currencies (referred to as asset-backed investments). By their very nature, these investments are not easy to understand. Even if such products are likely to be promoted as an alternative to traditional or conventional investments, these are investment opportunities which involve substantial risks. Investors who do not wish to have

However, despite such strict tests, abuse still manages to take place and people who rush into what they think will get them some quick cash often end up in the red. The most common form of abuse that takes place in the world of investment is mis-selling and bad advice, says Geoffrey Bezzina, Director of the Consumer Affairs Unit at the MFSA. Nevertheless, he points out, “There are some investors who are greedy or who simply gamble their savings in the hope of getting rich quick. If you

Money / Issue 15 - 9

Interview

risky investments in their portfolio should steer clear from such complex investments,” suggests Mr Bezzina.

What is Mr Bezzina’s advice to the novice looking to invest in funds?

“Start saving early. Investing is all about making informed choices. If you need to access your savings in the short term, place them in a savings or fixed deposit account rather than investing them.

“If you decide to invest, it may be best if you can put some money into a fund or a pool of funds periodically (monthly or quarterly). When investing in a fund, there are initial charges. There may also be annual charges and charges for withdrawing. You might also incur additional charges if you agree to a savings plan. There are investors who prefer to purchase individual securities such as bonds or shares.”

He underlines how important it is to be honest with yourself as to what you want to get out of investing in a fund.

An imperative question you should ask yourself is, ‘Do I need capital growth or a distributor fund (i.e. a fund which pays interest)?’ and ‘If I were to lose all my money in one investment, what impact will that have on my overall portfolio?’

As the saying goes, never put all your eggs in one basket. Mr Bezzina can’t recall how many times he has said this statement during his various education campaigns on radio and television. Still, he has come across many substantial portfolios invested in just one or two investments.

There are funds which are low risk, others which are high risk. Knowing which is which is easier than you think.

“Never stop asking questions. If you can, do some research on the internet,” he advises. “You may find information about a fund’s performance and compare it with others. All funds come accompanied with product literature.

Certain types of funds (mostly UCITS, a term which stands for Undertakings in Collective Investments in Transferable Securities) come accompanied with a

10 - Money / Issue 15

short document (not more than four pages) which gives a very good and objective summary of the fund, its performance and so on.

“Get hold of this document and go through it carefully. You might not be able to understand everything – so keep asking and take notes.

“Don’t invest at your first meeting with a financial planner. Go home and digest the information you are given. You don’t have any cooling off period. Don’t sign anything until you know what you are signing for. Beware of any product which promises high rates of return.

High return equals high risk, which equals a high commission rate for the financial planner.

“Finally, make sure you seek advice from a financial planner. Ask the person servicing you whether he is actually giving you advice, rather than merely selling you one or two financial products.

During the process of advice, the financial adviser will ask you questions to enable him to structure a portfolio suited for your circumstances. Ask for a copy of the documentation he compiles and go through it.”

Investing safely If it is not obvious from the firm’s website that it is authorised, then it is most likely not authorised If a firm appears to be authorised, double-check its authorisation. You can find the lists of authorised firms on the websites of national regulators Remember that if it sounds too good to be true, it probably is Understand the costs involved.

Firms must provide you with appropriate information.

Be wary of ‘free’ money: promotional offers such as ‘10% cash-back’ and ‘up to €500 when you open an account’ are examples of ploys used to entice you When using online platforms be careful about using software which automatically generates transactions on your behalf

And once you’ve made an investment, what are your rights?

“As an investor, you will be protected to varying degrees depending on how experienced you are in finance. The less experience you have, the more protection you will be given. An important law called the Markets in Financial Instruments Directive deals with all the issues that affect you when dealing with European investment firms, such as protecting financial products you own. This protection does not apply to home loans, credit cards, deposits or pension plans, but to products such as shares and bonds. And for these, firms may offer you services such as managing investments on your behalf, giving you advice on investments and buying or selling financial products.”

For more information and advice about investing, visit the MFSA’s consumer portal www.mymoneybox.mfsa.com.mt

investing Online Be aware of the potential risks involved in online investments Check if the firm is authorised Be wary of promises of high returns Be aware of software that automatically generates transactions for you Take special care when you’re asked to provide your credit card details If you do not understand what’s on offer, do not invest

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Business

North to south

The Scandinavian Business Forum aims to bridge geographical distance and create business opportunities between Scandinavia and Malta, says Andrea Faye Christians. Photo by Nicky Scicluna.

M

alta has many historic links with Scandinavia that stretch back centuries and include exchanges between notable people, from artists and scholars to writers and scientists. Now a new initiative aims to further strengthen relations with our northern counterparts in the form of the Scandinavian Business Forum.

As Chairman of this organisation and Partner at Fenech & Fenech Associates, Dr Mark Fenech played a fundamental part in the formation of this forum.

His background of working with Scandinavian companies had long made him aware of the tremendous potential that existed.

In 2008 Malta became part of the Eurozone and in doing so opened itself up to substantial changes as it was possible to offer fiscal benefits to European financial institutions, private banks and asset management houses.

Henceforth the island’s favourable tax climate made it particularly advantageous to foreign investors who, in their home country, would pay higher tax rates. By making use of the financial institutions and setting up companies here, they would be in a position to take advantage of the situation.

“With core costs that are generally considerably lower than those found in Northern Europe, the combination of an Anglo Saxon work ethic with a Mediterranean climate is very attractive.”

However, there were issues that needed urgent attention – not only was there a lack of awareness of what Malta had to offer but there was also no existing infrastructure to implement them. So three years ago, in 2009, work began in earnest to find a way to do so.

Dr Mark Fenech

After consulting with the then President of the Scandinavian Chamber of Commerce, Helga Ellul, Dr Fenech and his colleagues decided that the best way forward would be to create a

Money / Issue 15 - 13

Business

body under the auspices of the Malta Chamber of Commerce with the aim of consolidating existing business links and forging new ones.

With this intention Dr Fenech worked towards creating a business council from existing members of the chamber. He explained that these first months were spent as a think tank – a period to identify and quantify the aims of the forum.

As a model was formulated, other members were recruited, amongst them a significant number of Scandinavians who already resided in Malta. This culminated in the official launch of the Scandinavian Business Forum on November 5, 2010 – the launch was attended by two government ministers, namely Deputy Prime Minister and Minister for Foreign Affairs Tonio Borg and Finance Minister Tonio Fenech.

There were also prominent members of the business community and guests from Norway and Denmark.

Now that the cogs of the business machine were turning, the Scandinavian Business Forum hosted a Swedish business delegation in May 2011 – the meetings focused on financial services, wealth management matters and incorporated a number of cultural activities. It was again considered an all round success.

A year on, the Scandinavian Business Forum launched its website, www.sbfmalta.com, with the aim of showcasing not only all that Malta has to offer from the perspective of tax incentives and highly evolved financial services but to also promote other participating countries.

The impact of the forum is already evident with a great deal of traffic and feedback on the website. The testimonials that are written are bi-lingual and are, in the main, all complimentary about Malta, with a couple of comments pointing out some minor failings and provide a realistic picture of what someone relocating here can expect to find.

With core costs that are generally considerably lower than those found in Northern Europe, the combination

14 - Money / Issue 15

of an Anglo Saxon work ethic with a Mediterranean climate is very attractive.

The climate obviously speaks for itself while the relaxed lifestyle and good standard of living, health care and education are for many an added bonus.

Ultimately it is hoped that the Scandinavian Business Forum will act as a catalyst to enable greater commercial activity in the region.

Despite the geographic distance between Scandinavia and Malta we are strategically placed as a European gateway to not only Europe itself but also North Africa, the Middle East and even Asia. As far as existing Maltese companies are concerned, the Scandinavian Business Forum is a virtual link to finding new markets, sourcing new suppliers and finding potential new business partners.

In theory the possibilities are endless and are made more attractive as English is the second official language allowing for an ease of communication between countries.

Although Malta is already home to Scandinavian investment in the manufacturing and i-gaming sectors, Dr Fenech believes that, “There is huge potential for Scandinavian countries to invest in Malta and a great deal of untapped potential exits.”

In the immediate future opportunities present themselves in expanding financial services, real estate and tourism while at the same time existing Malta companies can look to explore possibilities abroad particularly through franchising and networking – the latter being a key word in the Scandinavian Business Forum.

Above all else Malta’s financial dealings are transparent and in today’s rather unstable conditions it providing a safe and legally recognised haven for those investors who wish to minimise risk.

It looks to be an exciting time for foreign investment as there are many areas of possible collaboration still to be explored. As far as Scandinavia is concerned, early indications suggest that what Malta has on offer as a fast evolving business hub is something that is just too good to refuse and will undoubtedly prove to be mutually beneficial in the long run.

Worth celebrating 6PM plc has launched QuickContribute, a project that bridges industry and academia through an applied knowledgebase where real life experiences are published online.

This was announced during 6PM plc’s fifth anniversary lunch at Paranga in St. George’s Bay. 6PM was founded in 1996 by Maltese entrepreneur and Agile specialist, Ivan Bartolo. Ten years later Management Consultancy (UK) Ltd, a company incorporated in the United Kingdom was created. This was established by Alan West Robinson and Steve Wightman in 2006. In 2007, 6PM Holdings plc was formed to bring together the two pre-existing companies – 6PM Ltd and 6PM Management Consultancy (UK) Ltd. Today 6PM plc also owns Compunet Operations Ltd, Compunet Agencies Ltd and 6PM Nearshore DOOEL. 6PM also has shareholding interest in Softweb Ltd, emCare360 Ltd, Makeezi Ltd and DSG Ltd. 6PM plc Chairman Nazzareno Vassallo welcomed the guests and Chief Executive Officer Ivan Bartolo gave a brief overview of 6PM’s experience over the last five years. Mr Bartolo explained how, “Listing on the Malta Stock Exchange brings with it several responsibilities and challenges. It brought with it accountability that is translating into a fighting spirit that has made the last five years ever so interesting.”

Minister of Finance, the Economy and Investment Tonio Fenech described 6PM as a flag-bearer of the Maltese ICT industry, a company that reflects the transformation that our economy has managed to make over the past 20 years.

Minister for Infrastructure, Transport and Communications Dr Austin Gatt said that, “Thanks to this Government’s vision in ICT and the investment from companies like 6PM, thousands of jobs are being created in this field.”

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Euro

Patrick Debattista is reading for an Executive MA in Financial Analysis.

In the balance The eurozone crisis has uncovered a divide between Europe’s North and South. How can Europe regain equilibrium, asks Patrick Debattista.

S

ome conveniently label them as ‘PIIGS’ while others use the terms ‘debtor nations’. Whatever terminology is applied, Portugal, Italy, Ireland, Greece and Spain have one thing in common – they are the eurozone’s troublemakers. For years on end, they lived in an artificial bubble of cheap credit, excessive expenditure and a newfound sense of wealth. As time went by, they racked up unsustainable levels of debt and are now seeking emergency help.

By contrast, their counterparts in the heart of Europe, mainly driven by a resurgent Germany, have largely adopted a prudent macroeconomic policy focused on trade surpluses, inflation control and budgetary discipline. These economies are now reaping the rewards of decades of thrift.

The World Economic Forum’s Global Competitiveness Index sheds light on this growing chasm. While Germany, Finland, Sweden, the Netherlands and the United Kingdom have all managed to consolidate their top 10 global rankings, the PIIGS nations all appear to be freefalling downwards. Italy is just 42nd in the competitiveness rankings, Portugal ranks 49th and Greece lags far behind in 96th place.

To add insult to injury, the debtors risk throwing the creditors in the heart of Europe down into the mire. This would not only jeopardise the functioning of the single market, but would most likely spell the end of the euro currency as we know it and would possibly undo the entire European project.

So what went wrong and what can be done to repair the damage that has so far plagued the single currency?

There are many facets to the plight which the eurozone is currently facing, but it all centres around the fact that Southern Europe is simply not competitive enough to attract foreign investors, so much so that even local capital tends to flee these nations. For instance, the Bank of Spain reveals that net capital outflows from the country totalled over 50% of the country’s GDP for the year ended July 31, 2012.

So how did the debtor nations become so uncompetitive? The creditors might state that the chief sources of the crisis range from complete mismanagement of public finances in Greece, a dysfunctional business environment in Italy, a massive property bubble gone bust in Spain and the lack of proper banking supervision in Ireland (Comelli, 2012). All of these explanations contain a hint of truth in them, but the underlying reasons are rather more complex.

At the turn of the century, various Northern European countries with funds to invest started to lend to Southern Europeans at interest rates which at the time were deemed appropriate by the market. Interest rates are a measure of risk, and these rates reflected the risk which market forces perceived was inherent

The key to solving the whole eurozone crisis is for the debtor nations to regain their long-lost status as an attractive destination for foreign investment. in Southern European debt – that is, a relatively low risk. Structural indicators in the South, such as employee productivity, remained unchanged or declined.

For various reasons – mostly political – Southern European governments were more than happy to accept huge sums of money at such low rates from their Northern counterparts. Cash-hungry debtor nations were effectively financing massive projects with this money, some of these nothing but white elephants, which boosted their popularity at the time while bubbles grew to epic proportions.

Money / Issue 15 - 17

Euro

Moreover, the banks also craved a piece of the action. As a result, France is now owed €332 billion by Italian banks, €115 billion by Spanish banks and €44 billion by Greek banks. German banks are less exposed to Greece, but are owed €134 billion by Italian borrowers and €146 billion by Spanish banks (Bank of International Settlements, 2012).

This process effectively means that if the banks default, they would not only halt the flow of credit in their economy, but they could also drag their governments down with them. This is known in some quarters as a feedback loop. Take, for instance, a person who loses his appetite when worried. Once he starts to worry, he loses weight, then worries more after noticing the weight loss, thus losing even more weight, and so on. This creates a vicious circle which, if not addressed (for instance, through external help) would lead to the destruction of the system. In our case, the whole eurozone system could be destroyed if in the short-term debtor nations are not bailed out. In the long run, Europe must help the debtors to implement widespread structural reforms in their economies.

So what is the solution?

The key to solving the whole eurozone crisis is for the debtor nations to regain their long-lost status as an attractive destination for foreign investment.

Relative unit labour costs throughout the Mediterranean have spiralled ever since their adoption of the euro as legal tender.

Somehow, these must be controlled.

Prior to the creation of the euro, currency devaluation would have gone some way to alleviate this problem and help the region regain its competitiveness. However, since joining the eurozone these countries have had to surrender their power to adjust monetary policy. This means that the only realistic tool at their disposal is to perform an internal devaluation, which is nothing but a widespread cost-cutting exercise to reduce average salaries across the board.

This is an exceptionally difficult exercise which often takes years to bear fruit.

While Germany’s economic performance over the past few years has been impressive, it is still highly exposed to its export markets. Germany is the world’s third-largest seller with 50% of its GDP exported in 2011. The corresponding figure for Greece is a dismal 24%, for Italy 29% and for Spain 30%. It is clear that this uneven balance must be shifted southward.

This means that Germany must relax its austerity drive and seek to loosen its purse strings, ideally doing so in a more competitive Mediterranean region. This is easier said than done. According to Mario Monti, Italy’s Prime Minister, Germany considers economics to be

“a branch of moral philosophy” and it is thus ingrained in German culture to focus on budget discipline as opposed to growth. Sadly, desperate times call for desperate measures and, in this case, a change in mentality.

In order to avert catastrophic bailouts of both Spain and Italy, their sovereign debt yields must be controlled once and for all. The monthly 10-year bond yield in Spain reached a rate of 6.79% in July 2012, while Greece is still completely shut out of the markets with a massive 25.82% yield in the same month. The only way to calm the bond markets is for the ECB to unequivocally support stricken nations with guarantees of assistance.

This could only be done through a fullyfledged banking union with the ECB acting as the lender of last resort.

Unfortunately – albeit understandably – creditor nations such as Germany, Finland and the Netherlands are staunchly opposed to the creation of a banking union. This behaviour does little to calm markets, and so the situation drags on.

For the eurozone to be able to sail forward amid the current financial storm, its leaders must first gather together and decide once and for all in which direction its ship must sail. Until then, it must somehow navigate treacherous waters without the leadership it so urgently needs.

Putting on a show Canon was the official camera at this year’s 20th edition of the Malta International Air Show. Available on the Avantech stand were a variety of professional camera bodies and telephoto lenses including the prestigious EF 400mm f/2.8, EF 300mm f/2.8 L IS II USM, EF 500mm f/4 L IS USM, EF 600mm f/4 L IS USM, EOS 5D mk III and EOS 1DX.

Multiple exposure. By Darrin Zammit Lupi.

18 - Money / Issue 15

Lenses of this calibre are in the high-end price sector of the Canon lens range and are used by photographers in major international events such as the Olympics and the World Cup. Avantech and Canon were keen to give all enthusiastic amateur and professional photographers a chance to use these high performance lenses. The Malta International Air Show was a perfect venue for such an event, with guaranteed visual spectacles. On Saturday evening Avantech invited photographers to a night photography session of the static display of all the participating aeroplanes.

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Reuben Buttigieg is Managing Director of Erremme Business Advisors and President of the Malta Institute of Management.

Funds

New markets, new opportunities Put Islamic Funds on top of the agenda, says Reuben Buttigieg.

L

ast September, Finance Malta and the Malta Institute of Management organised an educational clinic on Islamic Funds. The clinic presented various international panellists from Germany and Italy as well as local renowned speakers. The aim of the clinic was to understand the suitability of Malta’s legislation towards Islamic Funds as well as its attractiveness from a foreigner’s perspective.

On the structures specific to Malta, once again the suitability of the Professional Investor Funds regime to various Islamic Funds were emphasised as also evidenced in the book published by the Malta Institute of Management on the subject matter. On the other hand, there were doubts on whether UCITS and Islamic Funds can fit together. Although such structures are being used in the EU particularly in Luxembourg, it is clear that there may be a conflict with Shariah.

This view was also endorsed by the Malta Financial Services Authority in the publication of its Guidance Note.

The clinic also put to light Malta’s main issue – the visibility of Malta in the sector is considered insignificant even due to the messages that certain entities, authorities and personalities portray.

In spite of this, Malta has managed to attract some attention and funds, not to the level one would have expected, but certainly a step in the right direction. In fact various accountancy and law firms are doing some work on Islamic Funds.

Finance Malta should now take note of the outcomes of the work done by the Malta Institute of Management over the years and also of the outcomes of the educational clinic. In this context, it should take the lead in planning a national strategy in rendering Malta an Islamic Funds Centre. As the international speakers highlighted,

Malta has a story to tell when it comes to Islamic Funds and such a story can be the competitive advantage over its main competitors. New markets like Egypt, Libya and Tunisia are opening up and here Malta has a major role to play.

The development of North Africa will have a major impact on the growth of this industry in Malta. The efforts of the Malta Institute of Management in these years are showing results in the first Islamic Funds from North Africa.

However, the promotion of Malta in Islamic Finance needs to go a step further and not stop at the Funds Industry. Indeed the Trust and Trustees Act provides Malta with a unique tool

“New markets like Egypt, Libya and Tunisia are opening up and here Malta has a major role to play.” in Islamic finance in general. One of the main issues faced by the Islamic Finance Industry within conventional systems in North Africa was the lack of a proper and reputable Trust Institute.

Yet again Malta is not visible enough to the industry and jurisdictions that are far more expensive than Malta are experiencing growth in this area. Suffice to mention the use of Guernsey and Jersey and their popularity in the sector.

The size of the funds seems to be an issue in the perspective of international

players. In fact, on a number of occasions, various personalities have stated that when it comes to small funds Malta has a niche role to play.

However, for larger funds there are more favourable jurisdictions in view of the strong structures as well as an entire movement to support the industry. This is a cliché that Malta is doing nothing to overcome although it has the potential to do so. Certain stakeholders view Malta as a place which will face difficulties as the industry continues to grow.

One main criticism is that there seems to be no clear strategy in ensuring that there is sufficient human capital and expertise available in line with the growth of the industry. In actual fact, in spite of various calls it seems that Malta may be falling short on this. As opposed to Luxembourg , the various Maltese entities do not seem to be pulling the same rope and different messages of what Malta is and wants to be are given to the market. Certainly this does not help in the promotion of any sector.

As opposed to Government related authorisations, the private sector has been doing fairly well. The Maltese Government has on various occasions spoken on the subject with clear political statements about the Government’s commitment to the Islamic Finance sector. This was further endorsed by the type of Government project financing issued lately which in its form and substance is similar to a Sukuk Ijarah which seems to have come about by an Islamic Bank presentation way back in 2009. However, the same Government has not mandated any entity to formulate and implement and an adequate strategy to tap in this growing market. The Malta Government should mandate to Finance Malta the preparation of an adequate action agenda that goes beyond political statements.

Money / Issue 15 - 21

Available at 156, Ta’ Xbiex Sea Front, Ta’ Xbiex.

T: 2133 1192. Email: info@rlryachting.com www.rlryachting.com

Bruno L’ecuyer is the Head of Business Development at FinanceMalta.

Finance

Having a global mindset Bruno L’ecuyer explains how Malta is emerging as an international financial centre.

M

alta is emerging as one of the fastest growing international financial centres in Europe, building its reputation on sound fundamentals and excellent service.

Financial services have become one of Malta’s most important economic generators, registering impressive year-on-year growth and attracting everincreasing international attention from investors across the world. A quick glance at the latest National Statistics Office FDI report confirms this.

While Malta’s positioning as an IFC is primarily aimed at the continental European marketplace, and described as a well-diversified finance centre, Malta has strong banking, insurance, investment funds and wealth management sectors, all of which are underpinned by universally-praised, EU-compliant legislation, as well as a single regulator that has proven to be both flexible and accessible. So too is a pool of highly trained, experienced professional services providers, driving the business once it enters the country.

In view that financial services has become a global industry, the target audience includes operators based in the Middle East, South Africa, Asia and North America. We also recognise

the importance of China, India and Brazil and their relevance to Malta insofar as Malta’s positioning as a gateway to Europe is concerned.

Malta is staking its claim on a reputation for stability and security in the wake of the international financial crisis – consequently, the islands’ players are busily expanding international connections across the five continents, intent on positioning Malta as a global centre, serving global business.

This is where FinanceMalta comes in.

FinanceMalta is the public private initiative set up in 2007 with the scope of promoting Malta’s international financial centre. It harnesses the resources of the industry and government to ensure that Malta maintains a modern and effective legal, regulatory and fiscal framework in which the financial services sector can continue to grow and prosper.

In its day-to-day work, FinanceMalta communicates Malta’s many advantages to attract foreign direct investment in the areas of financial and credit institutions – these predominantly consist of regulated entities representing banks, insurance companies, trust companies, fund companies

and wealth managers, family offices, which are in effect family wealth corporations, audit and legal firms. Generally, the approach towards dialogue, planning and execution of communications to our target audience unites government and industry efforts into a single logical direction communicating our robust, excellent reputation as a forward looking and serious financial centre.

FinanceMalta confidently delivers because Malta enjoys a stable, well-managed jurisdiction, a robust, wellrespected, regulatory framework and because of its small size and diversified economy. Moreover, a sophisticated ICT infrastructure, English as an official language, an enviable climate and our unique strategic location generate opportunities for industry players not normally to be found in larger, less nimble, country infrastructures. Thus FinanceMalta leads the marketing efforts of Malta as a financial services centre to ensure that island-based, as well as overseas financial service companies are well informed as to the numerous benefits and advantages of Malta as a place to do business.

This impressive growth traction translates into career opportunities – while many of the jobs in finance need people with university degrees, there are also many opportunities for holders of vocational qualifications at different levels and for others with good exam grades at Advanced Level. There are jobs that require working at a desk and others that involve moving around to meet clients or to attend work-related meetings.

The finance industry offers training and development opportunities, good reward packages, career improvement, and excellent working environments. There is more information on career options from the MFSA for you, your friends or children to find out about.

Looking forward, it’s guaranteed that the challenges to sustainable growth for Malta are significant in today’s environment, and it’s going to be a bumpy ride, but we as an industry need to think collectively about them today with a global mindset.

Money / Issue 15 - 23

Finance

A threatening diversity?

Under pressure, will the European Union morph into a federal state, ask Chris Grech and Calvin Bartolo.

M

assive deficits and political discord threaten the economies of Europe and the US. Both economies are suffering from severe consumer retrenchment and mushrooming government debt levels.

The general sentiment is that the state of the economy of the European Union is far worse off than that of the US. However the government debt of the EU 27 nations was 85% of the region’s GDP at the end of 2011 and this is considerably lower than the US federal debt, which stood at 99% of GDP at the end of the same year.

Moreover, unlike the US, the EU is bringing order to its finances and has introduced a series of austerity measures in a number of member states. Indeed, the combined government deficit of the Eurozone nations in 2011 was 4.1% of GDP which is considerably lower than the 2011 US federal deficit of 8.7% of GDP. Governments, like households and corporations, finance some of their expenditure with debt. What is important is that the level of debt of a country is sustainable – that is, it can afford the cost of servicing that debt. There is no hard and fast rule that determines

when debt stops being sustainable but many cite a debt-to-GDP ratio of 90% as a critical level.

It is not only the level of debt but also the rate at which that debt is serviced that must be considered. For example, Japan has a debt to GDP ratio of approximately 200%. The debt is excessive and it also means that future generations will have to pay the expenditures of their predecessors. However, the 10-year Japanese government yield ranged between 1.8% and 0.8% during the past five years and currently stands at 0.83%. At this rate, almost any level of debt is sustainable.

The government of Japan is able to borrow at such affordable rates for a number of reasons. For starters, the more efficient the Japanese corporations become, the stronger the Yen appreciates and this encourages Japanese to invest their savings locally. In a weak economy which suffers from chronic deflation, the Japanese prefer to put their money in domestic government debt because there are few better alternatives.

The 10-year US government bond yield currently is 1.8% but the 10year government bond yield of nine out of 16 Eurozone

countries (according to the ECB, there are no Estonian sovereign debt securities that comply with the definition of long-term interest rates) is higher than 4%. In addition, the US government is in a better position to sell debt to the rest of the world because the US Dollar is the world’s reserve currency and countries like China which peg their currency at arguably artificial rates with the US Dollar are required to acquire US assets (typically treasuries) in order to keep their currency below market equilibrium. These reasons allow the US to issue debt with more ease and service it at lower rates when compared to its European counterpart.

The second reason why the European debt crisis was more severe than in the US is because Europe introduced a number of austerity measures. Austerity adversely affects growth and unfortunately markets react out of proportion during times of recession even if reducing government deficits is the right choice. The GDP of Europe is expected to contract by 0.3% in 2012 whereas it is forecasted that the US will grow at a solid rate of 2.2% in the same year. These forecasts should be considered in the light of the deficit of each economic bloc. The budget deficit of the US government

is 4.6% higher than in the Eurozone countries but GDP growth is only 2.5% higher.

Quite an expensive way to purchase growth.

A number of federal tax increases and spending cuts are scheduled to kick in 2013 if Republicans and Democrats do not agree on how to curb the budget deficit. The Congressional Budget Office estimates that the automatic tax increases and spending cuts will contract the US economy by 4% in 2013 and 5% in the subsequent financial year. Municipal (bonds issued by US states)

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 communitybased website where users may share their views and knowledge on companies listed on the local market.

Money / Issue 15 - 25

Finance

Unleashing Malta’s potential The Mediterranean is a bridge that unites Europe, Asia, and Africa. Its sea has served as a central superhighway for transport, trade and cultural exchange and its history is a story of interaction of cultures and peoples.

Today, the Mediterranean stands at the crossroads of various unfolding events that have changed the structure and character of the region. Recent events spearheaded by the Arab Spring combined with the economic crisis in Southern Europe have forced political and economic analysts to revisit their view of the region. These continuous developments and changing scenario have had a dramatic impact on Malta offering threats but also opportunities.

The Malta Institute of Management will hold a conference with the theme ‘Mediterranean Economic Forum – Unleashing Malta’s Potential’ on November 14, 15 at the Intercontinental, St Julian’s. This event will address the key role Malta plays in the North and South divide of the Mediterranean and will discuss recent developments as seen through the eyes of various leading speakers from Southern Europe, the MENA region and Turkey. On the first day of the conference, MIM Awards for Excellence will also be awarded.

26 - Money / Issue 15

defaults are considered rare but three cities in the State of California (Stockton, San Bernardino and Mammoth Lakes) have already filed for bankruptcy in 2012. Warren Buffet has in fact backed out of a number of credit default swaps that insured $8.25 billion in municipal bonds, sending panic signals that US finances are not what they used to be before.

The single currency is the third issue. The Euro was a political idea with the aim to achieve a greater integration of Europe. The inflexibility of the Euro that unravelled in front of our eyes was known

that Germany can do it better.

A currency union where Germany is compassionate to its weaker neighbours will not work in the long term. The components of a currency union must converge to achieve internal equilibrium since there are no currencies to depreciate any longer. It is in this light that last September Mr Jose Manoel Barroso proposed for the European Union to evolve into a “federation of nation states”.

A federation generally means a transfer of powers

Treaty. The Eurostat has also been given new authority to do limited audits on national accounts to prevent the number massaging done earlier by Greece and Portugal and recently, EU officials have been pushing for authority to review national budgets that were previously left to the individual countries.

There are however a number of fundamental issues relating to convergence that must be addressed before even contending the official concept of a federation.

Europe must become more

“A currency union where Germany is compassionate to its weaker neighbours will not work in the long term.” from the onset of the project and the UK experienced first-hand the disadvantages of a monetary union in 1992 when it was forced to withdraw from the European Exchange Mechanism.

The concepts of the Euro and of a federal Europe go hand in hand and it is the hesitation of EU Member States on what they want to achieve that worries markets. The divergence between Germany and the weak EU Member States will persist even if enough money is thrown at the periphery states. The reason why Germany runs a trade surplus whereas the majority of the other Eurozone countries run trade deficits is

from a national to a central government but a federation of EU Member States does not necessarily involve the centralisation of revenue collection. Surely this will never be accepted by Germany.

The current structure of the Eurozone countries already involves a degree of centralisation of policies on trade, agriculture, fisheries and the establishment of the monetary union. Even before the proposal of a federation of states was floated, the EU has in effect introduced a number of federal concepts such as the establishment of a single bank regulator and the proposal of the European Stability Mechanism (ESM)

whole and deal with issues that contributed to the debt crisis in the first place.

Matters such as tax evasion and lack of competitiveness in some countries must be resolved and the barriers of language and social insurance programmes within the labour markets must be broken down. The Europe that defends diversity and promotes the use of national languages does not realise that it is this same diversity that is threatening its political aims.

A federation is the reform required for the Euro to achieve its purpose but it must be based on strong fundamentals not on airy political dreams.

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.

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SMEs

Sean Patrick Sullivan is the director of education and communication at The BAO Institute For Healthy Living. The author of How To Be Happy (Even When You’re Not) and a creative consultant to both global brands and local businesses, he divides his time between Chicago, Toronto, Montreal, and Manhattan.

Fight or flight For small-business owners, constant crisis can become a way of living, working, and ultimately failing.

The solution is to learn to rise above and see beyond even when it makes absolutely no sense to do so. But how? Sean Patrick Sullivan reveals his 10-point plan and the shocking workplace nightmare that inspired it.

Illustration by Jeff Nguyen.

M

ay I be candid? When that truck crashed through the front of our facility – rupturing a water main, critically injuring one of our employees, and creating yet another crisis at our already troubled fitness-and-wellness centre – I’m glad I knew about the work of Walter Bradford Cannon.

In 1915, Dr Cannon, chairman of Harvard Medical School’s physiology department, published his findings regarding acute stress syndrome.

According to what was then theory but is now generally recognised as fact, human beings (like all other animals) respond to clear and present danger by releasing a very specific set of hormones and neurotransmitters, all of which prime our bodies to attack with greater force (fight) or escape with greater velocity (flight).

Unfortunately, Cannon wrote, prolonged exposure to crisis situations tends to cause immune-system shut-down as well as a cornucopia of psychological symptoms now known as post-traumatic stress disorder. And, oh, yes, lest we forget, that most sobering response to extremely prolonged exposure: death.

The irony and insight of Cannon’s legendary studies is that the fight-orflight response works. It makes sense.

It saves lives. Above all, it’s reasonable.

And, yet, when left unchecked, it kills.

What does this mean for smallbusiness owners and workers, who are, for the most part, under constant attack, even if of a more metaphorical variety?

The answer is shocking, stunning and spectacular.

Biologically, the only route to longterm survival, much less success, is to will oneself (and, by extension, one’s organisation) to become completely, thrillingly, non-sensically unreasonable.

For this middle ground between combat and surrender is the only way to achieve another of Cannon’s canonical discoveries: homeostasis, a state of metabolic balance and ecosystem harmony.

Now let’s return to that car crash. Once the dust settled, literally and figuratively, some of us became combative, aggressive, unable or downright unwilling to sleep – that’s ‘fight’. Others wanted to quit, throw in the towel, run away and start over somewhere else –

that’s flight. Personally, I went back and forth, and I gave myself permission to do so, with Cannon’s work reminding me of the bio-logic driving my rather bipolar job performance.

That said, I wasn’t the one who rose above it all and chose to be unreasonable.

That was our owner, a local businessman who not only insisted that we rebuild and reopen in less than two weeks, but that we rebrand at the same time, even though that was originally scheduled to happen gradually, over the course of six months, starting in 2013. Even though we didn’t have the time, money, or resources to do so. And even though we knew the self-induced rapid-fire tumultuousness would cause us to confuse (and most likely lose) boatloads of frazzled, traumatised, already overwhelmed customers.

It has been a couple of months since our pivot. The tempo, volume and urgency of our work are greater and

Money / Issue 15 - 29

SMEs

BOUNCING BACK 1 MORALITY

“Turn your tragedy into triumph and transform your entire enterprise in the process by rising above it all.”

Start with your stand. Why do you exist?

What’s your contribution to the world?

How do you help your customers and employees live fuller, richer lives? If you don’t have a moral imperative to prop you up when times are tough, those 18-hour-workdays are going to start to feel very long very fast.

2 AUTHENTICITY

When crisis came your way, what else was going on? What were you avoiding, resisting, pretending didn’t matter?

Were you already loathing every day?

No matter how ugly your inner or organisational truth, now’s the time to cough it up and get it out of the way.

3 POSSIBILITY more challenging than anything any of us have ever experienced before. Yet by rising above and looking beyond the conflama (that’s North American for ‘crisis’ plus ‘drama’), we’ve managed to chip away at every single one of our financial, managerial, and organisational problems, saving at least a year’s worth of work – and stress hormones – while creating a far better and more inspirational environment for our customers, our employees, and quite frankly ourselves.

Small-business owners, when you’re confronted by crisis, what’s practical... what’s reasonable... what makes sense... is to retreat or to retaliate. But biology doesn’t have to be your destiny.

Turn your tragedy into triumph and transform your entire enterprise in the process by rising above it all. It probably won’t feel right and it definitely won’t feel natural. But this is one circumstance in which suppressing how you feel can do you (and your bottom line) wonders.

Don’t know how? Don’t think you can? Don’t be silly. It’s relatively straightforward when you use the following 10-point plan, which we developed in-house to keep us on track.

After all, when your business is on the edge of extinction, you have nothing to lose and everything to gain.

30 - Money / Issue 15

Set aside your sense of shame. Ask yourself: if you could script a happy ending for your current crisis, what would really turn you on? What would inspire your vendors, partners, employees?

What heroic actions might magnetically attract new business? Write an imaginary newspaper story or magazine profile you’d like to see about yourself a year from now.

Read it every single morning, then again every single evening.

4 CREATIVITY

Once you have a vision in mind and on paper, create a project plan. Don’t work your way forward from now to then. If that had any chance of working, you wouldn’t be in crisis mode in the first place. Instead, work your way backward from then to now. What you’ll discover is uncorked creativity, an access to innovative problem solving that may be new (and really quite delightful) for you.

Can’t figure out how to get from point A to B? Ask your customers.

5 TRANSPARENCY

Put away your pride. Tell everyone everything including your fears and ideas, your challenges and objectives.

Then ask for opinions. Don’t worry.

They’re just opinions – they don’t bite.

This won’t weaken but rather fortify you. People love hearing the truth straight from the source. The bonus for you is that it stops gossip in its tracks.

6 SENSITIVITY

No matter what the crisis, someone other than you is usually feeling sad, angry, upset, overwhelmed or intimidated. Hear them out. And when you do, keep your mouth shut, your ears open. If you don’t like or simply disagree with what you’re hearing, fight any and all urges to defend yourself.

Simply being with whatever you get, demonstrating an ability to take it, seriously consider it, and move on signals strength. And that’s attractive to everyone.

7 INTEGRITY

Don’t get distracted by short-cuts or seduced by easy exits. And don’t get stupid or sloppy with process and methodology either. If you do, you’ll never achieve your objective. You’ll just prime the pump for yet another crisis down the road. Integrity, while annoying and inconvenient, tends to make everything work better.

8 MATURITY

You can’t force everyone to love what you’re doing. Give customers, employees, and others the right to feel however they want to feel. If someone wants to go, let them go, and wish them well. After all, they’re clearing a space for someone new, someone who wants what you’ve got.

9 CONSISTENCY

Nothing is more destructive than an entrepreneur who changes course every five minutes just because a new idea fails to work straight out of the gate. Review and refine. Adjust and adapt. Give yourself more time and apply yourself with greater vigour. And don’t switch plans until you’re absolutely, positively sure you’re on the wrong path. Practice over time makes everything easier.

10 INSANITY

Yes, all of this is crazy. So is being a small-business owner. If you can’t hack the fundamental lunacy of your endeavour, go work for someone else who can.

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Banking

Saving for the future You can improve your financial outlook by strengthening your savings behaviour, says Jason Zammit.

Jason Zammit is Head of Public and Media Relations, FIMBank p.l.c.

T

he term ‘propensity to save’ refers to one’s natural inclination or characteristic disposition to save.

The average propensity to save, on the other hand is the proportion of income which is saved, also known as the ‘savings ratio’. This is economics jargon that refers to the proportion of income which is saved, rather than spent on goods and services.

The savings ratio (or average propensity to save) is usually expressed for household savings as a percentage of total household disposable income, which is the money left after income tax has been accounted for. So yes, you too have an average propensity to save and governments, economists and banks are very interested in it.

Making changes in your own spending and savings behaviour is guaranteed to improve your financial outlook.

This measurement may seem to have little relevance to your day-today financial reality but to a number of organisations, the amount that you save and spend can determine national economic policy. When there is talk of consumer confidence, an accurate measurement of average and marginal propensity to save and to consume typically come into play. What makes them so important is that they are measuring what you are doing with your income, especially your discretionary income. One of the biggest drains on discretionary income is debt. No matter where you live, or how much you earn, debt is an obligation that cuts into your financial freedom.

Generally, there seems to be an increase in the awareness of the importance of debt management, with people taking positive action by sitting down and getting to grips with their financial reality. It all starts by asking yourself simple questions like: do I know what my financial goals are? Do I use my credit card and pay for purchases later or do I save up for things I really want?

Do I have a spending plan and do I know where my money goes each month?

You can immediately improve your financial outlook by strengthening your savings behaviour and by committing to save a larger proportion of your discretionary income.

Making changes in your own spending and savings behaviour is guaranteed to improve your financial outlook. You are bound to encounter problems, and the only way to meet your daily financial challenges successfully is to live within your income, and when you do receive those extra few euros, bank them as a hedge for future expenses.

To be successful in improving your savings behaviour, you need to be savvy enough to think about both the short and long term – to balance what you want now with what you want in the future.

Financial experts describe savings as ‘deferred spending’, meaning every euro you place in your savings will actually be spent at some point in the future.

Many would like you to spend more of the money you earn now. The temptation to do so will always be strong. However, your family is looking towards a greater sense of security that a regular saving habit can provide. While you may not consciously think about your propensity to save, being proactive in your saving as well as in your spending pattern is highly recommended. After all, any effort you put into increasing your propensity to save will benefit your personal security and that of your family.

FIMBank p.l.c. is the operator of Easisave, a secure online savings account that offers a leading interest rate on online savings accounts. Easisave is a flexible and secure platform that allows customers to manage their savings 24/7 over the internet and earn a high interest. For more information call the Easisave Helpdesk on 2132 2102 or visit www.easisave.com

Money / Issue 15 - 33

Make the right move!

A career in Financial Services Endless Opportunities in a rapidly developing industry www.careersinfinance.mfsa.com.mt

Scan QR Code with your smartphone Effective

Find us on:

FinanceMalta

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FinanceMalta - Garrison Chapel, Castille Place, Valletta VLT1063 - Malta | info@financemalta.org | tel. +356 2122 4525 | fax. +356 2144 9212 FinanceMalta is the public-private initiative set up to promote Malta’s International Financial Centre

Credit

Simon Camilleri, Country Manager, Creditinfo Malta has over a decade of experience in setting up and developing innovative credit risk management companies throughout Europe, as well as providing independent consultancy in this field and from his 10 years in the insurance industry

The cheque is in the post Simon Camilleri explains what leverage to use in order to claim your due.

A

n established, leading credit checking company is making the excuse of “the cheque is in the post” go away. Creditinfo Malta is making life simpler for SMEs and consumers to collect the money which they are owed by enabling their customers to send them data about the people and companies who owe them money. After rigorous checks, the information is registered on the Creditinfo database of bad debts – then if the debt is paid, it is removed.

The company or individual is given 14 days to respond to the claimant and pay the debt or agree on a satisfactory conclusion prior to the claim being logged on the database.

This data is available for Creditinfo’s clients to review prior to doing business with that individual or company to enable them to see if there is a history of bad debts and late payments and the likelihood of them getting paid in full on time.

“The most common excuse is still that the cheque is in the post’,” says Simon Camilleri, Country Manager, Creditinfo Malta. “We’re making it very simple and affordable for our customers to see who they are dealing with in advance – after all, knowledge is power.

Our services can also provide our customers with a little leverage on those people not willing to play by the rules and choosing not to pay on time.

“The thought of those individuals who refuse to pay being named and shamed is usually enough to ensure a payment is forthcoming.

Why should a business suffer and risk the possibility of going out of business due to poor cash flow simply because others are dishonourable and unwilling to pay their dues?”

Creditinfo Malta also offers a number of additional services enabling their clients to have a more in depth understanding of who they are working with.

Simon Camilleri discusses a number of ways of how Creditinfo Malta can enable SMEs to get their heads out of the sand.

“Information is the lifeblood of the modern economy – but how well do businesses really know their customers and suppliers?

“Many businesses are already using and benefiting from the new functionality of our services. We are continuously developing new solutions by actually listening to the users of our services and finding ways to meet their requirements. In the last few months, we’ve seen significant product improvement and growth in the number of our users and activity of our services.

The main advantages for our customers are the time saved not having to chase bad debtors and improving their cash flow.”

The services and products offered are useful to all types of businesses, especially those that provide various types of credit to customers on a regular basis. The information is collated from numerous sources such as leasing companies, telecom and communications companies, retail and a variety of SMEs in agriculture, aviation, carpentry, construction, electricians, financial and legal advisors, private schools, freight forwarding and logistics, healthcare and beauty, i-gaming, IT, plumbers, property developers, wholesalers. Basically, if you’re in business, you can benefit by using the Creditinfo database.

Creditinfo Malta welcomes the use of their free trial.

Just get in touch to discuss it in more detail or to arrange an appointment at your convenience with one of their friendly and knowledgeable staff. They offer a number of business packages which means you can choose what you require to meet your business needs.

The Creditinfo Group has been saving its customers’ time and money since 2002 and this year it celebrates its 10th anniversary at the Corinthia San Gorg on November 14.

Remember, prevention is better than cure, so don’t leave it until you are faced with a problem. It has never been easier to be informed.

Care for your credit Credit check potential customers both here in Malta and in the rest of the world prior to you entering into any agreement with them, potentially avoiding the possibility of bad debts or delayed payments.

Assess your current suppliers’ credit to determine if they are likely to be able to maintain the services they are providing you with. If they are unable to sustain their supply to you, this could have an impact on your business.

Monitor what is recorded against you or your company from public records and ensure it is updated – otherwise this could cause you problems if you are applying for credit.

Put effective but professional pressure on your defaulting debtors to settle their dues as you will be able to register overdue accounts on the Creditinfo Malta database.

Continually oversee the status of your debtors/clients and suppliers through an automated process. If you have advance warning of a potential default, steps can be taken to minimise the damage.

For more information visit www.creditinfo.com.mt or contact them on info@creditinfo.com.mt and 2131 2344.

You can also follow Creditinfo Malta on Facebook and Twitter.

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David Galea is CEO of BEA Consulting, a nichebased consultancy focusing on assisting clients in trimming their costs, boosting their sales and formalising their stuctures.

Finance

Managing your debts David Galea outlines measures to reduce your finance cost.

A

s the saying goes, nothing is certain other than death and taxes. But for businesses, we can rephrase that as ‘debts and taxes’.

Very few businesses are in the luxurious position to grow at a consistent rate without seeking funds from alternative sources of finance other than their own equity. Still, financing your business with other people’s money is not necessarily a bad thing if used judiciously.

In particular it would make sense if a profit opportunity is identified wherein own sources of finance are not available or alternatively could be used in other areas where the return is higher than what is referred to as the cost of capital. However, the fact remains that using other people’s money costs money and needs to be managed appropriately. This is referred to as the finance cost of an organisation Debt may be broadly classified in two major categories – short term and long term debt. Short term debt is normally used to finance timing differences between revenue generated by an organisation and proceeds actually received in order to sustain expenditure incurred by an organisation to create such revenue streams. On the other hand, long term debt is used to finance investments in intangible assets, property plant and equipment or financial assets.

The distinction between short term and long term debt is important since

these need to be managed differently for the purpose of reducing the associated finance cost. The cost of short term debt is normally minimised through improved working capital management. The cost of long term debt is better managed either through improved asset utilisation and rationalisation or debt consolidation.

Working capital management is an amalgam of making the most of your stock, debtors and creditors. In principle stock should only be made available just-in-time for delivery to the customer.

Admittedly this is no easy feat to accomplish in practice particularly in Malta where most of raw materials and supplies need to be shipped by sea or air and subject to the qualms of mother nature. The delivery promise risks becoming breached as the product is provided to the customer just-too-late instead of just-in-time.

We have all heard about text book techniques such as material requirement planning, economic order quanties and the relatively more modern just-in-time and kanban systems. These are all very useful tools that may be applied depending on the operating characeristics of the organisation and the demand that it is facing. Irrespective of the type of technique used to manage stock, one sure way of minimising its holding cost is to achieve faster throughput and higher productivity levels through increased

operational efficiency. Reduced cycle time means less time required for stock of raw materials to remain on the shelf since these can be converted faster in finished products and subsequently into cash, thereby saving in costs associated to finance short term liquity.

In the case of debtors and creditors, it is all about negotiating and enforcing attractive credit terms and conditions with both customers and suppliers.

Improved debtors’ collection periods may be achieved through better credit worthiness assessments of clients requesting credit, shorter credit periods and limits as well as the introduction of incentives to encourage timely payment of amounts due. On the other hand, creditors’ payment periods may be lengthened by negotiating longer credit periods and higher limits. Realistically, however, the success of achieving favourable terms from both parties depends on the bargaining power your organisation has with your customers and suppliers.

Long term debt managemet is about maintaining an appropriate level of gearing which makes the most of cheap sources of finance readily available in the marketplace without undermining the level of profitability as a result of significant finance costs which become disproportionate to the level of operating profits generated by the organisation.

An online investment community The first Maltese financial website blackdigits.com.mt allows users to analyse financial data of local listed companies – the goal is to set up the first online investment-community in Malta.

“We believe that there is an information gap in the Maltese market and we deployed more functionality to close part of that gap,” said co-founder Calvin Bartolo. The updated website now provides additional data on regulatory ratios, price related data and better charting tools. Ratios covering several years or companies can be displayed next to each other and users are now able to follow particular listed companies and receive instant e-mail notifications when such company issues its announcements.

“Our goal is to facilitate interaction between users. With this in mind we introduced a tool for users to discuss financial statements or whether a security is a buy or a hold,” said Chris Grech, the other co-founder. “We have also provided a page which may be maintained by each listed company.” Blackdigits.com.mt also launched the first Android app dedicated to the Maltese listed market. The app is downloadable for free from Google Play.

Access to all information is completely free of charge. Blackdigits.com.mt is partly financed through the ERDF under Operational Programme 1.

Money / Issue 15 - 37

Finance

From my experience, the major culprits of excessive finance costs caused by long term debt trace their origins to overcapacity or under-utilisation of fixed assets. This is particularly the case in highly capital intensive industries such as airlines, hotels, electronics manufacturing and high technology companies. From a financial perspective, the usual suspect that rings alarm bells for overcapacity is a disportionate level of depreciation charge in comparison to the overall levels of profitability. It is not unheard of for companies to have both a very attractive EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) and negative operating profits. In an effort to mimise the cost of debt, many investors strive to drive a hard bargain with financial institutions or seek to exploit the favourable conditions offered by the stock market to

38 - Money / Issue 15

access cheaper sources of finance.

While these are all excellent methods to reduce your finance cost, investors are best advised to stop and think about the overall feasibility and timeliness of the investment that they are making in the first place before embarking onto such costly ventures.

Pacing investment in fixed assets to coincide with their utilisation patterns may be a more effective strategy for leveraging value out of the cost of debt than seeking cheaper sources of finance in the first place.

High asset utilisation is deemed to be a key success factor that is essential when attempting to keep the level of financial gearing of an organisation in check.

Admittedly, there are instances in which a prima facie review of the balance sheet of

a company uncovers a generally low level of utilisation of fixed assets. This may be justified in specific circumstances such as investments in construction assets (where it is generally recognised that a significantly large capital outlay is unable to generate returns until the project is complete). In such cases, sound and effective project management standards and systems are vital to ensure that such projects are completed in time, within budget and according to specifications, such that the opportunity cost of the idle investment is minimised in the process.

In this analysis, I have sought to lightly touch on some of the key issues that need to be considered to manage your finance cost. In so doing it must be recognised that in the short space available, only the tip of the iceberg has been uncovered and that you now have more questions than answers.

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W at c h t h i s s pa c e The city of watches is never late. Money keeps the time on Zurich.

C

ertain myths and stereotypes don’t hold water. The French always accessorise with a bunch of onions around their neck – not true. They are more likely to drape an Hermés scarf around their neck. India is poor? Well, some people are poor – and that’s to be expected in a country with a population of 1.22 billion. And yet, the truth is that its economy is the fourth largest in the world on the basis of Purchasing Power Parity. America is liberal? Not in the south. The Swiss are efficient? Well, that one is true.

The largest city in Switzerland and the capital of the canton of Zurich, Zurich is a utopia done right. It’s a beautiful city with staggering views of Lake Zurich and the Alps. And it works – just to take one example, public transport runs efficiently, to the minute, with a 96 per cent punctuality rate.

40 - Money / Issue 15

Zurich’s economy is flourishing and is ranked as one of the most competitive in Europe. Unemployment is extremely low and production costs are competitive.

Zurich is also a good employer and promotes progressive working conditions such as fair salaries, advantageous social benefits, different working time models, equal opportunities for men and women and a vast range of educational and training possibilities.

The finance sector generates around a third of the wealth and a quarter of the jobs in Zurich.

These figures are significant, especially when considering that the municipality has a population of just 390,000 inhabitants, while the Zurich metropolitan area has a population of 1.83 million. That’s smaller than most European capitals.

Research and value creation also play a huge role in the city’s success.

The city is a centre for biotechnology and life sciences research. Apart from medicine, research is also rich in the automotive supplier industry and aerospace. Moreover, Zurich banks a lot on intellectual property management.

Finance is what fuels the economy – the city is home to a large number of financial institutions and banking giants.

The Greater Zurich Area is also a fast-growing centre for the life sciences

The city has attracted some of the largest corporations in Switzerland and in the world. 85 of the 100 biggest Swiss companies have their headquarters in the area, while Google has set up its European headquarters here, as have GM Europe and Fifa.

Zurich in numbers The finance sector generates around a third of the wealth and a quarter of the jobs in Zurich.

01

– international companies like Amgen, Baxter, Ecoleb, Pfizer and Zimmer have chosen to set up a branch or even their international headquarters here.

The same goes for ICT, which is Switzerland’s third most important industry and one of the top five employers in the country. International companies like IBM, Siemens, Philips and Hewlett-Packard are all based here.

No wonder that Zurich consistently hogs the top spot in quality of life surveys. This year, it ranked first in Monocle’s quality of life survey, also getting top marks for political and economic stability as well as infrastructure. Zurich also frequently tops the Mercer quality of living index – the strict Mercer index uses 39 criteria to assess quality of life, including political, economic and environmental factors as well as health and education services. Safety is also on top of the city’s agenda – Zurich does not have any dangerous areas and the crime rate is extremely low.

NASA

Most of Zurich’s success boils down to discipline. For instance, in order to further protect the environment, residents have voted to impose on themselves strict new emission targets.

Moreover, Zurich prides itself on its time management – after all, it’s never late.

And that’s one stereotype that is true.

17,000

2.5M

– ETH Zurich, the Swiss Federal Institute of Technology, has more than 17,000 students from approximately 80 countries who study and conduct research in the areas of engineering, architecture, mathematics and sciences.

3,700 students are doctoral candidates.

– Zurich hotels provide 2.5 million overnight stays every year.

20 million passengers use Zurich airport.

140 – The University of Zurich has more than 140 institutes.

1/9 One out of every nine jobs in Switzerland is in the City of Zurich.

125 – The Zurich municipal council has 125 members, while the city council has nine. Both councils are elected every four years.

85.1% – The total assets of banks in Zurich correspond to 85.1 per cent of the total value of all assets held in Switzerland.

They also generate 15 per cent of Switzerland’s entire revenue.

Money / Issue 15 - 41

Luxury

Cyrus Kuros Star Team

Conquering time

Cyrus the Great inspired Laurent Lecamp, CEO of Cyrus watches, to build an empire on innovation, exclusivity and identity.

How did your personal history with watches start?

I think it started like every beautiful story: “Once upon a time, in a small town in the south of France, a father offered a watch to his son for his 16th birthday…”

At the time I had no idea about watches, mechanisms, or complications.

Nevertheless what I received from my father gave me something that not even the most complicated watch in the world will ever give me: a huge emotion.

I will never forget that my first watch was a gift from my father. And that was the

42 - Money / Issue 15

best introduction to the world of watch making as – for me – it is based on emotion first.

Watches are one of the oldest inventions, yet you still infuse them with innovation. How do Cyrus watches balance tradition and innovation?

Cyrus the Great conquered the world 2,500 years ago. During his time, the first gold coin for trade was developed and it featured a lion fighting against a bull, symbol of Babylon, the famous ancient city conquered by Cyrus. I spent five months travelling all over the world

to find one of these coins and I managed to find one in Eastern Europe. I bought it immediately. I had in my hands one of the very first coins ever produced under the reign of Cyrus the Great. Unique.

Each Cyrus model we create in gold has a certified copy of the coin in 18kt gold on the back of the watch. This is like the signature of the brand. You also have a historical value like no other brand has and this is connected to the name of the brand, Cyrus.

If we go deeper into the concept, Cyrus the Great loved the number three. It was his lucky number – he conquered three

deployant buckle will always be in the middle of your wrist – not on the left or on the right.

You went against the flow and set up a family business – how important are the values of a family business?

You have a fascination for classical personalities – how do they inspire you?

A: Family is one of the most important things in life, simply because you can rely on it, like a best friend. I created Cyrus with my double-cousin Julien as we know that we can rely on each other.

If we disagree we discuss together and always find a solution. We are never afraid to give a different opinion or have a different point of view. We are like brothers. We started together and we will develop together too, whatever happens.

If I had to choose between two paths in the forest, I would always choose the less travelled one – in the end, that is what makes all the difference. This is how I see life and this is exactly what inspired Cyrus the Great 2,500 years ago. Cyrus was abandoned as a baby and life was not easy for him. But in the end he took the less travelled paths and ruled the world.

main territories before being considered as king of the world, he had three women and three children. Have a closer look at our two collections, Kuros (the Greek name for Cyrus) and Klepcys and you will observe 3D dial, three functions, three types of finishes on each timepiece – polished, brushed, sandblasted – a deployant buckle with three elements, logo and screws (our own screws) with three arms.

Even the design itself is inspired by the spirit of conquest of Cyrus as it is a worldwide patented design that perfectly adapts to the wrist, whatever its size.

Our sapphire is a torical one, with two angles, patented, as it perfectly suits the shape of the timepiece too.

Last but no least, for our Klepcys collection we developed complications that nobody has in the world. They are patented and belong only to the brand.

This is the new conquest of the 21st century: being innovative and exclusive with a strong identity.

You place a huge emphasis on the shape and ergonomics of a watch - how do you convince customers to forego the traditionally round watch?

A: That is a really good question and the answer is really simple. Go to GABA Diamonds and wear a Cyrus Kuros timepiece – you will feel the difference.

Not only does the design of the shape perfectly suit the wrist but the size of the straps can also be adjusted so that the

I believe that in life, a very positive mind is the key to success. I have no fascination for what people do, whoever they are, but I believe that a strong spirit, a positive one with another way of thinking, is what the world needs.

How important are patents in protecting creativity and innovation?

Patents are very important as they are proof that we were the first to do something. Being the first means that we were creative and driven by the spirit of innovation.

Some brands are already taking our complications and adapting them for their own models but I do not want to spend time and money to take them to court. And I do not need to do that as I have proof – the patents – that we were the first to develop these complications.

Whatever does happen in life, a follower will always be a follower, never a leader.

“This is the new conquest of the 21st century: being innovative and exclusive with a strong identity.”

What watch are you wearing right now?

A Cyrus Kuros on my left wrist and a Cyrus Klepcys on the right – that’s only because I’m alone at home. I find pleasure in wearing two collections as I can observe and compare them while thinking about new ideas. Once I go out, I wear a Kuros or Klepcys, depending on my mood.

What watches will you be introducing in your 2013 collection and when will this collection be unveiled?

We have our own manufacture with 70 watchmakers and engineers, based in Le Locle. For more than two years we have been working on a new development based on a manual winding movement (seven days power reserve).

This will also be our third collection and will be launched next year during the Baselworld watch exhibition. Once again, remember the number three – everything is connected. This is how I see luxury – once you have your own philosophy, you have to follow it, whatever happens.

Money / Issue 15 - 43

Design

A journey through space In her designs, Interior Architectural Designer Violet Kulewska combines sustainability, creativity and artistic freedom.

I came to Malta on a whim. But after a three-month internship, I decided to extend it, and then decided to settle down here and work on a freelance basis. I’ve now been in Malta for four years and I’ve loved every minute of it.

The role of a designer is to create a dreamscape for serenity and happiness.

Design is all about improving the quality of life through shapes, forms, space and colours.

When working on a project, I try and combine the technical and constructional requirements of design with artistic freedom – this helps me to find the best design solution for a particular space.

Malta has had a very profound impact on me and my work. When I first arrived here, Malta was an exotic destination – it was so different from Poland and London.

But the first time I walked into Valletta, I fell head over heels in love with it.

Four years later, I’m still amazed by Maltese architecture. Valletta, especially, is awe-inspiring.

I read a lot about Malta’s history. To live and work here, I feel that I need to know the history of Malta and its people.

Valletta is a planned city – every building and every space is in harmony. In other towns and villages, however, there is a lot going on, and this is frequently discordant. People should be more careful about where and how to build.

Money / Issue 15 - 45

Design

The designer Violet Kulewska, 32, was born in the South of Poland and graduated from the Department of Fine Arts and Display Design in 2000. After studying 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). She is now based in Malta and designs under the name VK interiors & furniture.

For more information visit www.violetkulewska.com

Sustainability is key. We have to maintain a sense of proportion and also make use of existing buildings which are currently not being utilised.

There is a folksy element in some of my designs – that’s an ode to my homeland and to my roots.

I have designed a number of retail outlets in Malta. For Chai Bubble Tea House in Spinola Bay, I was inspired by Tokyo tea houses, which are colourful and experimental. The design was also dictated by the product on sale, which is itself a modern take on Asian tea. It’s all very playful – the tea house is designed to look like a straw game, with a counter

that is made of brightly coloured tubes.

I have also designed the SeaGull clothing boutique in Hamrun, in collaboration with artist Adrian Abela. The idea is to transport customers from a busy town to the coast, through the design.

For me, ecology and sustainability are important values. For Malta Design Week, I used readymade traditional Maltese furniture and gave it a new function and new lease of life.

My approach to interior and product design is similar – my aim is to combine innovation, creativity and materials.

What inspires my relationship with clients is trust.

Pure thrills Michael Debono Ltd announces the launch of the Toyota GT86, a driverfocused, compact 2+2 sports car that has been designed to deliver the core qualities of the classic sports car experience. That means precise, instant response to the smallest throttle and steering inputs and a performance that appeals to those for whom driving is a passion.

GT86 is the world’s most compact four-seat sports car, built on a new platform and with a highly aerodynamic body shell. Thousands of man hours were spent meeting hundreds of development challenges, with Chief Engineer Tetsuya Tada and his Subaru counterpart Toshio Masuda, determined to preserve three key elements: rear-wheel drive, no turbo charging and ordinary tyres.

46 - Money / Issue 15

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A great day at the office As Dex launches Vitra, Romina Vassallo explains how this new brand focuses on the work environment while enhancing motivation and productivity. Romina Vassallo is Marketing Executive at Vivendo Group.

How do workspaces reflect and adapt to a company’s business strategies and targets?

human beings. We do not sell products, but rather create items that adapt to and enhance the lifestyles of our users.

You only need to look at companies such as Google and Apple to see how workspaces are intrinsic to a company’s strategies. Such companies create innovative workspaces that attract what every company needs – good talent. People want to work differently today, and companies are embracing new design concepts to facilitate this, allowing their staff to feel comfortable in their working environments.

Our first question to our customers is not “What colour would you like?” but rather, “What would you like your workspace to achieve?” We found a mirror of this philosophy in Dex Workspaces in Malta and have partnered with them to bring our innovative concepts to the local market.

Are personalised workspaces more inspirational than uniform workspaces?

Personalised workspaces allow you to take into account the differences in your workforce. Your senior management, who may be over 50, may want to work differently from a 20-year-old who you just employed straight out of university.

Today’s international workforces contain many different cultures and, by having personalised workspaces, you can create a productive environment that everyone is happy with.

What new elements does the Vitra brand introduce to the market?

At Vitra we believe in building furniture that adapts to the needs of

In the past, office spaces were segmented, like little islands in a large building. Office furniture was also adapted to the IT of the age, so big desks were designed to fit big computers. Technology has changed the way we work and workspaces have evolved accordingly. Workbenches are now becoming more common, and we are very proud to present the next generation of standing workspaces at Orgatec, a large furniture exhibition in Cologne, Germany on October 23.

How does the Vitra brand inspire the additional productivity of a company?

Today the office is a marketplace.

Formal spaces do not encourage the sharing of ideas and creativity. By adapting workspaces to match this, you allow people to work how they want.

For example, Vitra’s new standing workspaces create informal work areas that facilitate speedy meetings and staff collaboration, offering businesses considerable productivity benefits.

In addition, studies have shown that workers are more focused when standing.

What about the health benefits of a good workspace?

A good, comfortable posture is important when you are spending a long time in that position. Interestingly though, the human body is designed to stand erect, rather than sit – so our standing workspaces create a very interesting balance between health and efficiency. There are also stools provided so workers can sit, but the table retains its height, encouraging good posture.

This goes back to the intelligent design concept that Vitra is founded on.

What will Vitra bring to Dex Workspaces?

Dex Workspaces is already a wellknown brand in the Maltese furniture market, and Vitra will enhance this by allowing them to collaborate further with local interior designers and architects to bring unique workplace visions to life.

Our strength will allow Dex to adapt ad-hoc to whatever their customers may need and that, as we well know, is a great strength in today’s marketplace.

Money / Issue 15 - 49

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French Connection hat - €55.00 Tom Tailor shirt - €39.95 Mexx cardigan - €89.95 Mexx jacket - €159.00 Tom Tailor cords - €53.95 Opposite Esprit shirt - €39.95 Mexx cardigan - €65.00 Mexx blazer - €159.00 Mexx chinos - €65.00 French Connection shoes - €146.00

Mexx Metropolitan blazer - €159.00 Mexx Metropolitan trousers - €89.95 French Connection shirt - €89.00 BHS cardigan - €45.00 Musto bag - €215.00 Ecco shoes at King Shoe Shop - €119.90 Opposite French Connection beanie - €27.00 French Connection blazer - €265.00 Tom Tailor shirt - €29.95 BHS sweater - €22.00 Mexx chinos - €65.00 French Connection shoes - €146.00

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jacket - €123.00 shirt - €89.00 jeans - €77.00 shoes - €146.00

Opposite French Connection beanie - €27.00 Esprit t-shirt - €35.95 Musto coat - €169.00 French Connection jeans - €103.00 Mexx shoes - €149.00

Gifts

What money can buy Money helps you break your budget on these luxury items.

Scandyna Smallpod speakers Danish speaker company Scandyna has launched a wireless version of its Smallpod powered speakers.

These striking speakers have built-in amplification and Bluetooth connectivity so you can use it with any computer or tablet for wireless music playback.

There’s also a rear-mounted auxiliary input and a remote control.

58 - Money / Issue 15

Watch the time Luxury Swiss watchmaker Hublot has launched its new, limited edition King Power 305 timepiece. This 48 mmdiameter watch is made from King Gold (18kt gold with five per cent platinum) and is equipped with a HUB4214 mechanical self-winding skeleton chronograph movement, formed of 257 components. The watch’s solid case-back, also in King Gold, is engraved with a view of Miami Downtown and, of course, the number 305.

McLaren P1 Unveiled at this year’s Paris Motor Show, the McLaren P1 supercar will blow you away. And it’s not even the final product.

Life of Riley bottle trunk

A warm hug Your best armour against the cold is a softer than soft Loro Piana cashmere and suede blazer. This unstructured creation is a lesson in Italian luxury.

Pair with cream cords and a fine-knit sweater for the best in continental flair.

A sunny day in winter only means one thing – a picnic. Give your day outside a classy touch with this bottle trunk by Life of Riley – this leather trunk holds six bottles of wine and corkscrews. What else do you need?

William Morris Blackthorne Tie Everything to write home about The legendary Meisterstück 149 piston fountain pen

by Mont Blanc has an 18K gold nib with rhodium-plated inlay, barrel and cap made of black precious resin. Write on.

A talented writer, designer, and administrator, William Morris was one of the most influential figures of the British Victorian era. This tie draws on the influence of Morris’s wallpaper and fabrics to create a tie that’s just like wearing a piece of art. The tie is particularly inspired by the Blackthorne motif from 1892 wallpaper.

Paul Smith gloves Crafted from leather, these vintage gloves by Paul Smith are smart but with a playful finish, with multi-stripe piping and embossed Paul Smith signature logo.

Money / Issue 15 - 59

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In business class

Food and travel writer Mona Farrugia edits www.planetmona.com and runs Angelica in Valletta. www.angelicamalta.com

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Anthropologie

Capital investment How does one go from hating a city to almost loving it? Mona Farrugia finds out.

D

id you know that 70 per cent of Maltese have been to London?

Of course you did. To London and to Catania. Ok, strike that and make it Rome, which is closer to the truth.

Of course, others have been to Corfu, Bulgaria and on one of those weird package holidays which take you to out-of-the way ‘hotels’ in packed coaches full of people wearing nylon-derivative jumpers and non-iron trousers. There, they manage to attend mass on Sunday and shop in dreadful supermarkets which sell the same kind of tat they you would find in Malta for cheaper.

Our travel choices have, since the 1970s – when overseas travel started becoming less outlandish than a space journey – been informed by shopping, religion and if possible, both at the same time. Like it or not, the Mintoff years have formed us so that even if you can now get 378 kinds of toothpaste from your village pharmacy, we still think we can buy better and cheaper from abroad.

And when we want to shop hard, we go to London. Those who do this without money – trying to save money by spending it – go to Primark and hit the clothing aisles at Tesco, marvelling at how cheap everything is (it is cheap, in all senses). They stay at the cheapest hotels, trying not to notice that the underground really is under their ground. They spend half their day on the tube, ‘saving’ more money, and feast

on a fast food menu. Then, without any shame, they profess it to all and sundry on Facebook.

Don’t be shocked – this is how we are.

It’s the eternal 80/20 conundrum and the Maltese love to save money, even if most of the time it’s false economy.

The reason I hated London is because when I was 22, on my first visit, I tried to do it on the cheap. I stayed with a couple of friends at a Catholic hostel off Oxford Street, where we took it in turns to sleep on one single bed. We ate junk food and bought Che Guevara t-shirts in Camden.

We went to free-entrance clubs and dragged out a half pint for the best part of two hours. We lived like very poor, broke students in a city made for the rich, until my Belgian boyfriend saved me from the horror by turning up on his beautiful bike and whisked me off across Europe in leather.

Everything in London is created for those who can afford it. Even the salaries of those working for the same company but in a London office, rather than Derby, reflect this. Nothing is cheap, not even a coffee.

Which is why when I go there, I go large. There is no other option. The one thing you can do is make sure you get good value for money, starting with the room you pack all your shopping in at the end of a hard day at Harvey Nicks. Staying in the Knightsbridge or

Chelsea area is a good indicator. I tried to go hip for the past year or so, staying in Shoreditch, but cool as it was, and conveniently located next to Borough Market, I will never forget how terrible squeezing myself into a tiny room at The Zetter was, or the fact that room service was a vending machine outside a €250 a night room.

The Beaufort is half a kilometre down from Harrods, right next to Beaufort Gardens. It is quiet, located in a beautiful area and superbly blissful. The rooms are lovely, the bed comfortable, the amenities top quality and they have a free afternoon tea which includes champagne.

It is impossible to go to London and not shop. You can go the Primark way, spending €300 in one shop on cheap tat which you will never want to wear anyway, or you can take those €300 and spend them on one item which will last you for life. Say a pair of Current/Elliott jeans at Liberty.

The reality is that this is the city where you need to stop budgeting and start living, where you go from the yellows on the Monopoly board to the purples.

From deodorants and Sally Hansen nail products from Boots to a pair of €800 soft suede Giuseppe Zanotti boots and a €3,000,000 crash pad in Mayfair, London will offer it all and well.

Money / Issue 15 - 61

In business class

Keep your worries at bay GasanMamo Insurance just introduced a new insurance policy specifically designed for property owners who rent their property. The Landlord Insurance is divided into four main sections, each pivotal in providing overall comprehensive cover, including buildings cover, landlord’s contents insurance, rent guarantee (providing cover for loss of rent and the risk of rent default) and cover for legal liabilities.

“The Landlord Insurance has been specifically developed to focus entirely on the clients’ risks and insurance needs with this kind of property in mind,” said Julian J Mamo, Director at GasanMamo.

Increased and innovative cover applies in all sections including buildings and landlord’s contents.

One of the most significant parts of the policy is the rent guarantee, where owners are given peace of mind with protection over their rental income in the event of the building being made uninhabitable following an insured event together with cover in the event of the nonpayment of the rent due to specific insured circumstances. When a property is rented to third parties there are risks and responsibilities attached – the scope of this new and innovative policy is to provide protection against these risks.

For more information visit GasanMamo’s Head Office in Gzira or one of the GasanMamo branches or agents across Malta and Gozo, call on 2134 5123 or visit www.gasanmamo.com

62 - Money / Issue 15

Do you want to queue with the mad people outside the Apple Store in Regent Street for the latest Apple product?

Thought not. Call Harrods’ customer service line – they will put you through to their electronics department, which now has an Apple shop and you can pre-book whatever you want and then collect it at your convenience. When I did this, not only did they offer to call me back (to save me money) because I said I was flying in, but they actually called a day later to confirm that it was there and madam, when I liked, I was welcome to go over for it.

For food, I always pay Fortnum and Mason a visit, just to soak in the beauty of the windows and the loveliness of the rainbow-hued sweet stand. I also love the never-ending food aisles at Selfridges.

Harvey Nichols’ food floor is shamefully dull and gives too much space to Karl Lagerfeld Coke bottles Out of the safe walls of plush department stores, the most fun food shopping can be is East End’s Borough Market on a Saturday morning. Kick it off with a kippers breakfast at Roast and then immerse yourself in the world’s wines, sausages, pies, tarts and meat. I love the Ginger Pig’s selection and always bring their pork pies back with me.

London does food so well that it puts most other European capital cities to shame. From glorious cupcakes (albeit mostly commercial and with some pretty dodgy ingredients thrown in for shelf-life) and cakes to a slab of chateaubriand consumed on tiny tables at Racine (on Brompton Road, another stone’s throw away from the Beaufort) to every single bit of the world’s cuisine including Ethiopian and Armenian, you can eat it here and eat it well. For seafood and oysters, any of Richard Caring’s restaurants are great (if alone, eat at the bar where you will never feel abandoned) – J Sheekey is my personal favourite.

St John’s (East End) does offal in an amazing way and that includes the roasted bone marrow dug out with tiny forks. Dinner by Heston Blumenthal at the Mandarin Oriental (right opposite the Tom Ford make-up counter exit at Harrods) is an outstanding experience on all levels: culinary, ambience (ask for the tables which back to the kitchen and

overlook Regent’s Park) and service. It does come with a long waiting list for a table but chance a walk-in at odd times and you’ll probably be rewarded. If that fails, opt for the outstanding burgers at Daniel Boulud right underneath, still at the Mandarin. Lunch for one with wine and dessert will cost you around €80, but it doesn’t seem to put anybody off.

When in London, I love buying cosmetics. Cue Kiehl’s, Aveda haircare and Aesop oil cleanser, moisturiser and hand-cream – I usually stock up at Liberty. I also get a scarf every time I’m there. And Current/Elliott jeans. And beautiful stationery. I can feel the credit card meltdown creeping in already.

Which is why I should never have bought my first Tom Ford lipstick. What the master of perfectionism has managed to do is infuse every bit of his attention to detail in every single item that comes out of that black and gold counter at Harrods.

I gave my Tom Ford virginity to a white and gold, square sided, bright orange lipstick a year and a half ago and there was simply no turning back after that. It is creamy, bright, the pigment strong and makes your lips (or mine, rather, since I’m not lending it) look like a million dollars for the measly sum of €45. The lipstick effect (when people will not buy a €1,500 Chanel bag but would buy a €20 Chanel lipstick) this ain’t.

For offbeat brands, Space NK is still the beauty shop du jour. They have By Terry, probably the best foundation and highlighter brand in the universe and informed, enthusiastic staff. So does Bobbi Brown at Harrods.

London is shoe heaven. From the all-over Louboutin shops to my favourite flats on earth at Pretty Ballerinas (their folding leather ones are gorgeous, smart and practical), ladies will be seriously happy. Ugg opened a shop five seconds away from Harrods and nobody can surely dispute the loveliness of sliding their weary feet into what seems to be a lamb and walking in it.

There can never be enough pages to cover shopping in London, which is why entire guides are dedicated to it.

Just make sure you have a good bath to go back to in the evening – those weary feet and legs are not going to relax themselves.

Property

Moving in

Live the dream with Money’s properties of the month.

total floor area of more than 500m², this property is both luxurious and comfortable.

Sliema Price: €900,000 - Freehold (FH)

Tigne, Sliema Price: €470,000 - FH

Outstanding and unique, this duplex penthouse enjoys spectacular views of the Grand Harbour and Sliema creek. Property has an 80-foot frontage on the eighth and ninth floors with a total floor area of over 400m². This is one of the largest penthouses in central Sliema and is designed with luxury and comfort in mind.

Includes four bedrooms, kitchen/living/dining, three bathrooms and pool.

Very well priced penthouse in a block of nine in one of Tigne’s best areas. Highly finished. Measuring over 220m² with large frontage, two double bedrooms both with ensuite, main bathroom, very large and bright open plan kitchen, living and dining. Enjoys beautiful views of Valletta. A Jacuzzi is part of the finished residence and a pool can be placed on request while still in construction.

adjacent open plan kitchen/ breakfast/dining area with parquet flooring. Both these areas lead to a lovely front terrace with stunning views of the marina. The sizeable main bathroom has Gianni Versace designer finishes. The master bedroom benefits from a walk-in-wardrobe, ensuite bathroom and terrace with wonderful views. Also includes two guest bedrooms with ensuite bathrooms. A car space is included in the package and a further, optional second car space is also available.

BLOCK OF APARTMENTS

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Portomaso, St Julian’s Price: €1,050,000 - FH An elegant apartment in one of the best blocks and floors in Portomaso. This spacious accommodation is spread over 255m² and boasts a large entrance hall, a sunken, formal lounge and dining area and an

Two plots for semi-detached villa, both measuring 185m².

Enjoying city and sea views.

San Pawl tat-Targa, Naxxar Price: €560,000 - FH Semi-detached villa measuring 350m² with breathtaking country views.

Madliena, Gharghur Land for fully detached villa measuring 800m² at €950,000 - FH

500m² with permit in hand. A bargain at €678,000 - FH More land with permits for villas and bungalows in other desirable areas are available.

Sliema Price: €123,000 - FH

One of the largest penthouses in the north of the island.

This property has a frontage of 160 feet and is situated in the tranquil surroundings of what is a walker’s paradise and is only minutes away from the nearest beach and all the necessary amenities. With a

The Village, St Julian’s Price: €260,000 each - FH

Land for fully detached villa measuring 3300m² at €1,300,000 - FH

APARTMENTS

Bahrija Price: €380,000 - FH

LAND FOR SEMI / FULLY DETACHED VILLAS

Visuals

PENTHOUSES

Very well priced block of five apartments consisting of three two-bedroom apartments, one twobedroom maisonette, and a one-bedroom penthouse.

This block is situated in a very good area just off Dingli Street and has a total floor area of 90m² and a 16-foot frontage. All apartments include main bathroom and ensuite bathroom.

VILLAS

Kappara Price: €800,000 - FH Fully detached villa in an elite part of Kappara, comprising a large entrance hall, lounge/dining, fitted kitchen/breakfast/living room, pantry, study, guest toilet, four bedrooms, bathroom, shower en suite, laundry room on roof, two/ three car garage, gym and large area which could extend the garage or be turned into a flatlet. Surrounding garden and space for pool.

Bidnija Price: Offers only.

An outstanding, brand new three-bedroom semidetached villa in one of the best areas of Bidnija. Still under construction but will be finished in the coming weeks.

Includes a well-sized open plan kitchen, living, separate dining room, full-sized basement, pool and 1.5 tumoli of gardens.

five cars outdoors and three in the garage. The house includes four bedrooms, separate kitchen and living, large kitchen and study. This property has been vacant for some years but can be restored to its former glory with very little money. Can also be easily transformed into three beautiful apartments with communal pool or two semidetached villas.

Class 4 permit in hand, situated in a prime position facing the marina. The property has two main entrances and covers 450m².

It is fully air-conditioned and has state of the art lighting, false ceiling, all points and much more. Good walking business and ample parking.

Can also be rented.

HOUSES OF CHARACTER Valletta Price: €654,000 FH

Buskett, Rabat Price €654,000 - FH Brand new, to be sold finished 750m² bungalow in the most renowned and sought after area of Rabat, proposed plan consists of a large kitchen/living/dining, two double bedrooms, main with ensuite, one large single bedroom, swimming pool with separate garden/ entertainment area offering all available commodities.

Modifications to existing plan are also possible. Highly recommendable especially for those who enjoy genuine Maltese suburbs.

Pembroke Price: €650,000 negotiable.

- FH A rare beauty in a very sought after area with unobstructed views to Villa Rosa and the sea. This large corner property has two entrances, large pool with entertainment area, garage and drive-in with two gates which can accommodate

Iklin Price: €700,000 -FH Semi-detached threebedroom bungalow in a quiet residential area. Measuring 500m², this property enjoys all round country views.

Accommodation includes entrance hall, sitting/ dining room, separate fully fitted kitchen, three double bedrooms, bathroom and two ensuite bathrooms, back garden with ample space for pool and a three car garage.

An ideal family home.

House of character with Class 4 permit in hand in a quiet area of Valletta. Registered as office and enjoys sea views.

Presently in use and ready to move into. The property has four floors and two separate basements, internal covered courtyard, large well, two toilets and kitchenette.

Electricity, plumbing and lighting everywhere and telephone system in all rooms. Air-conditioned on third and fourth floors.

The property is in perfect condition and internal features have been restored.

Freehold with its own roof.

COMMERCIAL Ta’ Xbiex Price: €1,738,000 - FH New on the market, ready to move into ground floor commercial premises with

Tas-Salib, Rabat Price: €700,000 - FH A rare find, a unique fully detached house of character

in one of the most exclusive areas in Rabat, over looking Chadwick lakes and with unobstructed breathtaking country views. This highly converted house of character consists of 4 double bedrooms all with en suite, spacious open plan kitchen, living and dinning, 2 lockup garages with a 10 car drive way, underlying caves with swimming pool and another very large pool with Jacuzzi overlooking Chadwick lakes. In addition this property has 2 tumuli of land.

For more information regarding these properties or any other which are not featured here contact B&A Realtors consultants Cliff Arpa on 9999 7890 or Nina Zelenina on 9920 0800.

Money / Issue 15 - 65

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

The Bluesman’s blog The Bluesman giddies up on a horse with a name.

S

ometimes I wonder if the horse minded being replaced by clattering machinery. This noble beast, responsible for the domination and movement of armies, pack horse, work horse and war horse, once introduced to the Americas by the conquistadors, helped settle it.

And where would Hollywood Westerns be without the horse?

This sturdy four-legged extra is so much a part of the genre that Westerns are very often referred to as Oaters. The American Indians are usually – and unfairly I might add – depicted as a marauding band of expert horsemen. But it wasn’t always this way. In the 1600s the Spanish ranchers in the Southwest used horses to work the land but the Native Americans, who were used as slaves on these ranches, were forbidden by law to own a horse or a gun. Nevertheless they learned how to train and ride horses.

After the Spanish fled to Mexico during the revolt of the Pueblo tribe in 1680, the Pueblos took to breeding and trading horses.

Ironic, then, that the Sacred Dog gave way to the Iron Horse.

It would be hard to imagine getting around New York City without the use of the subway. A stainless steel worm meandering underground occasionally bursting to the surface like those things in Dune. Well, almost. Its more sophisticated cousins ply the routes up and down what is termed the East Coast Corridor into Canada and West into New Jersey and beyond.

A trip on an Amtrak train North to Buffalo going through Woodstock country (Bethel was the actual site of the concert) takes seven hours – vast fields of corn, oats and wheat roll past

66 - Money / Issue 15

reminding the traveller of the vastness of the land. On a trip through New Jersey once we had to stop and wait for a freight train to cross ahead.

It took 25 minutes. The horse drawn Prairie Schooner wagon opened up the West but the railroad, built, populated and supplied it.

The automobile, of course, could be considered the direct replacement for the horse and that would explain this country’s love affair with the horseless buggy.

Head south and find the open road, heading west along Interstate 40, for instance, one of the routes West. You climb up to the Smoky Mountains through Asheville, North Carolina.

There’s plenty of gnarly road in the interstate system but this stretch is well maintained and very picturesque.

Eventually coming across the centre of country music in the middle of Tennessee, Nashville, on to Memphis and across the Mississippi.

I guess there’s something about the sound of wheels drub-drubbing over the road surface that evokes the sound of hooves. Except the cost of feeding the horses carrying you maybe? A century ago a hundredweight, four days worth, of any of the primary feeds cost a dollar.

This translates to 25 cents per day. The modern day daily cost of feeding a horse could be anywhere from $4.40 to $8.80. In the US, a gallon of gas in 1912 would have cost you around 20 cents. Nice yeah? Ah, but that piddling 20 cents is equivalent to $5 in today’s money. Currently the price is $4.15 for regular grade in New York. The average across the States ranges from $3.50 in Tennessee to $4.65 in California. So it seems like we’re a little better off driving cars than riding horses but then consider the price in 2000 – it was $1.55.

The Iraq War was indeed about oil, just not for us, only for the likes of Halliburton.

Road trip anyone?