The Business Observer Newspaper 11th August

INTERVIEW

Issue 57

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August 11, 2016

Distributed with Times of Malta

Crowdfunding platform Zaar has already had 21 campaigns since it was launched in January. Manager Matthew Caruana gives tips on how to succeed. see pages 8 and 9 >

NEWS HSBC Bank Malta’s return on equity has fallen to 8.5% but its CEO, Andrew Beane, is convinced that the new strategy will bring IT back above the group’s 10% target. see page 3 >

Prospects looking good Vanessa Macdonald The government is planning to announce fiscal incentives in the coming Budget to cover the Prospects product launched earlier this year by the Malta Stock Exchange.

Prospects was launched last February to offer a cost-effective alternative source of financing to SMEs that need between €1 million and €5 million. The MSE is the regulator and the admission process has a lighter regulatory structure than the main market. Furthermore, the cost to come to market should be very affordable, with the Exchange keeping its own fees between €5,000 and €15,000. The product is based on the concept of a corporate adviser who would bring the SME to the listing. Besides helping the SME to come to market and attain the standards required, the adviser also ensures continued adherence to the rules and transparency.

“Progress has been made. We were held back by State aid issues but an acceptable solution has been found by the Stock Exchange and its advisers,” Finance Minister Edward Scicluna told The Business Observer.

The news was welcomed by the Malta Stock Exchange. Simon Zammit, CEO designate, said that following the Prospects launch, the MSE continued to listen to stakeholders and

suggestions on how to continue improving the product.

“The fiscal position in respect of equity admitted on Prospects was one area of concern and the MSE worked closely with the finance ministry, the Inland Revenue Department and Mimcol in order to come up with, through our advisers, an incentive package that will make Prospects an attractive market to both SMEs and their investors.

“We welcome the minister’s announcement that these incentives will be announced in this year’s Budget. This is very good news and will surely accelerate the already substantial interest that has been shown for admission to Prospects by the many family-run SMEs in Malta.”

However, the news was not as good for shareholders hoping to see an end to anomalies in the tax refund on dividends, with

“We were held back

by State aid issues but an acceptable solution has been found”

the minister saying that a solution may be proposed in this year’s or next year’s Budget, but a final decision has not yet been taken.

“We have to see whether spending the money on this issue is a priority for this year,” Prof. Scicluna said.

Shareholders receive dividends from companies net of tax, as the 35 per cent corporate tax is deducted at source. In their tax return, people then declare their gross dividends along with any other income and, depending on the tax band into which they fall, get a rebate for the difference between the 35 per cent tax deducted from the dividends and their tax band.

The problem arose when the income tax 35 per cent rate dropped to 32 per cent in 2013, 29 per cent in 2014 and 25 per cent in 2015. Shareholders who fall into the new 25 per cent bracket are still being taxed at a rate of 35 per cent on their dividends – while those who were originally in the 25 per cent tax bracket were getting a 10 per cent rebate.

Sources had explained over two years ago that the problem was that there are currently hundreds of millions of euro in company reserves built up over decades, on which tax has been paid provisionally at the rate of 35 per cent.

Continued on page 17

ANALYSIS People either love the TransAtlantic Trade and Investment Partnership – or hate it. Vanessa Macdonald tries to plough her way through the arguments for and against. see pages 5, 6 and 15 >

STOCK MARKET REVIEW Could it really come to this? Could Maltese banks actually start charging customers to keep their money in current or savings accounts, as some UK banks are doing? see pages 16 and 17 >

e Business OBSERVER

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August 11, 2016

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NEWS

HSBC head positive about its future in Malta The chief executive office of HSBC Bank Malta, Andrew Beane, is confident about the future of the bank in Malta – despite the fact that its return on equity is down to 8.5 per cent.

HSBC Group had set a benchmark of 10 per cent ROE by 2017 for its operations but this was recently revised by chairman Douglas Flint “in light of the current uncertain economic and geo-political environment”, coupled with the bank’s view that interest rates will remain low for a long time. Mr Flint said that while the overall target remained intact and appropriate, the current guidance to reach this level by the end of 2017 “is no longer considered achievable”.

Mr Beane, director and chief executive officer of HSBC Bank Malta, who took over eight

“ere are considerably more compliance burdens on banks but we cannot let that be at the expense of customer relationships”

months ago, told The Business Observer at the announcement of the interim results that the focus on ROE was ‘through the cycle’: “We have to recognise that the negative interest rate environment has changed the structural profitability of banks. I remain confident in our ability to deliver a return on equity greater than 10 per cent over time. Equally as we set out this morning, we have a clear strategy to rebuild profitability, which is encouraging as well. I stand here feeling confident about the future.

The bank’s chief financial officer Rashid Daurov pointed out during the presentation of the results that most banks in Europe were only managing a return on equity of between six and eight per cent.

The bank made a profit before tax of €41.3 million for the six months ended June 30, 2016, saved by a one-off €10.8 million gain from the sale of its investment in Visa Europe. Without the Visa Europe gain, the figure drops to €30.5 million, 15.9 per cent down compared to the same period in 2015.

In spite of this, the bank recommended a gross interim dividend of 7.1 cents per share – 40 per cent higher than the 2015 interim dividend – based on the higher dividend payout ratio of 65 per cent approved earlier this year.

“This is the second time that we paid out this level of dividend,” Mr Beane said. “I think that there has to be a distinction between the dividend payout ratio and the ab-

HSBC BANK MALTA CEO ANDREW BEANE

solute level of profits. The dividend payout ratio is a reflection of the capital strength of the bank and in the new regulatory framework in which we operate, this requires the ‘no objection’ of the European Central Bank. So again, I think it is a sign of confidence in the institution.

“The absolute level of dividend in cash terms then depends on the amount of profits that the bank makes. We can build absolute profitability over time – but it is the sustainability that determines

the dividend. What I think it means strategically is that banks need to deliver high quality of profits in order to have the regulatory confidence to be able to pass that through for shareholders.

And that is what I believe that we can do at HSBC,” he said.

Mr Beane presented a new strategy to the board in February and said that some elements were already ahead of schedule. He announced a new product to be launched soon aimed at small businesses and, replying to a

question about the bank’s lending policies, Mr Beane was clear: the bank wants to help.

“We have excess liquidity so we would like to increase our lending within our risk profile. There are considerably more compliance burdens on banks but we cannot let that be at the expense of customer relationships. We know the process can be bureaucratic so I am working to improve this, with the help of the new team we have put together in the past six months,” he said.

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ANALYSIS

Divided we fall…

THE US FLAG FLUTTERING OVER A HALL OF THE HANOVER FAIR DECORATED WITH A BANNER SUPPORTING TTIP IN GERMANY. PHOTO: WOLFGANG RATTAY/REUTERS

It seems unlikely that the Trans Pacific Partnership will be approved by the US Congress. What hope then for the TransAtlantic Trade and Investment Partnership (TTIP)? at is only one of the many issues facing this historic deal, as VANESSA MACDONALD found out after speaking to politicians, officials, business leaders, civic society representatives and academics on both sides of the Atlantic.

Political support – US The chief negotiators – Ignacio Garcia Bercero for the EU and Dan Mullaney for the US – insist that things are on track to sign the TransAtlantic Trade and Investment Partnership. But reaching agreement on all the pending issues is only the first hurdle: the timing is also crucial.

The deadline is – believe it or not – this December. Even assuming that President Barack Obama manages to sign it before the end of his term, it still needs to go to Congress – and that depends a great deal on who is elected in November.

The deal needs just a simple majority to pass, requiring the approval of both the House’s Ways and Means Committee and the Senate’s Finance Committee. Hearings last 30 working days and they would either need to approve or reject: they will not be able to amend it.

Working backwards, this means that for Mr Obama to submit it to Congress in time for him to sign, it would need to be concluded by mid to end November – by when the new President will have been chosen. The climate is hardly conducive to trade deals.

“There has been a sea change in the trade arena. There has not been a majority on free trade in Congress for over 20 years,” Steve Billet, a professor at George Washington University, said.

“If the 1993 North American Free Trade Agreement or [China’s accession to] the World Trade Organisation had to be put to the vote now, I think they would not pass,” he said with a shake of his head.

The Republicans used to be much more in favour of trade deals in the past but they have now moved to a much more protectionist position under Donald Trump, and the Democratic contender Hillary Clinton has distanced herself from TTIP – although if Mr Obama managed to get it through, she is unlikely to dump it completely and would probably try to make her mark by shooting for a better deal, he believes. Mr Trump, on

the other hand, would object vociferously to any attempt to get the deal through between the election and his inauguration.

It does not help that the recently-concluded TransPacific Partnership, which involves the US and 11 other Pacific rim countries, is also on the cards as the two trade agreements are being judged by the same yardstick – even though they are completely different in scope and impact.

Political support – EU The window of opportunity for this deal to be approved does not only affect the US side of the deal but also the EU one, where similar quandaries exist, with French and German elections looming.

Having said that, all the member states agreed to let the Council continue to negotiate.

At some stage, negotiations on the last, tough issues will hit a wall and the two sides will need to take a decision, even though that will mean compromises, winners and losers.

This is one of the reasons that European Commissioner for Trade Cecilia Malmström and US Trade Representative Michael Froman are meeting every two weeks, apart from regular updates.

She recently stated: “The EU has an ambitious trade agenda and remains engaged in pursuing and concluding the different negotiations in which it is involved. (…) On TTIP, therefore, the EU is prepared to make the political choices needed to close this deal with the current US administration, provided that the substance is right.”

“You have to look at the whole package”

Just as the US would need to get Congressional approval, the EU would need the approval of the European Parliament, and it would then need to be ratified by all the member states, since it will probably be presented as a ‘mixed agreement’, just as the Canadian one was. MEPs are kept informed about progress through the Trade Policy Committee which meets every Friday – although German MEP Bernd Lange admitted that some member states were more engaged than others.

The European Parliament, in the meantime, will only get to vote on the final package – just as Congress will – but it has been able to pass a few proactive resolutions which send a clear message to the negotiators on issues which could be deal-breakers – preventing last-minute panic. The EP’s trade committee managed to ensure that MEPs had access to the ‘secret room’ in which documentation is kept, and briefings after each round of talks.

The easiest thing would be for the two sides to pat themselves on the back about the 97 per cent of the deal which has been agreed, and to stop there, before the heavy stuff has to be tackled. But this so-called ‘TTIP Lite’ is simply not on the cards.

Everyone from Dutch MEP Marietje Schaake to the chief negotiators said the same thing: they are not willing to sacrifice an “ambitious, comprehensive and balanced” agreement merely to try to meet the deadline.

“It will work, as long as the parties are willing to be pragmatic and trade off clauses.

There will be good parts and bad parts but you have to look at the whole package. That is the sensible thing to do,” Joel Trachtman, a professor of international law, said.

Geographical Indication TTIP could well go down in history as the Parmesan Wars, even though many of the battles involved were already played out at the World Trade Organisation. There are thousands of products protected by Geographical Indications (GI) in the EU: member states fought fiercely for products like Parmigiano Reggiano, Scotch whisky and Parma ham to be recognised. The dust has hardly settled within Europe, so expecting EU producers to allow the US to start exporting generic parmesan and champagne – well, it is enough to make your whey curdle. Country of origin labelling or GIs are the third largest stumbling block for TTIP, according to an Atlantic Council survey.

The facts do not explain the concerns of the EU’s stakeholders over this $5.2 billion sector.

The US Dairy Council complained at a stakeholders’ meeting – a regular slot during the trade talk rounds – that the EU exported 10 times as many agricultural products to the US as vice versa.

Why can’t you have California champagne?

After all, the EU exports six times as much wine to the US as vice-versa, and 324 times as much champagne, oh, sorry, sparking wine.

Continued on page 6

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e Business OBSERVER

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August 11, 2016

ANALYSIS ??

Protecting consumers Continued from page 5 The American Wine Institute speaker at the meeting was livid: the Americans have been producing burgundy and champagne for 200 years, long before the EU side decided to “protect” its appellation.

The EU producers want to protect the price premium that the GI affords; the suggestion of getting “a $250 trademark” was seen as insulting by the industry representatives, who add that the cost of defending the trademark would be outrageous. Additionally, a trademark would only belong to one company, whereas there are often several producers making a GI food.

The Americans argue that it would cost millions to rebrand their products – which they refer to as ‘semi-generics’ – and that these would hardly make a dent in EU exports.

The EU side is also baffled at the opposition in the US, having just concluded a trade deal with Canada (CETA) which protects 140 GI products there.

What was equally as baffling was the “heels dug in” stand taken by the stakeholders in Brussels a few weeks ago: this was, after all, the 14th round of talks. The lines drawn in the sand were what you would have expected in the first round and it is amazing that so little has been achieved in three whole years.

Food safety EU chief negotiator Ignacio Garcia Bercero cannot say it often enough: nothing the negotiators do will lower the standards of protection for EU consumers. There is clearly, however, considerable doubt, judging by the protesters who gather in Brussels during every round of talks.

The European Consumer Organisation (BEUC) summarised the differences: the EU applies the precautionary principle to proactively regulate risks while the US uses the ‘reasonable certainty of no harm’, waiting for evidence of arm before regulating.

The EU has refused for decades to import hormone-fed beef from the US, and continues to do so in spite of the fact that this contravenes WTO rules. It lost the case and had to face retaliatory measures from the US, but still persists. It has faced similar cases on genetically modified organisms (GMOs): at present only 55 are authorised in the EU. This is yet another issue that seems to defy resolution. The US wants the EU to base its

decisions on science – as the WTO does – and not emotion, fear and pressure from civil society.

The US cannot see what the fuss is about: “We are not going to force people to eat anything that they don’t want to eat,” a source familiar with the negotiations said.

It does not help that there has been considerable resistance from US producers to label GMO foods as such – even though consumer pressure is building up there too and a number of brands are boasting that they are “GMO free”. At present, only one state has mandatory GMO labelling.

Monique Goyens, the director general of the European Consumer Organisation, was cynical.

“There will be corporate pressure which will lead to ‘watering down’ of the statements made now. It is all very well and good to make promises but, in practice, businesses have more resources than civic society and simply wear down resistance, what we call ‘paralysis by analysis’.

“They say that we should base decisions on science – but who pays for that science?

It is very often industry itself. At the very least, we should have publicly-funded science!” she said.

Standards are at the heart of the non-tariff barriers and the two parties use very different ways of establishing them. The US standards are set by around 400 public-private partnerships with most of the standards set by the 20 main ones – which makes them much more user-driven than in the EU, incorporating professional societies, trade societies, testing and certification organisations – as well as ones dedicated solely to setting standards.

Investment protection Perhaps it would be better to start on a positive note: there are a number of things that the EU and the US agree on when it comes to investment dispute resolution. Both want a transparent system and the dismissal of frivolous claims.

Alas, that is as far as it goes. The original dispute mechanism was heavily criticised by civil society which saw it as a way for Big Business to bully governments into relaxing environmental laws, among other things. A survey by the Atlantic Council found that 57 per cent see this as the greatest obstacle to a successful completion of TTIP.

A DEMONSTRATOR BANGS A POT DURING A PROTEST OUTSIDE THE 14TH ROUND OF THE TTIP NEGOTIATIONS IN BRUSSELS, BELGIUM. PHOTO: FRANÇOIS LENOIR/REUTERS

Officials have tried to point out that there are already dispute provisions in 3,200 trade and investment agreements among 180 countries. The US has 50 current agreements which have ISDS provisions – and never lost one. The EU has 1,400 bilateral agreements with countries around the world, designed to protect private investments.

Transatlantic cases account for only 20 per cent of the 653 global cases to date, of which 23 per cent were won by the state, and only eight per cent by the investor (the rest being dropped or agreed ‘out of court’).

The EU realised it was going to get nowhere and came back recently with a completely different concept: an investment court, which the US has not yet taken an official position on. However, AmCham EU has said clearly that according to the feedback it had received, the court proposal would not make it through Congress, effectively blocking the whole deal.

Stakeholders on the US side argue that arbiters appointed by each side would be more independent than judges which depend on the State to be reappointed. They could also be chosen for their more specialised knowledge. The EU side argues that arbiters are often corporate lawyers who could appear for the defendant company in the next dispute, also creating a conflict of interest.

“How could you have a neutral jurist if they are paid by one of the parties?” a government

trade official said. However, the EU proposals seemed to have considerable support on its side of the pond. Dutch MEP Schaake was bowled over by it, saying it was so good that it should be used in other outdated trade deals, as it was more transparent, had an appeal system and a bigger role for civic society.

AmCham EU is less impressed: “[We] are concerned that the European Commission’s proposal appears to weaken rather than strengthen investment protection”, warning that: “Without investment provisions, we do not believe TTIP can fulfil the EU objective to act as a blueprint for 21st century trade agreements”.

Shaun Donnelly, from the US Council for International Business, was the US Trade Representative before Dan Mullaney and would have been leading the negotiations had he not stepped down. He believes that investment eclipses trade by far – one academic believes investments could increase seven-fold with TTIP – noting that while the EU has only started facing these disputes recently, the US has been struggling with them for decades.

“The current resolution mechanisms were already revised twice in 2004 and 2012 to increase transparency. The business community – we represent some 300 leading multinationals – is comfortable with the present mechanism and they feel that it creContinued on page 15

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INTERVIEW

Many hands make light work In just seven months since it was launched by the University of Malta and the Malta Business Bureau, crowdfunding platform Zaar has already attracted 21 projects, manager Matthew Caruana said.

Of these, eight were successful, eight unsuccessful and three are still ongoing. This gives a success rate of 50 per cent, actually better than international levels, Mr Caruana said.

“And remember that it is the crowdfunding that is unsuccessful – since the target set by the beneficiaries themselves was very high – and not necessarily the project. The product or event might have gone ahead – but using different funds.

“For example, Cycling for Children with Disability raised over €12,250 in less than a month but was ‘unsuccessful’ – merely because they set the target as €50,000! The people behind the campaign were very happy!

“It is also important to point out that since it was a philanthropic campaign, they – and the San Miguel School which is the ultimate beneficiary – still get the money raised,” he said.

Zaar is focusing on four types of campaign: business projects; research and academic projects; fundraising and social causes; and arts and culture. Each of these has a different approach when it comes to the benefits for the crowdfunders.

Campaigns for philanthropic or social causes usually do not offer a reward and are, more or less, ‘donations’. Arts and culture were included as the founders of the platform believe that on an international level, reward-based models were most effective with the creative sector: “The people behind the campaign know how to sell their story and their rewards are more accessible: they can give you tickets to the event or paintings and prints.

“For a business, it is all about getting money up front to get your project going, which you then give back later on. The most basic reward would be pre-sales,” he added.

Zaar offers more than just the platform. It offers mentoring on how the campaign should be run and, through a partnership

with Grant Thornton, offers advisory services for business planning, budgeting, proposals, feasibility studies and so on. It also helps with media, social media and exposure.

Mr Caruana is also trying to recruit companies to offer additional support, either pro bono or at reduced rates.

“I am creating a pool of helpers. It could also be financial support but it could be anything such as video productions and photography. It is a win/win situation as the company will remain their client if it is successful,” he said.

Although it is too early to analyse crowdfunding trends, Mr Caruana has noted that there are some repeat backers, albeit not the majority.

“Yes, some people do like to be involved in different things so they contribute to multiple campaigns. However, most of them are Maltese, which means the pool of funders is limited,” he lamented.

“But although we are a local platform, the audience is international so – depending on the campaign – we might be able to export the ideas to seek overseas backers. Crossborder crowdfunding is quite rare but we have large Maltese communities abroad who still feel an affiliation with Malta – so they are another target we can work on.

“The projects also come to us – rather than to an international platform – for this reason.

They don’t get lost in the massive number of projects that there are on international platforms. And the benefits often make more sense here! If your future market is Malta, then we believe that you should use a Maltese crowdfunding platform.

“There are also logistical problems: some platforms want you to have a bank account in that jurisdiction or want you to have a registered company or address in that country. And if there is a legal issue, it is better to deal with your local courts.”

He is optimistic about the future, believing that crowdfunding will grow in Malta, just as it has internationally – increasing from $2.7 billion to $34 billion between 2012 and 2015.

ZAAR MANAGER MATTHEW CARUANA. PHOTO: MARK ZAMMIT CORDINA

“Cross-border crowdfunding is quite rare but we have large Maltese communities abroad who still feel an affiliation with Malta” “Crowdfunding developed because the risks are high and the entrepreneur does not have many other options. It opens up the financing option by splitting the risk across a greater base.

“And for the entrepreneur, crowdfunding gives them a head start, giving them the chance to get to market, to validate your idea. It gives them something material they can take to the bank to organise traditional financing, for example.”

Tips for success Take your time It takes a lot longer to get a business project ready than it does to organise the crowdfunding. Don’t rush and make sure that everything is ready before you go public and launch.

Get the right campaign duration Avoid the temptation to run a campaign for months on end. The ideal is 30-40 days.

Make your message animated Adding a video can make a difference.

Crowdfunders often find out about the pitch on social media so if there is a clip, it is easier than having to plough through text.

Think like your backer Of course, they want to get their money back… But backers also like to see an innovative idea coming to fruition and to feel that they played a part in something exciting, that they shared a vision.

Inspire them!

Make the reward appropriate The reward needs to be enticing. For social causes, the philanthropic motivation is clear. For the artistic side, the rewards need to be valuable – or at least equivalent to what people are giving.

For businesses, backers must first be interested in the product or service, so pre-sales are a hit.

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INTERVIEW

Get that network going!

In crowdfunding, your network is very important. Statistically they say that 20-30 per cent of the funds come from your first line of contacts.

Use the campaign as market research During the campaign, people will contact you and give ideas and feedback: the platform allows two-way interaction. Encourage this as it is not only about the money you can raise: it is also invaluable market research.

Don’t be afraid of failure Failure is part and parcel of crowdfunding,

so don’t be afraid of transparency. If you cannot deliver on the rewards promised – say, the event is not going to go ahead – we refund the money to the backers and you as the campaign promoter do not get anything.

But for a start-up, backers are aware that there is a risk that the project itself might not work out. Keep in communication with the backers; give them updates on how things are going. If something goes wrong, the backers will know that you did your best and were not negligible or fraudulent.

You may need to use crowdfunding again – so your reputation is key!

Legislation needed for crowdfunding Crowdfunding platform Zaar is lobbying the government to introduce legislation which would enable it to expand from reward-based campaigns to equity and lending-based.

Member states in the EU are all scrambling to catch up with the crowdfunding phenomenon but the European Commission decided last May to leave it up to each country to decide on what it wanted, rather than to set up a common framework.

“There is currently quite a lot of consistency between the various member states so the European Commission took a ‘wait and see’ approach,” Zaar manager Matthew Caruana said.

However, that does not mean that Malta should dither on the sidelines.

Although reward-based campaigns are covered by current legislation, Zaar is avoiding equity or loan-based ones as it does not want to operate in a vacuum.

This is why it is pushing the government and the MFSA to introduce a framework with guidelines.

Zaar and its partner Grant Thornton are currently reviewing the various legislation used across the EU to come up with suggestions.

“We should be ready with our review of major legislations in the EU in the

coming weeks. We can see what worked and what didn’t and learn from the best practices of other countries.

“It is hard to say which model is best as things are changing rapidly. Although crowdfunding is well established, different legislations have different strong points. For example, the UK one is based on self-regulation, typical of this country.

Others are making it easier for companies to start their campaign, taking the approach that this should be easy access to the market for young start-ups – but with more controls later on.

“The legislation is consistent on certain points – for example, that due diligence has to be done by the platform – but there are different standards and thresholds. For example, for campaigns raising over €1 million, there might be additional checks,” he explained.

Mr Caruana said that Zaar would like to conduct a proper study to assess the value of the crowdfunding market – to back up its lobbying effort.

“We want to be more proactive and to continue lobbying to prove to authorities that it works. Support is there. It is a lost opportunity as start-ups financed through crowdfunding are creating jobs, investment and growth. We ought to be benefitting from that as a country.”

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CASE STUDY

Barter system strangling construction sector suppliers The barter system prevalent in the construction sector is strangling cash flow for suppliers, and a solution spanning various stakeholders has to be found, Arthur Calleja, the managing director of Würth Malta, said.

He said that getting paid on time in Malta was a problem across the sectors but that construction was by far the worst.

Management time dedicated to credit control can be utilised in a more productive way which would ultimately contribute to boost company KPIs. “In Germany, customers give their banks a one-year mandate to pay Würth directly – getting a discount for early payment, for example. Thanks to this, 88 per cent of payments are made on time via the banking system.

“In Malta, up to until a few years ago, only three or four per cent of our customers in other industry segments paid on time. The value of direct bank payments has today increased to circa 10 per cent of total receivables and we have also seen an increase in cash sales – but not in the construction industry. The problem is not to persuade the customer to buy Würth products, just to pay up on time!”

Traditionally in Malta, various craftsmen involved in construction – from mechanical engineering to plastering – settle transactions through ‘exchange of business’ or barter. But this puts unnecessary pressure on companies’ cash flow. Mr Calleja explained that companies like Würth cannot accept property, goods or services as barter, and late payments could constrain the company’s considerable growth potential.

“This is the major negative issue as we import and distribute products. We even offer on-site delivery, without a minimum order level. We invest in people, knowledge and high stock levels. So if you get paid by your customer 10 or 12 months later, then it has an impact on your strategy. A collection period of over 10

WÜRTH MANAGING DIRECTOR ARTHUR CALLEJA PHOTO: DARRIN ZAMMIT LUPI

“You cannot refuse to give credit; it is just not possible in the construction industry” months will adversely impact the company’s cash flow.

“But what is the alternative? You cannot refuse to give credit; it is just not possible in the

construction industry. Our customers are themselves paid in instalments as each project stage is completed and certified. Large construction projects can easily have 20 different

contractors on site simultaneously, so one contractor can easily hold up the rest,” he said.

There are two other aspects that worry Mr Calleja: direct imports via internet of inferior quality products – not limited to the construction sector – which should “be regulated to conform with standards and have the necessary certifications”.

Another issue is Sicilian traders who market similar ranges of products with no after sales but at cheaper prices.

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CASE StuDy

“Of course, we accept that this is a free market. But there is no escaping that it puts unnecessary pressure on our pricing,” he admitted.

The local company is healthy on a variety of indicators, from sales and profitability to headcount and stock turnover. This ensures the support of the group which financed the new headquarters in Żebbuġ.

However, there is constant pressure, as the local firm is benchmarked against larger markets like Greece, Italy and the Balkans – the other countries in the Würth region that Malta forms part of.

“The Würth Group has its main logistics centres in southern Germany and, if products are out of stock, in other group

“e local company is healthy on a variety of indicators, from sales and profitability to headcount and stock turnover”

companies they can be shipped directly to large customers! Clearly, we cannot do that. We have to think about the lead time for freight and, in the interest of customer relations, we have been known to bring things in by courier,” he said.

Is there a solution? Mr Calleja sees two ways to improve the system. The first is the supply side: banks could take a more proactive role and the government could ensure that its tenders are paid on time.

The second aspect is more under Würth’s control: “We have to ensure that we are disciplined and monitor all our customer accounts, so that we can understand when delays are genuine.

“To do this, you have to be in regular contact with your customers. You need to speak to their management and before the credit limit is being reached, you need to let your customer know. All too often, we are distracted by other things and, if you do not chase a customer, they will not pay.

“Finally, we succeed in paying our suppliers on time and, as a consequence, we should expect our receipts to be timely too.” €12 billion sales 67,000 employees 3 million customers 100,000 products

Würth A SECOND LOOK When Würth came to Malta in September 1988, the island had already seen an influx of German manufacturing companies. But Würth was not interested in opening a production plant here – which would have entitled it to incentives. The wholesale and retail supplier wanted to sell its tools, equipment, chemicals and fasteners here but since there was a protectionist policy in force at the time, a foreigner could not own a company here.

However, the set-up and operations were controlled by the German group.

Two years ago, the company moved from Qormi to state-of-the-art premises in Żebbuġ, a €6 million investment which was funded jointly by the group (€2.3 million) and by the Maltese company (€3.7 million).

“We were growing – we doubled our headcount between 2002 and 2012 to 60 – and needed a central location with more space. We have over 500 visitors at the shop every day. This would not have been possible in Qormi, where the premises were small and parking was such a nightmare!,” he said.

“Steady growth could only be achieved through the support of the mother company giving us a clear

vision, and the local human resource team which was ken to perform and reach set targets,” he explained.

“In order to tap into the potential of the customer base, we started ‘divisionalisation’ – our secret weapon – into six sectors: automotive and cargo, wood and turnkey industries, metal, construction, nautical, and wholesale trade,” he explained.

Sales consultants were trained as pure breed specialists who knew that division inside out, using the ‘train the trainer’ concept to disseminate the knowledge.

The range is so extensive that it is hard to describe but Mr Calleja said it was basically there to support the sectors in which it operates: “We supply everything that a skilled worker, manufacturing plant or site would require – except the raw material itself.

So, for example, we supply everything a carpenter would need to turn raw wood into furniture – even the protective clothing he would wear – except the wood itself!”

The group, which today owns more than 400 subsidiaries worldwide, was founded as a small company in 1945, and remained family-owned, now in its third generation.

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e Business Observer is Malta’s leading business newspaper distributed with Times of Malta every fortnight.

Editorial Vanessa Macdonald, Assistant editor, Times of Malta.

EDITORIAL

Publishers Allied Newspapers Ltd. Content House Group Ltd.

Fumbling in the dark Finance Minister Edward Scicluna makes an important point in today’s Business Observer: data is crucial for planning purposes.

This is of particular importance when you consider that when it comes to government decisions, every action has an equal and opposite reaction. Take, for example, the disastrous decision to allow additional floors to be added to houses which resulted in the wholesale destruction of two-storeyed terraced houses.

Or the heavy-handed decision to tax host families which resulted in a dramatic decrease in the number of households willing to take in English-language students – which took years to recover even after a hasty compromise was made.

The decision to reduce the tax on income from the rental of properties was a pragmatic way to address the rampant tax evasion that was clearly eating into government revenue. Tax Commissioner Marvin Gaerty had explained two years ago that there was a considerable amount of enforcement, with automated systems able to search through individual taxpayers and identify those who have more than one property.

“The more properties the taxpayer has, the more likely it is that he is renting them out. You have to prioritise and audit the cases where there is most risk of irregular activity,” he had told The Business Observer at the time. However, enforcement was clearly not enough and not only the stick but a carrot was needed.

The government needs to assess whether this policy change had the desired effect, and if so, to what extent. It needs to know how many people are now declaring rental income that was previously lost to the black economy and how many people are now renting that did not, encouraged by the easier and lower flat rate. This has to be offset against the revenue lost because those who actually were declaring

their rental income (net of expenses) and paying 35 per cent now only pay 15 per cent.

Even these numbers only tell part of the story. They have to be weighted against the number of properties coming on to the rental market, increasing demand (and the higher wages these tenants earn which make landlords salivate), and the way higher prices at the top end of the market drag up those at the lower end.

This newspaper has tried repeatedly to get figures which would shed light on these trends but these are either not available or not forthcoming. From what the Finance Minister said, the lack of statistics is also frustrating him.

The government needs to model forecasts before it takes decisions and it also needs to be able to check that policies deliver the ‘intended consequences’ while watching out for unintended ones.

Is the Malta Developers’ Association right to say that rental income was being underdeclared and that prices have therefore not really gone up that much (from 23 per cent to 38 per cent for three-bedroom and one-bedroom apartments respectively between 2012 and 2015)?

Understanding all of this is important because of the conclusion drawn by anti-poverty groups that lower-income households were being squeezed out of the market. It is important because this has led to calls for the government to intervene – which would be a disaster unless there were a clear indication of market failure causing social injustice.

The more dynamic a sector, the more important it is to have timely and comprehensive information. This is nowhere more true than in the property sector. Prof. Scicluna may not have been referring to the property sector but he was right: “We need better data for planning purposes.”

Advertising Enquiries Tel: 21 320713 Email: info@contenthouse.com.mt Advertising Sales Matthew Spiteri Head of Sales Petra Urso Publications Sales Manager Kurt Cauchi Rose Caruana Advertising Sales Executives Lindsey Napier Marvic Cutajar Advertising Sales Coordinators Printer Progress Press Ltd.

BUSINESS OPINION

Compensation to shareholders

Anthony Curmi The article entitled ‘Impasse over National Bank valuation’ (Business Observer, July 14) sums up correctly the present situation in regard to the two pending court cases instituted by NBM shareholders against the government.

However, as the article makes reference to two rather wide views on what would constitute fair compensation (zero and €325 million) to NBM shareholders, I think it proper to throw some light on how I arrived at the latter figure, more so as my name is mentioned in the article.

The detailed arguments in support of my own estimate of the present day value (adjusted for inflation and taking into account dividends distributed by Bank of Valletta etc) of the NBM’s shareholders’ stake in the bank (which was taken over by government without compensation) are contained in an affidavit presented in court in January 2015.

What led me to arrive at a fair compensation of €325 million was based on my estimate of Lm7 million of the NBM’s real 1973 net

equity value as against government’s experts’ contention of zero value because, in their view, the NBM was illiquid and insolvent in 1973.

Both these points were exhaustively debated in court. An important factor is that the Constitutional Court of Appeal did not only confirm two judgments but stated that the value had passed, without any compensation, from the NBM shareholders to the Council of Administration (COA) and then to BOV and that they both benefited from such value received.

This notwithstanding, the government’s experts kept bringing up the illiquidity and solvency issues as alleged proof of zero value although what now remains to be decided by the court is the quantum of compensation.

The zero value was not based on a professional evaluation of the bank early in December 1973. This negative equity value was estimated by the government and its advisers in just four days from the time the NBM was closed until it reopened with the same name but owned and managed by the COA following the urgent enactment of specific legislation.

Indeed, it was only on March 20, 1974, that the bank’s assets and liabilities were transferred by the COA to BOV (when the government infused additional capital of Lm3.3 million) and a report was produced by government-appointed new auditors who concluded that as at December 31, 1973, the value of NBM’s assets exceeded its liabilities by Lm253,000. NBM’s previous long-

standing auditors were shown the door by the COA. Although NBM’s own auditors certified that the NBM had a surplus of assets over liabilities of nearly Lm3 million 12 months earlier, the new auditors concluded that the bank had a negative value. This substantial change has been challenged on various grounds, which are well documented in court and which now remain to be evaluated by independent expert(s).

In essence, NBM’s 1973 pre-tax profits of Lm795,000 before deducting an excessive increase in provisions for Non-Performing Loans (from Lm2.4 million to Lm6 million) and extraordinary items of Lm517,000, was turned into a final loss of Lm3.2 million – wiping out all the NBM’s equity and resulting in a net equity deficit.

In my January 2015 affidavit, I supported with figures cogent reasons why I consider that NBM’s 1973 real net asset value was in the region of Lm7 million and not zero. Undisputable details were given of what the government derived from its shareholding in BOV by way of net dividends, bonus shares, etc for a present day value of at least €387 million.

The Lm387 million estimate has increased further as, apart from the reasons given below, the abovementioned calculations were based on the then share market price of €2.10 per share, whereas the current price is nearer €2.20.

Given that the figure of Lm7 million is more than double than that of the government’s equity infusion

in BOV, I contend that the NBM shareholders can rightfully claim over €300 million by way of compensation which figure includes the present day value of Lm7 million (i.e. in excess of €61 million).

Since the above-mentioned affidavit, the government received yet more dividends, etc from BOV. Indeed, the government presently holds over 98 million ordinary

shares. At the current market price, these alone are worth €216 million.

Certainly there is ample room for the government to pay fair compensation without this being a burden on the government budget and thus on taxpayers.

These are the technical aspects which the court, before pronouncing judgment, is now seeking to have evaluated by independent expert(s) as mentioned in the article.

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ANALYSIS

TTIP: a means to harness globalisation Continued from page 6 ates enough space in which the government can regulate,” he said. “If is not clear how the EU intends to select the judges for the court it is proposing, and why anyone would want an appellate court which would cause delays and add costs.”

Joel Trachtman, a professor of international law at the Fletcher School of Law and Democracy, stressed that it makes sense for governments to ensure that foreigners are treated fairly – but that this would not necessarily give corporates the upper hand.

“NGOs have long been concerned by the ability of governments to regulate. For example, Togo could not fight Philip Morris when challenged about plain packaging on cigarettes as it would have been so expensive to do so, in the absence of a mechanism ,” he reminded journalists during the briefing.

“Remember that no government has so far ever lost a case for failing to provide nondiscriminatory, fair and equitable treatment.”

Public procurement The EU only recently added public procurement to the list of chapters. There is already a WTO agreement that covers public procurement but not all the states in the US are subject to it; in stark contrast, all the EU member states have implemented the WTO agreement.

The matter is of great concern to the EU side: the 1933 Buy American Act requires the US government to treat US firms preferentially when it buys equipment or awards a contract, discriminating against European companies.

Mr Donnelly, of the US Council for International Business, believes that EU companies are eyeing procurement at state rather than federal level but agreed that there was considerable protectionism to overcome.

Consequences of failure “TTIP is a valid response to concerns about globalisation that are expressed so often by people who criticise TTIP,” Mr Garcia Bercero said.

“If we want to have a shot at shaping globalisation, we need a like-minded partner that largely shares our views, that shares our respect for democracy and the rule of law. TTIP

“I believe that we have gone past the point of no return”

is therefore not only an economic opportunity but also it is a means to harness globalisation in accordance with our values.”

Mr Mullaney was also determined to plough on: “Completing these negotiations will require considerable political will and a pragmatic approach on both sides to get this done. As President Obama has emphasised, the US is prepared to make every effort to complete negotiations this year… We know this is a challenging year for Europe, in the midst of several challenging years.

“Brexit affects anew the calculations of everyone but we are convinced that the strategic and economic rationale for TTIP remains strong. TTIP can help strengthen a transatlantic relationship that has weathered many previous challenges and has been the foundation of our common prosperity and security for more than 70 years.

“Just as we both have much to gain though a successful TTIP, we have much to lose through failure. We should not let this unique window of opportunity to complete TTIP this year slip away.”

Dutch MEP Schaake agreed: “The consequences would be to go back to bilateral agreements, which would mean a race to the bottom as countries vie for competitive advantages and cut standards. If we stop negotiating, our position will weaken. Together, we stand stronger. Our rivals are happy to exploit the sections where there is

opposition. The problem is that people know what they don’t want – but they don’t always understand the consequences of getting what they want!”

Nicholas Hodac, an IBM executive actin in AmCham EU, was more pragmatic: “At least the negotiations have forced people into the same room to talk. A lot has been achieved in the past three years and companies are now also thinking about how trade agreements help. Even if TTIP fails, we need to keep up the momentum. I believe that we have gone past the point of no return.”

Prof. Trachtman believes TTIP would deter the ‘race to the bottom’: “Imagine if there were an EU/US standard. Other countries would have to raise the level of their game so TTIP would effectively be creating a world standard. This is why it is so important for TTIP to happen before China starts to set standards for the rest of the world through its sheer size.”

And US Council for International Business’s Donnelly was just as forceful in his warnings: “If we don’t do this, other countries might, and they might be ones which do not have the same values, standards and labour conditions. Don’t forget that these are not things which can be done through the World Trade Organisation as other countries would block us.

“If we miss this window of opportunity, then it is not clear when the next one would be.”

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STOCK MARKET REVIEW

Will bank deposit interest rates go negative?

Edward Rizzo Last week, the Bank of England (BOE) reduced the bank base rate in the UK for the first time since March 2009 and said it expects to cut it further towards zero in the

months ahead. In response to the June vote in the Brexit referendum, the BOE cut interest rates by 25 basis points to 0.25 per cent as part of a wider monetary stimulus package which exceeded market expectations. The package also included a revival of the quantitative easing programme (which had been on pause since 2012) and introduced purchases of corporate bonds apart from other measures to stimulate bank lending.

In anticipation of this widely expected drop in interest rates in the UK, at the end of July, NatWest bank and its parent Royal Bank of Scotland became the first British banks to warn that they may impose negative interest rates on

depositors holding money in current accounts.

The banks sent letters to 1.3 million business customers to inform them of this possibility although there was no indication that negative rates will be imposed imminently or that individual current accounts of retail depositors are also at risk of this eventuality.

Banks in other parts of the world have already had to deal with negative interest rates at their central banks. The rate at the Swiss National Bank is at -0.75 per cent and the central banks in Denmark and Sweden also imposed negative interest rates some time ago. As a result of this unprecedented environment, a few

“None of the Maltese banks have so far considered negative rates on current or savings accounts”

months ago, a commercial bank in Switzerland became the first lender in the world to pass on the costs of negative rates to its customers.

In Europe, the European Central Bank’s refinancing rate (the overnight lending facility to banks) is currently at zero per cent although the deposit rate (the rate of interest for banks placing excess liquidity at the ECB) is at -0.4 per cent. Despite this scenario, there have not been any noticeable moves by the main commercial banks in Europe to impose negative interest rates on current accounts for customers as yet.

A negative rate on deposits is effectively a charge for holding cash

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STOCK MARKET REVIEW

with the bank and this would change the entire banking philosophy since customers are normally incentivised to place their money in banks and receive interest on their savings or term deposit accounts.

In Malta, the main commercial banks reduced interest rates on savings account to very minimal levels last year in response to the downturn in interest rates by the ECB. However, none of the Maltese banks has written to business or retail customers to inform them of the possibility of reducing rates on current or savings accounts into negative territory similar to what took place recently in the UK. It is difficult to imagine whether this may actually happen in Malta and it would be very much dependent on circumstances going forward. So far, although the amount of ‘unwanted deposits’ keeps growing, given the already high levels of liquidity at most of the commercial banks, the profitability levels at many of the local banks have held up relatively well, although the return on equity has been decreasing steadily to the detriment of the numerous shareholders of these banks.

If this scenario actually materialises in the future, it will have serious implications across the banking sector and the economy at large. The first bank that launches such an unprecedented course of action would undoubtedly be faced with many disgruntled customers. This could easily result in a number of customers shifting their deposits to other competing banks – which would not be welcome news for the other banks who have their own difficulty in employing such liquidity in a profitable manner given the negative deposit rate at the ECB and the sharp decline in yields of sovereign bonds.

If other banks then decide to follow suit, one of the unfortunate circumstances would be hoarding of cash in personal residences – which could have serious repercussions in the form of increased theft and criminality.

While this hypothetical scenario would change the overall dynamics across the local or European banking industry, retail investors have already been dealing with the prospect of negligible or near

“e profitability levels at many of the local banks have held up relatively well, although the return on equity has been decreasing steadily to the detriment of the numerous shareholders of these banks”

zero interest rates at the banks for quite a while.

Within this context, it is therefore not surprising that in the space of a few weeks during July and the first few days of August, two sizeable bond issues and the €160 million Malta Government Stock issue were all oversubscribed. For the second time in succession, retail investors in the MGS issues also crowded out institutional investors and the auction for participation by tender was cancelled.

The response from the retail investing community once again shows strong demand for new issues as a result of the few alternatives available in the current interest rate environment. Due to the very low rates of interest across Malta’s main commercial banks, savers are seeking investment opportunities across the stockmarket to generate an adequate income stream.

In recent years, as many investors started coming to terms with the low interest rate environment, some also sought exposure to a number of equity investments which generally offered sustainable yields to investors. This is a phenomenon which was also very much in evidence across international financial markets.

The major deterrent raised by many investors (especially pensioners who generally do not reach the maximum tax bracket) is the different tax treatment on

dividend income generated by equities as opposed to interest income on bonds. The 35 per cent tax at source for dividend income of most equities on the Malta Stock Exchange is very often not regarded positively and puts off various investors from considering an equity investment.

This is a well-known observation and, in fact, at the recent event commemorating the 25th anniversary of the Malta Stock Exchange, Finance Minister Edward Scicluna announced that the government is discussing a possible adjustment of the effective tax rate on dividend beneficiaries in order to remove the present bias towards bank deposits and other fixed interest rate investments (see story on page 1). This could be a very important development for a certain profile of investors. It may open up increasing investment possibilities across the equity market for those investors seeking to earn adequate income from their accumulated savings lying idle within the banking system.

Whether Maltese, British or other European banks push interest rates on customer accounts into negative territory is still uncertain and very much dependent on future developments. Whatever the future may hold, the need for depositors to seek alternative investment opportunities (other than bank deposits) to generate investment income will only continue to grow in the years ahead.

In view of this, demand for fixed income instruments and dividend-paying equities should remain very strong.

In the local bond market, the latest issues from Midi plc and International Hotel Investments plc came after a rather prolonged period when very few corporate bonds were on offer. Last week, Plaza Centres plc announced that it is seeking regulatory approval for the issuance of a relatively small €8.5 million 10-year unsecured bond.

Other companies from various economic sectors are also rumoured to be working on new bond issues in the weeks and months ahead. Hopefully, other investment opportunities will be offered to retail and institutional investors to assist investors in this challenging environment.

Edward Rizzo is a director at Rizzo, Farrugia & Co (Stockbrokers) Ltd. Rizzo, Farrugia & Co. (Stockbrokers) Ltd (RFC) is a member of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the company/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon.

RFC, its directors, the author of this report, other employees or RFC on behalf of its clients, have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent, and may also have other business relationships with the company/s. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen.

Past performance is not necessarily indicative of future results. Neither RFC, nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report. © 2016 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved

Rectifying anomalies in tax refunds Continued from page 1 This means the government would have to give a refund to any shareholders receiving dividends paid from those reserves who fall into a tax bracket of less than 35 per cent.

The government has been planning to remove this unfair anomaly since the tax rate started to fall but the minister said he was not prepared to go ahead until he had a proper estimate of how much the government would have to refund – and watertight legislation.

“We knew that the reduction in tax bands would reduce our revenue by €45 million – but this did not include this dividend issue.

“Successive governments for years have been collecting the 35 per cent on the reserves – imagine having to refund the difference! It is dynamite.

There is no way we can afford to pay out all those refunds if all these undistributed profits were released as dividends.

“The problem is that no one could give me an estimate on what it would cost us, which is very disappointing. Our system, no matter how many improvements we make, is not up to my standard. We need better data for planning purposes.

“Now I have an estimate but I am not going to divulge it for now as the range is too wide. We then considered starting with those companies listed on the Stock Exchange but the issue of State aid had to be considered.

“Now I have been assured that there is a way to solve this. This is important as there is a strong bias in favour of bank deposits and against investment in risk-based equities,” he concluded.

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BUSINESS UPDATES

Add a little zest to your staff party Medavia Technics: inspiring trust Medavia (Mediterranean Aviation Co. Ltd), has been a success story since its birth in 1978. Medavia Technics, the maintenance repair organisation (MRO), is one of the company’s core businesses. With EASA Part-145, FAA, LyCAA and Botswana CAA approvals, Medavia Technics boasts of a state-of-the-art 5,000sqm hangar inside Safi Aviation Park, part of Malta’s International Airport.

Boosted by Malta’s strategic position at the cross roads of three continents, and detracting maximum advantage from the good, English-speaking work force, Medavia Technics has succeeded in inspiring trust among clients through its approvals.

The MRO Part 145 organisation offers heavy base maintenance, structural repair capabilities, full refurbishments, modifications,

What’s the secret to success in business, you ask? One person who knows the answer is Richard Branson, whose top tip on how to get the most out of a business and its employees is simply: “Throw the biggest staff party. Work should be fun and enjoyable.”

This summer, why not engage your employees, build a stronger team and improve turnover rates? Treat your team to a staff party that exceeds expectations with Zest Outside Catering. Built on the foundations of the award-winning Zest restaurant, Zest Outside

Catering has earned a reputation for creative and elegant outside catering with impeccable service. Zest Outside Catering provides fine food along with smart, friendly and professional service to ensure that your event runs smoothly.

But what truly sets Zest apart is its commitment to designing tailor-made solutions to ensure your event leaves a lasting impression.

From staff parties at sea to rooftop pool parties under the stars at the boutique Hotel Juliani, Zest offers a variety of custom catering packages to suit your needs.

non destructive testing, painting jobs and other aviation related services. Medavia Technics has valuable experience in the establishment and operation of line maintenance stations inclusive of the technical support in the field, under normal and AOG situations. Some of the aircraft approvals include the Viking Air DHC-6 series, CASA 212 series, Hawker Beechcraft 1900D and Super Kingairs 200, Bombardier DHC8 Classic series Q100/20/300 and the Q400, and the BAe/Avro RJ 146.

Medavia also provides other technical services to support its fleet and thirdparty maintenance customers; including design-approved organisation DOA (Part 21J) and CAMO (Part M), besides its long-established chartering and ground handling capabilities.

Stock Exchange launches e-Portfolio service The Malta Stock Exchange has begun providing its 75,000 account holders an opportunity to access their accounts online. The e-Portfolio portal has now been launched and during the first few weeks of the initial stage, the Exchange has received a significant number of registrations as well as very positive feedback from investors who are now able to view their Malta Stock Exchange-based investments online.

The e-Portfolio provides MSE account holders with valuable information;

including up-to-date account details and balances, statement of holdings, transaction history and registration advice, real-time portfolio valuation, as well as the latest annual reports for all mse listed companies, within a single secure and user-friendly area.

Furthermore, to facilitate the registration process, a help desk has been set up at the Exchange’s premises in Valletta. Alternatively, investors are also encouraged to visit one of the Exchange’s member firms

(www.borzamalta.com.mt/memberfirms) in order to complete and authenticate the registration form.

The initial success of e-Portfolio has encouraged the Exchange to start development on the second stage of the service and provide more online information and facilities based on user feedback.

To register or find out more, visit the e-Portfolio website https://eportfolio. borzamalta.com.mt or www.borzamalta .com.mt; call 2124 4051 or send an e-mail to customercare@borzamalta.com.mt.

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BUSINESS ??UPDATES

Gio at Portomaso Casino Since setting up their establishment in 2006, Portomaso Casino has attempted to reach for the sky with its ambitious plans to set a new benchmark within Malta’s entertainment industry.

The place has, in fact, become a top destination for both tourists and locals, making Portomaso Casino

one of Malta’s leading companies within its sector.

A recent refurbishment has contributed to a continuous expansion that puts clients’ experience as their number one priority. The establishment will be comprised of a new events room with the name of Gio, which will be launched on Tuesday,

September 20. This new area will allow the Casino to host a number of local and foreign events, including corporate and private functions, team building events, as well as product launches.

Apart from the events room, there are plans to open a new restaurant, including an exquisite open area which enjoys breathtaking views of the surrounding regions. This area will have an external independent access lounge, meaning that persons of any age will be allowed to enter the section, and thus opening it up to a new range of audiences.

Raesch Quartz (Malta): a local SME competing in global market Raesch Quarz (Malta) is one of the longest established companies at the Mosta Technopark, having started operations in 1997. It is owned by a German stocklisted company, Dr Hoenle AG of Munich, and run by a local management team. Currently, it employs 45 people.

At the core of its production processes is its raw material: fused quartz, which has better UV transmission than most other glasses and is capable of withstanding temperatures as high as 1,200°C. In-house trained glassblowers use hydrogen flames to weld, blow and shape quartz tubes into custom-made components for UV disinfection and curing equipment, special lighting, semiconductor processing, metal casting, and sampling and measurement of molten metals.

The key to surviving as a small manufacturing facility producing highly-specialised products is being able to deliver a wide range of high-quality products at a reasonable cost and at short lead times to selected market niches.

Raesch Quarz (Malta) exports around €4 million worth of quartz glass components annually to 14 countries worldwide, including Germany, Japan, Italy, Czech Republic, Hungary and China.

More flexible and costeffective logistical links from Malta would certainly strengthen the company’s market position internationally.

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BUSINESS UPDATES

Access to the single market The free movement of goods and persons lie at the very core of the European single market or internal market, where the economies of scale benefit all participants.

It is recognised that islands, be they island regions and even more so island states, are less well placed than other mainland regions to take full advantage of the European single market. This can be put down to one factor, and one factor only: accessibility.

The lack of access to the single market is a disadvantage to the de-

velopment of export industries, in particular the agricultural and fishing industry. Insularity also means that industry incurs additional costs because of the need to hold more stocks and, consequently, the requirement for greater storage space, compounded by comparatively high costs of property. In general, island regions have become overreliant on tourism and the provision of financial services.

Virtu Ferries bring over 45,000 Sicilian tourists to Malta each

year, while another 5,000 Europeans holidaying in Sicily take the company’s Malta Excursion.

Virtu Ferries has eliminated the geographical divide and made Malta part of the single mainland European market. The effects of the island’s double insularity are as good as having been overcome – the Strait of Messina is hardly a factor.

Having a daily scheduled highspeed car and passenger ferry service between Malta and Sicily, a crossing time of 90 minutes, over

500 round trips every year and a designated terminal in Valletta, as well as having been designed with passengers as well as exporters and importers in mind, it is little wonder that commercial entities are increasingly making use of the service.

It could be little things, like a vital spare part that brings works to a halt – you are only a telephone call away from a major supplier in Sicily and the item will be at hand within the day. It could be big things – fresh fish is

a two-way traffic affair, and with Malta exporting as well as importing on a seasonal basis, the fresh produce is in the shops just a few hours after leaving the quay. As for leisure, the wide open spaces of Sicily have become a new welcome way of life for many Maltese.

Malta punches far above its weight, and long may it continue to do so. The spirit of innovation is where the future lies. Time is money.

It is time for Virtu’s next move.

Maltapost launches Easipik, a secure parcel locker network Maltapost has launched a parcel locker solution which allows customers to collect their Send On shopping any time from a number of lockers conveniently located around Malta.

Following the launch of Send On hubs in the UK, Italy, Germany and the US, thousands of Maltese consumers are shopping from their favourite European and American online brands, particularly those which do not ship directly to Malta. To continue improving on the customer experience, Maltapost has launched Easipik, a parcel locker solution for shoppers on the go who are not at home to receive their items.

With Easipik, customers may collect their Send On shopping 24/7 from a number of lockers which are conveniently located around Malta.

To utilise these lockers, customers are to log on to their Send On account before shopping online and choose one of the parcel lockers located in various Post Offices as their delivery address. When the parcel is ready for collection, the customer will receive an email and SMS with a code which should be keyed into the parcel locker screen in order to release the item.

For more information, customers can visit www.maltapost.com/sendon.

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BUSINESS UPDATES

Pjazza Tigné: a summer of fashion, food and fun

Recording studio makes your music sound great Door7 Studio services are aimed to offer everything you need to make your music sound great. Artists can easily record their music or songs and have it available to be shared with friends or contacts in no time.

Whether you have been practising your favourite cover version or jamming to a great track, producing and recording are the first steps you need to get you and your talent exposed and noticed.

Our team makes use of different tools and techniques to bring out the best for each project within its context. Every project is finally mixed and mastered in-house, giving the

extra polish to the final product. Our recording services can be divided into two segments – business services such as promotional audio clips, voice and video translation, dubbing, audio books, documentary narration and more, and personal services, such as voice and instrument recording.

From singers and solo artists, to narrations, dub voiceovers and instrument recordings, we have got it covered.

Visit us on www.door7music.com to listen to our portfolio and see customer feedback. Feel free to get in touch on info@door7music.com if you have any enquiries.

Pjazza Tigné, at the heart of Tigné Point in Sliema, offers a serene car-free environment where the whole family can shop, dine and enjoy free time in a safe and tranquil ambiance.

Shoppers will find the exclusive fashion brands of Paul & Shark, Luisa Spagnoli, List, Mexx and Gagliardi. If it is luxury gifts you are after, then Diamonds International, Mdina Glass and Henri will not disappoint either. Opening hours are from Monday to Saturday from 9.30am till 7.30pm.

When it comes to dining out, food lovers can choose from a number of coffee shops and restaurants located around the piazza.

At Fratelli La Bufala one can enjoy al fresco pizza, pasta or salads made with the freshest Italian ingredients. The recently opened Oro Lounge offers Asian fusion and Japanese cuisine, including a variety of sushi dishes. Both restaurants are open daily and offer the option of indoor or outdoor dining. Throughout the year, the piazza plays host to a

number of events. Besides the annual Christmas Market, recent activities included a fashion show, a car show and a children’s fun fair.

For the latest news and upcoming events at Pjazza Tigné follow facebook.com/pjazzatigne.