The Malta Business Observer, 29th August 2019

NEWS

Issue 101

Distributed with Times of Malta

| August 29, 2019

Blockchain-run ROC to be launched by end 2019 Helena Grech A new practice whereby companies in Malta are to be registered on a blockchain system is expected to be launched sometime in the fourth quarter of 2019, said Joseph Farrugia, the Registrar at the Registry of Companies.

Last May, Prime Minister Joseph Muscat announced that the Registry of Companies will be the first agency in the world to run on a blockchain-based system.

Distributed Ledger Technology (DLT), such as the blockchain, is a decentralised way of storing information which is immutable and transparent, authorities and stakeholders say.

As Malta continues to position itself to earn the self-appointed title, Blockchain Island, a number of initiatives have been pushed to reap the maximum range of benefits that such a technology can bring about. This follows a spate of laws passed locally aimed at regulating the world of blockchain technology, cryptocurrency and financial instruments.

In comments to The Malta Business Observer, Registrar Joseph Farrugia explained how “a number of bottlenecks have been identified [in the current company registry system] and a new proposed solution has been outlined. This system will make use of modern technologies and allow the Registry to update its processes in order to become more efficient, secure, and, ultimately, provide a better service to the business community.”

Experts in the field of sustainable development, together with industry stakeholders, underline the pivotal role businesses play in demanding policy change to ensure the country improves its environmental performance. see pages 5, 6 >

BUSINESS OPINION e CEO of the Gozo Business Chamber, Daniel Borg, outlines the current trends in tourism on the island, highlighting the need to think ahead to protect Gozo’s distinctiveness as a tourist destination. see page 11 >

CASE STUDY Valletta Cruise Port CEO, Stephen Xuereb, describes the entity’s recent achievements, which have seen the operator register an actualised growth of 75 per cent since 2013. see pages 16, 17 > Addressing possible issues of confusion, Mr Farrugia revealed that, apart from expecting the new system to be launched sometime towards the end of 2019, he added that “the new system will function in parallel with the old system for a transition period which will be determined during the testing period.”

Delving into how this is expected to work, Mr Farrugia explained that the proposed system will be “developed using the latest blockchain technology at hand and it will manage the workflow of processes performed by the Registry. Customers will be able to initiate processes on a distributed ledger and Registry of Company Agency (ROCA) officers

“is system will make use of modern technologies and allow the Registry to update its processes.” – Joseph Farrugia, Registrar, ROC

STOCK MARKET REVIEW

will be able to manage these processes using the same ledger.”

He added that “this will increase the efficiency of the processes and ensure transparency and auditability.” Indeed, in keeping with the goal of making the entire process more straightforward, Mr Farrugia

e nomination of French lawyer and politician Christine Lagarde to President of the European Central Bank (ECB) is the focus of this month’s column by Josef Cutajar, Research Analyst at Rizzo, Farrugia & Co (Stockbrokers) Limited. see pages 22, 23 >

asserted that “the users will have access to a more user-friendly system, particularly in the registration stage and online services.”

Mr Farrugia revealed that “the system will include AI features continued on page 3

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NEWS

Rental contracts registered on blockchain offer more protection – Parliamentary Secretary spokesperson continued from page 1 which will speed up the process which is currently is being done manually.” Reducing “unnecessary bureaucratic procedures” is, in fact, another goal of the project, Mr Farrugia claimed. He elaborated by delving into the features users can expect, such as those “related to auditability and transparency,” while also underlining that the new system “will decrease the level of human error considerably.”

He went on to say that “the processes adopted by the Registry of Companies have been in place for a number of years. Technological advances over recent years have given rise to the need for these processes to be updated in line with industry standards and expectations.”

Moving on to more technical details, Mr Farrugia explained that the enhancement of ROCA’s IT system “will have an effect on the transposition and implementation of EU Directive 2018/843 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (the 5th AML Directive).” To this end, he explained, the new updates will provide “verification methods on beneficial owners of commercial partnerships and public access of beneficial ownership information.”

Blockchain technology is also expected to be used in the real estate sphere. A short time after the Prime Minister announced plans for the Registry of Companies to be run on DLT, plans for property rental contracts to also be registered on a blockchain-based system became known.

In June, the Prime Minister and Parliamentary Secretary for social accommodation Roderick Galdes announced a set of rental guidelines, together with the decision to have rental contracts registered on the blockchain.

A spokesperson from the office of Mr Galdes told The Malta Business Observer there were “various benefits” tied to using a blockchain-based register for rental agreements. Top of the list is the “immutability” of such a method of recordkeeping. The spokesperson described how records of rental agreements and

“Access, or authorisation, is required to view the data.” – Office of Parliamentary Secretary Roderick Galdes. contract terms would be unchangeable thanks to the technology behind DLT platforms such as blockchain. In addition, contracts uploaded to the blockchain are “tamper-resistant” by DLT technology-design.

Malta has been criticised for bureaucratic difficulties, particularly to access documents. Acknowledging this, the spokesperson said that this new system will be public,

making it more transparent. However, access, or authorisation, is required to view the data,” presumably in order to protect individual privacy.

Taking advantage of the technology behind smart contracts, the spokesperson said that using this technology would “ensure the proper drawing up of the agreement and may be used to enforce certain conditions.” Indeed, smart contracts are essentially a piece

of code with conditions written into it. When conditions by both parties are met, outcomes predefined in the smart contract code are automatically executed.

The spokesperson confidently stated that this new system “offers more protection and peace of mind to both the lessor and lessee.”

And, some players in the sector have also expressed hope that the new system will lead to a process which is more streamlined. Engel & Völkers Sara Grech managing director Benjamin Tabone Grech, in recent comments to this newspaper, had said that the use of blockchain for the sale of properties would be significant as it would cut the lengthy process of signing a promise of sale agreement from months, to just a few weeks.

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Environmental sustainability essential for economic success, experts say Jo Caruana Today’s businesses have a major role to demand policy change to ensure environmental sustainability and protect Malta’s future, thus cementing its economic success, experts in the field and industry stakeholders have said in strongly worded comments to The Malta Business Observer.

Going into detail about why businesses need to be concerned about going green, Prof. Maria Attard, director of the Institute for Climate Change and Sustainable Development at the University of Malta, said that both large companies and SMEs have a responsibility to lessen their impact on the environment, as they both benefit directly and indirectly from its quality.

“Take, for example, the location choice decisions of large multinational firms that depend on financial but also quality-of-life considerations for their employees,” she stated. “Increasingly, there are obligations on companies to achieve good environmental ratings as part of their CSR promises or production processes. From environmental awards for industry to environment performance in buildings, all efforts point towards an increased awareness of the need to contribute towards sustainability.”

Prof. Attard highlighted that Malta’s economic success is linked to a number of factors. “Primarily (and historically) it is our geographic position and favourable environment with a mild climate, at least so far, and beautiful natural and man-made landscapes that enrich our product and attract foreign investment,” she stated. “Financial packages and governance are also important factors and, hence, are important considerations when de-

signing policies that prioritise the environment.”

Prof. Attard also pointed to the fact that “many of the larger (foreign) industries that have opened shop in Malta adopt green business principles” and contribute significantly to making business in Malta greener. Despite this, since many of the island’s industries are made up of small and medium sized enterprises (SMEs), there lies a challenge. “Many of these SMEs do not feel their contribution is significant and due, in part, to a lack of a general best practice framework, sustainability principles and green practices are misconstrued,” she underlined.

Focusing on the future, Prof. Attard stressed that planning is critical for the sustainable development of our islands and underlined that businesses should be at the forefront of pushing for stronger environmental policies to ensure they continue to benefit from what Malta has to offer.

“I like to use the example of land as a resource because it reflects the urgency that we need to plan well,” she said. “Malta’s built-up area now covers some 33 per cent of the islands. We’ve extended our urban area significantly despite controls put in place in the early ‘90s. The current construction boom driving economic growth is benefitting from land that is slowly being taken up. If we continue extending the urban area at this rate, future generations will not have the same opportunities we have to make the most of the construction industry, tourism and foreign investment, which is based on quality-of-life principles. We will lose our heritage (natural and man-made), our coastline and our seas. Therefore, today’s businesses have a major role to demand policy that protects Malta’s

“e Chamber has consistently advocated regulation and policy incentives towards green procurement and resource efficiency.” – Adrian Mallia, Malta Chamber

future, as well as today’s economic success,” she stressed.

Adrian Mallia, chairman of the Sustainable Development Committee within the Malta Chamber of Commerce, Enterprise and Industry echoed these sentiments. “Although Malta has managed to improve greatly in terms of waste and water management infrastructure, and the generation of energy from renewable sources since our EU membership, the growth of our economy in the last six years has come at a cost to our environment and societal well-being,” he said.

“This is exacerbated further when it comes to the sudden labour shortages that have resulted in thousands of foreign workers moving to our shores, as well as the increase in tourist arrivals. It has brought about challenges in the

form of infrastructural needs, housing availability, increased waste generation, further depletion of our scarce water resources, a higher demand for electricity, more vehicles on the road (leading to the worsening air quality situation and pressures for road widening), and increased pressure on our public health and education systems. These developments are outgrowing the pace of the investment needed in sustainable development, which now require a holistic plan that takes into consideration long-term sustainable growth,” he said.

This is where policy should be stronger, Mr Mallia underlined, by reducing the cost of compliance and increasing enforcement. “The Chamber has consistently advocated regulation and policy incen-

tives towards green procurement and resource efficiency,” he said.

“The environmental sector, especially at EU level, is highly regulated and legislated upon, and these policy drivers aim to influence the modus operandi of public and private organisations, leading to a reduction of environmental impacts, improvement in performance, a more sustainable behaviour, and the betterment of society,” he stressed.

“While this has been achieved in some sectors – and there are several examples, especially from overseas – unfortunately, many private-sector investors and operators in Malta still view compliance with environmental requirements as a costly, lengthy and bothersome process that seemingly adds little to the bottom line, which, in part, can be true.

To compound the issue further, law-abiding companies are concontinued on page 6

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NEWS

“SMEs do not feel their contribution is significant” – ICCSD Director continued from page 5 stantly competing with operators who are trying to cut corners. Lack of enforcement of these rules by the relevant authorities creates an unlevelled playing field for those who do their part, and ‘rewards’ businesses that take the risk and do not abide by the rules,” he continued.

Internationally, sustainabilitydriven targets have been set and they are both demanding and diverse. The 2030 Agenda for Sustainable Development, adopted by all United Nations member states in 2015, provides a shared blueprint for peace and prosperity for people and the planet, now and into the future. At its heart are the 17 Sustainable Development Goals (SDGs) that are an urgent call for action by all countries – developed and developing – in a global partnership.

These SDGs cover everything from affordable and clean energy, to climate action and the creation of sustainable communities.

For sustainability consultant Gayle Murphy, these targets serve as both an inspiration and a guide to the work that she does with her clients, where she is drafted in specifically to help them boost their sustainable practices.

“Sustainability is definitely on business minds,” she said. “The targets set by the UN – as well as more awareness about long-term viability and the state of the planet – have encouraged companies to focus more on sustainable development and consider a more circular approach to the economy. This means using resources more efficiently, considering environmental impacts, and taking greater care when making decisions about the way things are done.”

And it isn’t just businesses that are taking note, but investors too.

“International research shows that 60 per cent of funders and investors today look for integrated reporting on the triple bottom line (people, planet, profit) and won’t invest un-

less sustainability is taken into consideration,” she continued.” This makes sense, because it helps to guarantee profitability long term, as opposed to just in the short term.

Locally, it is snow balling too, and, across my consultancy companies, I have seen a huge rise in the number of businesses eager to make sustainability a cornerstone of their practices so that they can help to secure success in the longer term.”

Indeed, more and more businesses are choosing to incorporate green innovation into their strategies, such as the GoTo car sharing service. “Shared vehicle solutions reduce the number of vehicles on roads, which results in savings on CO2 emissions, reduction in traffic levels, better usage of public spaces and better quality of life,” explained CEO Liral Golan. “Our One-Way fleet makes Malta the only country in the world with a nation-wide, fully-electric car sharing solution. We’re happy to help put Malta in such a unique and

privileged position when it comes to green initiatives.”

Luxury car manufacture Jaguar is also switching to increased electrification as the main power source instead of direct fossil fuel burning.

“Jaguar has introduced the world’s first fully electric luxury vehicle – the Jaguar i-Pace – and laid the foundations for future models to be built on the same powertrain and chassis,” explained Carlos Mizzi, brand manager for JLR. “And all this had been done without compromising on its performance. Now, given the fact that the Government has removed registration tax and is incentivising electric and plug-in hybrid cars by granting over €6,000 on each new vehicle purchased, we are seeing a sharp increase in clients shifting the powertrain of their vehicles. Malta is about to commit to becoming one of the first countries with a date by which all imported vehicles must be electric, so this is definitely a major step forward,” he explained.

And the renewable energy sector is also gaining ground. “Although they are still the same size in terms of dimension, photovoltaic modules are generating more powers,” asserted Neal Azzopardi from Global Tech Malta, distributors of LG. “And they are also becoming more efficient in terms of their degradation throughout their 25-year lifetime.

Upgrades are now constant. For example, if we take LG, they always keep up-to-date with wattage. So, a few months ago we were selling 340W panels, whereas, now, these have been upgraded to 355W. This means panels are more efficient, so they produce more.”

Looking to the future, Mr Azzopardi added that “it would be good for laws to dictate that certain types of houses, like villas, must have solar panels installed to qualify for a permit; this is already happening in countries like Dubai. Green buildings should be the norm – especially here, where we have 300 days of sun.”

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ANALYSIS

How has the hike in cruise liner passengers impacted local businesses?

Helena Grech According to figures released by the National Statistics Office, cruise liner passengers visiting Malta in the first half of 2019 increased by a staggering 35.3 per cent, compared to the same period last year, with absolute figures reaching 341,659 visitors. In view of the increase in numbers, The Malta Business Observer posed questions to local businesses and stakeholders to determine how this hike in numbers has affected them.

In comments to The Malta Business Observer, a spokesperson for the Valletta Cruise Port agency said that the industry “leaves a big economic impact on the local economy through services to ships, passengers and crew; incoming and outgoing flights through the Malta International Airport; and on hotel accommodation where cruise and stay passengers have the option to spend a number of days in Malta prior or after their cruise.”

Indeed, the spokesperson stressed that the cruise industry could be indirectly benefitting local retailers and restaurants in the longer-term, saying that “the cruise port estimates more than 80 per cent of passengers visiting Malta on a cruise show interest to return to Malta for a longer landbased holiday”. This is because “a cruise gives the first taste of what Malta has to offer, leaving passengers wanting more, often returning to Malta on a longer holiday or recommending Malta and what it offers to family and friends,” she said.

However, the spokesperson expressed caution saying that “the cruise industry on the Maltese Islands can only grow if we provide a consistently superior level of service and create added value through collaboration with local

“The cruise industry on the Maltese Islands can only grow if we provide a consistently superior level of service and create added value through collaboration with local partners.” – Spokesperson, Valletta Cruise Port. partners.” It was an awareness of such priorities which characterises the Valletta Cruise Port policy, she said, which “is built around hospitality and customer

satisfaction. Our company culture is reflective of this”.

The Head of Tourism and Hospitality within the General Retailers and Traders Union (GRTU), Philip

Fenech, echoed many of these thoughts and said, that naturally, an increase in visitors – in this case cruise liner passengers – translates into extra value for the island.

“Although cruise liner passengers are here for a very short visit, they use a variety of goods and services,” he explained. He noted the knock-on effect on the entire island as a result of the increase in cruise ship numbers since a certain number of visitors tend to hit the most important sites – across the board - in a short period of time. Indeed, since “some are more adventurous and move on to other parts of the island away from the ports, and some may be

taken in groups in organised excursions” value is spread “to other parts of the island,” he asserted.

Mr Fenech also spoke about certain retailers in Valletta, noting that some actually heavily depend on cruise liner passengers owing to the added number of shops in village centres taking local sales away from the capital city.

As a result, local shoppers who used to enter Valletta for their needs are being replaced with cruise liner passengers often visiting the capital city for the day. He concluded that one shoe shop owner even said that the cruise continued on page 13

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

Acting Managing Editor Rebecca Anastasi

EDITORIAL

Ensuring economic success by addressing the challenge of our times International headlines over the past few weeks have brought the dramatic Amazon fires closer to home, with images showing the unmitigated scale of the environmental disaster which threatens the planet’s biggest rainforest. Blake plumes of smoke have pumped disturbing quantities of carbon into the atmosphere as trees have been cleared at the rate of five football pitches every minute while farmers and land-grabbers have been accused of coordinating the fires to deforest the zone and increase productive areas, according to recent media reports.

Such has been the scale of concern that it has overshadowed discussions during the G7 meeting in Biarritz with politicians being accused of sacrificing the environment on the high-altar of economic interests.

But it’s not just the Amazon which has taken a hit. Greenhouse gas emissions continue to rise as coral reefs are depleted and temperatures rise.

Looking closer to home, environmental sustainability has become central to the conversation on future profitability, with an increasing number of sectors understanding that the only way to ensure success in the long-term is to think strategically about nature’s resources. Indeed, in this edition of the Malta Business Observer, experts in the field of sustainability and development, as well as industry stakeholders, do not mince their words in stressing that it is incumbent on businesses to demand policy change to protect Malta’s future.

Professor Maria Attard, the Director of the Institute for Climate Change and Sustainable Development at the University of Malta is one of the most vociferous on the topic. In her view, every company – whether a large corporation or an SME - has a responsibility towards the environment and must consider the impact of their operations on the country’s resources and on its development in the crucial coming years.

And Prof. Attard is not wrong. Malta’s land is extremely finite, its ground water levels limited and its climate showing signs of instability.

Furthermore, a European Commission early warning report, published last month, flagged up serious concerns on the country’s waste management system, stating that the island is likely to miss the EU’s 2020 recycling targets, with only 7 per cent of all waste recycled, with the other 83 per cent being landfilled. And, while blame cannot be wholly put at businesses’ doors, their use of the island’s beautiful natural landscapes and geographic position means they are well-placed to be at the vanguard of solidifying the island’s environmental performance, as Prof. Attard specifies.

Moreover, as consumer awareness increases and perceptions change, companies would do well to position their brand as a leader in this sphere. On a practical level, businesses could review and revise their environmental policies – enshrining them in employee contracts to establish accountability – and manage their operations to ensure sustainability is placed at the heart of all decision-making.

Taking the initiative on, for instance, employees’ transport woes and encouraging (even supporting) greener alternatives might result in more environment-friendly attitudes trickling down throughout the enterprise.

Cynically-speaking, this could prove to be a boon to a company’s public image, as it tries to balance traditional shrug-of-the-shoulder attitudes with concerns over the viability of our behaviour in the long-term.

Nowadays, there is little doubt that the current state-of-play cannot work far into the future. Policy, attitudes and mentalities must change.

Each industry – and businesses across the spectrum – have a responsibility to take a long, hard look at their role in ensuring that today’s economic successes have positive environmental ramifications for decades to come.

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Advertising Enquiries Tel: 2132 0713 Email: info@contenthouse.com.mt Advertising Sales Matthew Spiteri Director of Sales and Business Development Jean Mark Meli Senior Brand Sales Executive Lindsey Napier Director of Sales and Operations Sue Ann Pisani Advertising Coordinator Printer Progress Press Ltd.

BUSINESS OPINION

Ensuring sustainability for Gozo’s tourism sector “While numbers are important, Gozo’s success in the tourism sector has and will continue to depend on its distinctiveness as a tourist destination, different from the main island of Malta.”

Daniel Borg, Gozo Business Chamber Following on the inbound tourism figures that were issued by the National Statistics Office in July of this year, and if we go by the numbers and the trends experienced in previous years, the results – if sustained throughout 2019 – can be seen as encouraging.

In 2018, Gozo welcomed 204,849 foreign tourists, an increase of 21,690 or 11.8 per cent over the previous year, while domestic tourists to Gozo numbered 227,121, a decrease of 9,717 or 4.1 per cent over the previous year (2017). This year Gozo Channel reported an encouraging 5 per cent increase in passenger travel over the popular mid-August break, which was also sustained by the addition of a ferry to the current fleet, thus facilitating passenger travel between the two islands.

It is well known that the economic contribution of foreign visitors to the Gozitan economy is greater than that of domestic tourists. They tend to spend a higher amount of nights in Gozo,

though domestic tourists help to sustain the industry during the shoulder and lean months.

Tourism is an industry which is constantly evolving, and Gozo is very much dependent on it. A report published in 2014 by the Ministry for Tourism highlighted how tourism expenditure in Gozo amounts to around 50 per cent of Gozo’s GDP and generates up to 20 per cent of the total employment in Gozo. I think that number still stands. Indeed, the impact of the tourism industry in Gozo is wide-ranging and does not solely affect those industries specifically related to the tourism sector itself. Conversely, measures intended to diversify the Gozitan economy are also welcome,

as their impact on related industries, such as catering and entertainment, should be beneficial.

The nature of the tourism sector in Gozo differs from that of Malta.

Accommodation units in Gozo are dispersed around the whole island, and not only in specific tourism hotspots such as Marsalforn, Xlendi. This is also because of the nature of the accommodation sector itself. In Gozo, 72 per cent of the accommodation available is selfcatering, with only 28 per cent based on collective accommodation. These self-catering units are spread throughout the entire island. As a result, there is a large number of small operators within the industry, with tourism directly

contributing to the well-being of small-scale operators. However, a concern is that fluctuations in the industry usually hit these particular operators harder.

This tourist season, the members of the Gozo Chamber of Commerce have reported mixed results and reactions, despite the current numbers. Some have reported an increase in numbers, but a decrease in quality. Others, especially in specialised niche tourism segments, have indicated increased competition from markets which, for the past few years, had experienced a decline resulting from internal strife (for instance, Egypt, and its diving segment) but which are showing some signs of recu-

peration. On the other hand, there are some players who have reported a decline in numbers.

Furthermore, rather than issues surrounding the instability of seasonality, the main concerns this year have been related to the quality of tourist arrivals. Indeed, recent measures, designed to tackle the fluctuations in numbers across seasons, have had positive results. For instance, one can point out the proliferation of cultural activities, such as the island’s three international festivals, as well as its operas, and their promotion abroad as an example of initiatives promoting Gozo as a year-round destination.

However, these activities risk not having the desired impact if other measures related to sustainability are not undertaken, such as reigning in development; protecting urban village cores; retaining green zones between our villages and towns; and ensuring that Gozo retains that character and charm which has been its main selling point over the years. While numbers are important, Gozo’s success in the tourism sector has and will continue to depend on its distinctiveness as a tourist destination, different from the main island of Malta. This, in turn, depends on niche tourism segments such as diving, walking holidays and religious tourism, which hold considerable potential. Sustainability is the key.

Daniel Borg is the CEO of the Gozo Business Chamber which aims to promote the common interests of business operators in Gozo.

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ANALYSIS

Cruise passenger value is spread to various parts of the island, GRTU says continued from page 9 liner passengers make up as much as 60 per cent of their sales.

However, comments gathered on the ground didn’t corroborate these claims. Christina Zammit La Rosa from Ecco remarked that “if there was in increase in tourist numbers over last year, there would have been an increase over the projected forecast, which at the moment has not materialised.”

She went on to say that if one had to factor in the increase in cruise line passengers in this case, this should have translated into an increase in numbers. But “we have not observed this over the past six months.” Ms Zammit La Rosa added that, all this notwithstanding, 2019 was a stronger year than the previous four years.

Moreover, a spokesperson from one of Malta’s most iconic cafés, Caffe Cordina, explained that the level of business, in their case, has remained constant

“Although cruise liner passengers are here for a very short visit, they use a variety of goods and services.” – Philip Grech, Head of Tourism and Hospitality, GRTU over the past twelve months, despite the increase in cruise passenger numbers. This may be due to the levelling out of visitors who had arrived in Valletta to participate and experience any of the Capital of Culture events in 2018, they said.

On the Valletta Waterfront, two other popular restaurants - who preferred not to be named – also referred to Valletta’s time in the spotlight last year in their assessment of the current situation, saying that it was difficult to deter-

mine how this year’s surge in cruise liner passengers has affected them since last year’s numbers were already high.

On the other hand, a spokesperson for D-Store, with premises in Valletta said, if anything, there could have, perhaps, been a slight slow-down in business, and expressed doubt that cruise liner passengers would spend the afternoon in Valletta to go retail shopping, though she did note that souvenir shops may be the exception.

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ENVIRONMENT

ERA implementing measures to control emissions, safeguard flora and fauna Rebecca Anastasi The Environment and Resources Authority (ERA) has announced that it is implementing concrete measures which will control harmful emissions into the air from medium combustion plants and safeguard new species of flora and fauna to protect specific areas of the Maltese environment.

In comments given to The Malta Business Observer, a spokesperson for the Authority stated this drive was part of the entity’s remit to implement international and EU legal instruments and ensure adherence to regulation in order to provide “assurance that the environment is being safeguarded and protected”.

To this end, the ERA’s Chief Executive Officer, Dr Louise Spiteri said that the new regulations will, firstly, require operators of medium combustion plants – whether new or already in existence - to obtain a permit from the entity. The permit will set the emission limit values of particular compounds passed into the atmosphere as the plant burns fuel to generate energy, to accord with current legislation.

The amount of sulphur dioxide (SO2), nitrogen oxides (NOX) and dust generated from medium combustion plants is limited by the Laws of Malta and must be in line with the requirements stipulated in SL 549.122, The Limitation of Emissions of Certain Pollutants into the air from Medium Combustion Plants Regulations, 2018.

“The new permit will set certain emission limit values for the production of NOX , SO2 and dust, which must be monitored by the operator. These vary according to whether the plant is classified as existing or new, the rated thermal input of the plant and the type of fuel used. Operators of plants will

also be required to monitor carbon monoxide, to keep track of such emissions and to provide the necessary information to the ERA in order to ensure compliance with the legislation,” Dr Spiteri said.

New plants will need to obtain the necessary permit from the ERA prior to commencing operations.

For those which are already up and running, the permitting process must be completed by a set deadline: those with a rated thermal input greater than 5MWth must obtain a permit by 1st January 2024, at the latest, and those with a rated thermal input of less than, or equal to, 5MWth must obtain a permit by 1st January 2029 at the latest.

“Collaboration between the ERA and all those concerned is imperative in order to obtain the ultimate desired result: reduced emissions to the air and the mitigation of potential risks to human health and the environment.”

– Dr Louise Spiteri, ERA, CEO

In order to apply for a permit for a medium combustion plant, operators must pay the applicable fees to the ERA, the spokesperson specified. Applications for permits are processed by the Permitting Unit within the Environment Resources Directorate and then presented to the ERA Board. The permits are granted for a definite time period, following which the operator will be required to apply for a renewal of the permit with the Authority within stipulated timeframes.

Dr Spiteri emphasised that the ERA will ensure compliance with the medium combustion plants regulations and will carry out any necessary inspections as well as monitor the permitted installations. “Collaboration between the ERA and all those concerned is imperative in order to obtain the ultimate desired result: reduced emissions to the air and the mitigation of potential risks to human health and the environment,” the Authority’s CEO said.

The Authority has also started the process to implement legislation - designed in conjunction with the Ministry for the Environment, Sustainable Development and Climate Change - to increase the protection of certain species of flora and fauna. The new regulations will

allow the ERA to issue a protection notice on a particular species, should its conservation status be deteriorating. The notice will specify any conditions deemed necessary to protect the flora or fauna, laying out any prohibitions on activities which may cause damage or loss, and instituting fines for crimes committed within protected sites.

Perit Michelle Piccinino, Director for the Environment and Resources Unit within the ERA, also explained that the new regulations give the Authority further means with which to remove and control invasive alien species. “This law also gives more protection to specific sites and allows for more flexibility in the designation of protected areas. Under the new regulations, a site may be proposed for protection based on ecological, geological and natural features it offers,” she asserted.

To this end, certain species of orchid, butterflies, coral, sharks and others will now be added to the list of protected plants and animals.

“These plants and animals have been given protection status as a result of further scientific research resulting in an increase in knowledge which lends towards cementing their conservation status,” Perit Piccinino said. Among these species is a new endemic plant, the Gozo Spi-

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ENVIRONMENT

“ese plants and animals have been given protection status as a result of further scientific research resulting in an increase in knowledge which lends towards cementing their conservation status.”

- Perit Michelle Piccinino, ERA Unit Director der Orchid, which is only found in Gozo. “This orchid was recently discovered along with a number of endangered butterflies and corals of international importance found in Maltese waters,” she concluded.

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CASE STUDY

Guest experience is key to success in crui Cassi Camilleri The cruise industry in Malta is going from strength to strength, with a record 820,000 passenger movements expected in 2019, translating to potential direct and indirect expenditure of over €100 million, according to Valletta Cruise Port (VCP) CEO, Stephen Xuereb.

The reasons behind this industry’s local success are many and include the unique beauty of the Grand Harbour gracing the shores of the capital city, Valletta - a UNESCO World Heritage site, within walking distance from the port - as well as the island’s convenient geographical location. This makes the archipelago appealing for both east and west Mediterranean cruises.

“We also have a natural Grand Harbour and we can accommodate all kinds of cruise vessels, from the largest cruise ships to the luxury boutique lines, supported by excellent port facilities,” asserted Mr Xuereb.

A lot is being done to support the burgeoning industry that has seen VCP register an actualised growth of 75 per cent over the 6-year period, from 2013 to 2019. “Investment in infrastructure and service quality has increased.

Airport transfers are faster and more efficient.

We have established the Valletta Waterfront as an important – and welcoming - destination for cruise passengers, crew, land-based tourists and locals. Indeed, one of the biggest achievements over the years was when we received the Europa Nostra Award for Conservation from the European Union. That was a moment of pride because, the iconic Pinto Stores with the coloured doors are now instantly recognisable and also symbolic of Malta’s Grand Harbour,” Mr Xuereb asserted.

This year, infrastructural improvements will continue as permissions have been obtained to widen the Pinto 4 and 5 quays by 15 metres to allow bigger ships to berth. “With this development we are looking at a more attractive and secure operation,” noted Mr Xuereb. “After all, ships are getting bigger. The majority of the 128 cruise ships currently in the order books for the coming years are large resort ships with capacities of up to 6,000 passengers.”

The focus on culture in recent years, predominantly through Valletta holding the title of European City of Culture in 2018, has also had a positive impact he said. “New events are sprouting in regenerated historic buildings: from art exhibitions and visual experiences to music, dance, drama, literature, and science”.

This has all contributed to “keeping our product fresh for visitors,” he added.

“We have established the Valletta Waterfront as an important welcoming destination for cruise passengers, crew, land-based tourists and locals. Indeed, one of the biggest achievements over the years was when we received the Europa Nostra Award for Conservation from the European Union.”

There is a heightened level of awareness with regards to guests and their experience of Malta at VCP. “In fact, I am often asked who our customers are,” revealed Mr Xuereb, “The answer is always the same. Technically, our customer is the cruise line, but we’re also serving their guests. So, the guest experience is as important as the service we give to the ship.”

This is a philosophy ingrained in the entity’s operations, as proven by the accolades recently bestowed on VCP — the awards for Best Terminal Operator by Cruise Insight for the second consecutive year; and Top Rated Mediterranean Cruise Destination by the Cruise Critic Cruisers’ Choice. “This shows that we are being valued by both the cruise lines and their guests.

It shows that our modus operandi, our flexibil-

ity, our reliability, and our commitment, is having a positive impact,” he added.

This said, naysayers exist too. The industry often attracts criticism that cruise ships only bring business to the operators. In response to this, Mr Xuereb said that “during the 18year period between 2000 and 2018, according to independent studies, passengers generated €400 million in direct expenditure, while direct cruise expenditure hit the €1 billion mark. The industry is leaving a huge economic impact locally, not just through service to ships, passengers and crew, but also in incoming and outgoing flights through Malta International Airport, as well as hotel accommodation where passengers stay prior to and after their cruise,” the CEO explained.

Moreover, the cruise industry is giving people a taste of Malta that stays with them and sees them return for longer stays, Mr Xuereb emphasised. “While a lot of money is being spent to promote Malta overseas, the cruise industry is bringing 800,000 tourists to experience Malta for the day, and, if we give them a good experience, they go back home, and they promote Malta with their friends. This is of huge value to tourism in Malta.” In fact, it is estimated that more than 80 per cent of passengers, visiting Malta on a cruise, show interest in returning for a longer, land-based holiday, he underlined.

Naturally, there are challenges being faced as well. Environmental concerns and sustainability have become a top priority for governments and policy-makers worldwide,

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ise industry – Valletta Cruise Port CEO

“Whilst a lot of money is being spent to promote Malta overseas, the cruise industry is bringing 800,000 tourists to experience Malta for the day…is is a huge value that our industry provides for tourism in Malta.”

VALLETTA CRUISE PORT

and the cruising industry is taking serious note. Mr Xuereb refers to the Cruise Lines International Association’s report which shows that a large investment by cruise lines of $1 billion in environmental technology will prioritise areas of action, including “air emissions reduction, advanced wastewater treatment systems, solar panels, heating, ventilations and air conditioning systems as well as LNG as an alternative and cleaner fuel.” All of this is working towards the goal to reduce sulphur emissions and keep to the 0.5 per cent global sulphur limit set for 2020 by the International Maritime Organisation in 2016, Mr Xuereb continued.

Beyond all this, Mr Xuereb also added that VCP is in the process of implementing an Envi-

ronmental Risk Management System which will see an Environmental Committee or a ‘green team’ of leaders and employees assisting and offering advice on the environmental direction the entity will take. “The aim is to have ‘green port’ accreditations this year. There are also plans to install newly designed canopies which will do justice to the historic fabric of the Valletta Waterfront and its 19 beautifully restored 18th-century warehouses and ancillary buildings,” Mr Xuereb said.

With demand continuously on the rise “there are about 120 new cruiseship builds on order at the moment -” VCP is well aware of the need for cooperation, Mr Xuereb pointed out. This is where the Malta Cruise Network Forum comes in, bringing together

the Ministry of Tourism, the Malta Tourism Authority, Transport Malta, the Malta Police Force, and VCP, amongst others, to ensure that developments and pertinent matters are dealt with effectively.

On an international level, VCP is also supported by Global Ports Holding (GPH), the biggest independent cruise port operator in the world, spread across nine countries and three continents. Mr Xuereb was appointed GPH’s Chief Operating Officer three years ago and is responsible for the operations in 17 cruise ports across nine countries. Mr Xuereb is clear that this partnership offers Malta the opportunity to exchange knowledge and best practices with its peers, as well as to consolidate VCP’s strategic direction. “GPH is a dy-

namic company, growing strategically whilst keeping its core values of accountability, excellence, respect and valuing teamwork, in all its endeavours,” he stated.

Describing global industry trends, Mr Xuereb pointed to the changes in the perception of cruise travel over the years. This year alone, 30 million people are expected to cruise thanks to the varied options and prices on offer. Whereas it used to be considered the purview of the rich and affluent, today the market has opened up to different segments. “It can be the perfect budget holiday. So, if you have a budget, you can also stay on board and enjoy the facilities; it’s like a floating city so there is plenty to do. Economic downturns, for instance, don’t affect the industry at all,” said Mr Xuereb.

Looking ahead, the CEO noted the packed calendar of events VCP has planned for the next years. "For another year, VCP has teamed up with Valletta Waterfront's catering and retail outlets to organise an eclectic calendar of events on the shoreside. The calendar is packed with activities for Christmas, Valentine's Day, Carnival, Easter, Halloween... you name it," asserted Mr. Xuereb.

"We also have our own celebrations now.

The iconic coloured doors have inspired Colour Fest, which together with the historic Grand Harbour serve as a backdrop for a funfilled weekend in early spring. Maltese Nights are now in their third consecutive year, giving guests the opportunity to engage in traditional folk dancing, or enjoy falconry displays, street games, pony rides, festive village bands and the historic terramaxka street organ. The goal is to have something going on all year round, not just during peak season. We're always pushing to do better," Mr Xuereb concluded.

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CASE STUDY

Car sharing service GoTo registers over 650 trips per day Jo Caruana In the year since it was set up, car sharing service GoTo has attracted 8,000 users – of which almost 5,700 have made at least one trip in the last month. This usage now adds up to over 650 trips every day, with steady ongoing growth in the number of registrations, active users and trips month on month, across both its One-Way and Roundtrip product offerings.

Take-up has been popular across a number of demographics, according to the figures announced by GoTo CEO Liran Golan. In terms of nationality, GoTo’s user base seems to reflect the population living in Malta, with Maltese, English, Italian and French as the most prolific users.

Age-wise, over 50 per cent of users are between 25 and 44 years old.

As the GoTo fleet is shared between its users, this uptake has reduced the amount of vehicles on the road, helping to build an effective transport solution that lessens the time that cars sit idly in parking bays or garages, Mr Golan said in comments to The Malta Business Observer. The fact that the majority of the fleet is electric also has knock-on positive effects for local air quality and the environment.

Looking back on a busy year, Mr Golan said that, as a result, the launch of GoTo – Malta’s first nationwide car sharing service – has been a success.

Discussing his expectations with regards to these demographics, Mr Golan said they were as largely expected, with young drivers the most eager to seek alternatives to car ownership. “As technology evolves and spreads, we’ll probably see an increase in adoption among an older audience,” he underlined.

“We will continue to monitor Malta’s transportation needs and patterns in order to develop the right portfolio of shared mobility.”

“As a young, flexible and fast-growing company, we are also able to come up with different solutions like we did with the launch of our Basic Plan, which comes with a free membership, and Roundtrips to address the need for longer trips and earlier booking periods. We are reacting to what we know the market wants,” he explained.

The company’s One-Way trips are designed for short journeys, like getting to and from work, or heading to the airport. The service is extremely effective because users can book in-

stantly, can use any GoTo parking spot, and will only pay per-minute for the time they are driving to their destination, the CEO stressed.

The Roundtrip service was launched more recently and is designed for longer trips, so users can make different stops on their journey. “This service is a little different because users pick a car up and then return it to the same location at the end of their time with it; in between, they can go to as many destinations as they need to,” Mr Golan said. “In this case, payment is per

hour and bookings can be made up to three months in advance, allowing for longer-term planning. Going forward, we will continue to look for opportunities to address new audiences and improve mobility for everyone living in Malta and Gozo, and this will include expanding shared vehicle solutions to people in multiple age ranges.”

The last 12 months have certainly provided a learning experience for the company, which had already successfully operated in Israel before moving locally. With the new knowledge acquired in Malta, Mr Golan said that the company will be putting extra effort into growing its electric charging stations. “This will be hugely important for our growth and it will enable us to best support Malta’s infrastructure,” he explained. “In addition, we are working with the authorities on the island to improve enforcement

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CASE STUDY

when it comes to the usage of parking spaces reserved exclusively for our customers.”

Already looking to the future, in terms of how GoTo will evolve in the months to come, Mr Golan stated the company will be sustaining its growth by improving the distribution of its vehicles. Plans are also in place to constantly boost the GoTo technology experience for users, by continuing to bring smart and environmentally-friendly mobility solutions to the islands.

Assessing feedback on the service so far, both the company’s individual and corporate customers are positive about it. “We are always happy to hear from people who have decided to replace their cars with a GoTo solution,” he said. “Our customers love the fact that they get to use electric vehicles to commute without having to break the bank. We also receive several compliments about our 24/7 customer service.”

Mr Golan explained that the company’s long-term vision is to continue to take on the responsibility of leading shared mobility solutions for the islands. “Looking to the years ahead, we will continue to monitor Malta’s transportation needs and patterns in order to develop the right portfolio of shared mobility that will enable us to continue pursuing that.”

The firm’s mission, he continued, was “to improve urban lifestyle here by developing shared transportation solutions and providing the freedom of mobility. We believe we can get there by offering multiple solutions that address different consumer needs; by providing an outstanding customer experience; and by continuing to listen to our customers and the population in Malta. There is plenty more in the pipeline.”

Indeed, GoTo is proving to be a very popular business solution, as well as ideal for individuals. Since its launch, GoTo has given many companies an effective solution that provides complete flexibility to their teams, without the need for major financial investment, especially as more and more companies on the island are becoming concerned about the logistics of getting staff to and from work. This is especially true for global companies with international team members who do not choose to own their own vehicle on the island, Mr Golan said.

“Now, a year in, we are incredibly happy with the take-up and usage response. Strong operational dedication, teamwork and planning were at the core of our smooth establishment. High receptiveness from the market is continuously proving that there is a strong need for shared mobility solutions,” he concluded.

PHOTO: ALAN CARVILLE

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FOCUS

An environmental approach for a sustainable future economy Marc Muscat Ever since Government announced its decision to commission a Waste-to-Energy plant, there has been a pressing need for Malta to revisit its performance on recycling. Government is committed to significantly reducing the amount of waste which is being landfilled.

This is mainly for two reasons. In the first instance, the size of the island is not conducive to the current rate of land uptake simply to discard waste. Using virgin land for landfilling purposes not only damages the environment, but landfilled material is a source of emissions that impact our climate.

Secondly, the landfilled material contains embedded resources – that is, resources which should be recovered rather than wasted.

The Government recognised this opportunity and, in 2018, established a new agency – the Resource Recovery and Recycling Agency, whose purpose is to work with the private sector so that Malta increases its efforts to recover materials and convert them into a new resource. This approach is one of the principles of the circular econ-

“e Resource Recovery and Recycling Agency will establish a series of collaborative activities with different stakeholders with the objective to create a recovery and recycling ecosystem focusing on quality results that are environmentally sound, economically feasible and provide societal gains.” omy to which the Agency is committed and has pledged to promote initiatives intended to keep products and materials in use. The regenerative approach differs from the traditional linear economic models, in which we extract raw materials for use and subsequent discard. The Agency will focus not only on the main waste streams but also on their related economic sectors so as to address the issues of barriers that may impede the progress across the sector and respective value chains.

In a country, such as Malta – which is highly dependent on importation of raw materials and finished goods – our efforts should be directed towards reusability, repairability, as well as the collection and recycling of the material and

product life cycles. A successful transition towards a circular economic system will require collaborative interaction between a number of stakeholders to win their commitment to the development of circular business models. This development can bring disruptive change to the current linear models. Whilst there are exceptions, individual operators might find it more challenging to voluntarily embark on possibly expensive and somewhat arduous practices aimed at reusing and recycling.

The Resource Recovery and Recycling Agency will establish a series of collaborative activities with different stakeholders with the objective to create a recovery and recycling ecosystem focusing on quality results that are environmen-

tally sound, economically feasible and provide societal gains. This will be done by identifying a category which could take the form of a product group or a waste stream, assessing its impact on the environment and exploring the regenerative business opportunities.

Following this, the agency will proceed to identify and engage with the appropriate stakeholders so that, together, challenges and barriers to development (which may be impeding the change process) can be understood and potential solutions devised. The final stage in this process would be to, together with the business sector, evaluate the benefits which would lead to the implementation of solutions.

The Agency is already working on one such project – the beverage

containers recycling initiative. The initiative first identified a waste stream of over 20 million containers per annum which are predominantly made of plastic but also include metal and glass containers.

This waste stream has long been known to be one of the sources of littering, causing environmental damage to both land and sea. Yet, this waste stream, if managed properly, offers major recycling opportunities. What is today considered a nuisance could be converted into a resource. Thus, the Agency studied a number of similar applications across Europe and submitted a proposal to the authorities.

Following this, the Ministry for the Environment, Sustainable Development and Climate Change invited stakeholders to submit their views and subsequent discussions were held to identify the solutions and mechanisms necessary for such an initiative to be implemented, and to agree on the required regulations and targets. The process was the first of its kind, and it will lead to high-quality, and more onerous, recycling results than those contained in European regulations. The solution will see a level of innovation brought into the is-

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FOCUS

land through private investment – an investment that is being carried out by the producers, importers and retailers working closely together to deliver an environmentally sound project. The Agency will, thereafter, work closely with the operator to regulate and support it in order to achieve the desired results. This is a project that will be financially sustainable and create new job opportunities, thus ticking all the boxes of the circular economy. This first initiative serves as a template on which other initiatives can be built. It demonstrates the corporate maturity of an industry sector committed to improve its environmental credentials.

There are numerous other opportunities that will arise as the island transitions to a circular economy. Apart from recycling and material recovery efforts, the technological cycle offers opportunities for different business models. Increasing asset utilisation models – where one, for instance, rents a bike or a vehicle to go from one point to another, leaving the asset free to be used by another customer – is such an opportunity. The use of online media, wherein news, books and music are consumed without the need for tangible objects, is also a circular economy model which reduces the consumption of materials that may eventually end up as

waste. The leasing of equipment rather than outright purchasing, thus having the producer retain ownership up to the end-of-life, also leads to improved re-manufacture and recycling opportunities. All

these are disruptive models that not only create business opportunities but change consumption patterns and increase sustainability.

There are just as many opportunities with regards to the biological

cycle, known as the bio-economy.

Organic and biomass waste constitute a significant portion of our rubbish. In Malta, these include residues from agriculture and farming, fisheries and aquaculture, food

processing, parks, gardens and households. Biomass is also generated from wastewater treatment plants. As a waste stream it is second only to construction and demolition waste. The transition to a circular bio-economy has enormous industrial potential and offers significant benefits for the environment, climate and a sustainable society.

We are all also aware of the potential renewable energy contained in biomass. However, the concept of a bio-economy goes beyond the basics. The bio-economy also produces biofuels for transportation; bio-chemical nutrients and bioplastics; animal feed and food ingredients; as well as medicinal and health products. Industry is growing aware of these opportunities and the Resource Recovery and Recycling Agency will strive to support and promote such directions.

Transitioning to a circular economy not only provides new business models and opportunities; it does so with an environmental and social conscience. Not only will such initiatives contribute positively to the environment and climate change; they will also result in knowledge, innovation and new employment opportunities.

Marc Muscat is the Chief Executive Officer of the Resource Recovery and Recycling Agency.

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e Malta Business OBSERVER

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STOCK MARKET REVIEW

e next act for the ECB

Josef Cutajar

Early last month, financial markets were taken by surprise when French lawyer and politician Ms Christine Lagarde was nominated to step into the shoes of the outgoing President of the European Central Bank (ECB), Mr Mario Draghi. The move cheered investors, as prior to her nomination as ECB President, when she was still occupying the position of managing director of the International Monetary Fund (IMF), Ms Lagarde encouraged the world’s major central banks, on various occasions, to step up their concerted efforts towards supporting the growth outlook of the world’s economy through looser monetary policy. In fact, on 11 April 2019, Ms Lagarde pleaded with central banks to “stay accommodating” in order to “facilitate the fiscal measures that need to be taken.”

The responsibilities that Ms Lagarde will be taking on as ECB President, following formal appointment by EU leaders in October 2019, are critical for the prospects of the euro area. She will have to fill in the space of Mr Draghi who, over the past eight years since assuming office on 1

November 2011, was instrumental in keeping the very existence of the euro project intact. Apart from his most famous signature moves in extending ECB monetary policy into unchartered territories and saving the economic, as well as the financial fate of entire countries including the notorious ‘PIIGS’ (namely Portugal, Italy, Ireland, Greece and Spain), the outgoing President also played a very important role in embracing the remit of the Single Supervisory Mechanism (SSM) which, in turn, is a central component of the European Banking Union and the framework that grants the ECB authority over all banks in participating EU member states.

Although it is unlikely for Ms Lagarde to receive the baptism of fire that Mr Draghi had when he took over the realms of the ECB at the height of the euro debt crisis, the challenges for her going forward are surely no less daunting.

It is true that Ms Lagarde will be inheriting a much healthier economy than Mr Draghi did in 2011, but, on the other hand, she will kick-start her term wedged between a slowing global economy, on the one side, coupled with an outsized ECB balance sheet and with limited space for further downward potential in interest rates on the other. Indeed, many financial analysts and economists have already opined that amid the various risks posed by the protracting trade dispute between the US and China, as well as other geopolitical uncertainties including the possibility of a ‘hard’ Brexit in two months’ time, the ECB could well be in an awkward position where its competencies are already at their limit, and if this limit is stretched further, its inde-

CHRISTINE LAGARDE, IMF MANAGING DIRECTOR. PHOTO: SHUTTERSTOCK

“e responsibilities that Ms Lagarde will be taking on as ECB President, following formal appointment by EU leaders in October 2019, are critical for the prospects of the euro area.”

pendence and mandate would become subject to greater scrutiny and questioning. In fact, should economic conditions in the euro area deteriorate further, the ECB may have to respond again with greater force than it has already done over the past few years, only this time having much less room for manoeuvring.

This is assuming there is no intro-

duction of any new unconventional monetary policy tools like ‘helicopter money’ – a term coined by economist Milton Friedman in 1969 and described as “very interesting” by Mr Draghi in 2016. This concept essentially involves the printing of new money to fund government spending or to distribute to the public at large.

As the unconventional aspect of modern monetary policymaking is exploited further and possibly extended beyond the tools in use today by the ECB – namely negative interest rates, quantitative easing and forward guidance – risks become more pronounced. These include those that challenge the same fundamentals that underpin financial

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STOCK MARKET REVIEW

stability that monetary policy itself is meant to safeguard. Indeed, as persistently very low to negative yields encourage moral hazard and fuel excessive risktaking by investors, the incoming President Ms Lagarde might have to deal with circumstances that are already pointing to the creation of financial vulnerabilities including debt overhangs.

As a result, a rather imminent task for Ms Lagarde might possibly well be the prioritisation between financial stability and price stability – a situation that puts to the test her atypical profile as a central banker. Furthermore, the new ECB President might also have to consider whether to follow the example of the US Federal Reserve and initiate a review of monetary policy strategy, tools and communication. This would be particularly worthwhile in view of the ECB’s monetary policy target of an inflation rate of “below, but close to, 2 per cent over the medium term” which was first adopted by the ECB Governing Council in 1998 and slightly amended five years later in 2003, and which many economists are now considering to be no longer suitable.

The political and diplomatic background of Ms Lagarde provides confidence that the ECB will likely play a more active part in

“e challenges for Ms Lagarde are significant.

Nonetheless, her political prowess, negotiating skills and extensive international experience might turn out to be key elements.”

building consensus and determining how the process of economic integration within the euro area is conducted. As the euro

sovereign debt crisis clearly showed, a major vulnerability of the EU is the incompleteness of the Economic and Monetary Union (EMU) which manifests itself in disjointed coordination of fiscal policy (which is largely shaped at national level) and monetary policy (which is conducted at supranational level by the ECB). Over the years, this imperfection increased the ‘burden’ of the economic success of the euro area on monetary policy which has now exhausted most, if not all, of its space for manoeuvring with the tools currently available. Against this background, it would not turn out as surprising if, in the months ahead, the ECB were to step up its voice in advocating the implementation of certain reforms at national level, even though this would risk impairing some of its independence.

Similarly, Ms Lagarde may also prove to be a key figure for the completion of the Banking Union going forward. In one of his remarks earlier this year, the Chairperson of the ECB Supervisory Board, Mr Andrea Enria, clearly acknowledged that Europe’s banking sector “remains largely segmented along national lines.”

Although the improvement, in economic conditions, in the euro area, over the past few years has

helped to strengthen the resilience of European banks, issues related to low profitability, legacy non-performing exposures and digitalisation remain of paramount importance as they represent a challenge to longterm sustainability. In parallel, the incoming ECB President must also deal with the possibility of reinvigorating the establishment of the European Deposit Insurance Scheme which, in turn, would be an important building block for more cross-border bank mergers and the defragmentation of the European banking sector.

Last month, European leaders opted for an unconventional candidate to take the helm of the ECB during unconventional times.

The challenges for Ms Lagarde are significant. Nonetheless, her political prowess, negotiating skills and extensive international experience might turn out to be key elements for her to induce flexibility and quick response from the ECB and the other main institutions within the EMU aimed at improving the economic and financial prospects upon which the livelihood of millions of people are dependent on.

Josef Cutajar is a Research Analyst at Rizzo, Farrugia & Co (Stockbrokers) Limited

Rizzo, Farrugia & Co. (Stockbrokers) Ltd, “Rizzo Farrugia”, 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. Rizzo Farrugia, its directors, the author of this report, other employees or Rizzo Farrugia 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 Rizzo Farrugia, 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. © 2019 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved

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e Malta Business OBSERVER

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BUSINESS UPDATES

Express Trailers inaugurates new learning centre Express Trailers has completed a new state-of-the-art learning centre for the training of its employees.

The LOGIC Learning Centre, located within Express Trailers’ premises, represents an investment in two interjoined but dividable halls, and three mini-lecture rooms, with state-of-the-art sound engineering and multi-media video and teleconference equipment, which will also serve as meeting rooms. The complex is also served with a modern canteen and outdoor chill-out area for users of the facilities. The centre will be managed by the company’s Training Academy which Express Trailers launched last year.

Speaking about this investment, Franco Azzopardi, Chairman and CEO of Express Trailers explained how this new training facility will also be open to the company’s clients and other parties who are interested in learning more about the intricate world of logistics and commerce - both as a future business prospect and, also, from a career perspective.

“Our people drive our business by optimising equipment, space, distance and time. They bring their experience to address all the

logistics risks involved. And, to keep delivering our hallmark premium quality service, they need to keep getting the best training,” said Mr Azzopardi.

“We are investing substantially in this learning centre, and in the

training academy, so our people will have all the opportunities where to challenge themselves, become inspired and energized to become better in what they do, and to, ultimately, serve our clients better. People will con-

nect at LOGIC. It is where Express Trailers’ ‘Excellence, Experience and Expertise’ maxim will become tangible,” added Franco Azzopardi.

The Express Trailers Training Academy was launched last year

to offer all employees continued training for them to become professionals in their respective fields and for them to remain abreast with the latest developments in the transport and logistics market.

Since then, 35 training sessions have been delivered with the participation of over 250 employees who have obtained professional certification in a variety of subjects such as Incoterms and Transport Documentation, Cyber Security, Technical Training and other training related to specific departments.

“Our employees are not just employees. When they start working with us, they become experts and professionals in their work and, on many occasions, they are the ones passing on their acquired knowledge and experience to newer employees. In fact, more hands-on training on the job, and formal training by experienced employees, is being planned from this coming September. Ongoing training, the sharing of experience and a persuasive attitude towards working safely combine to characterise our company culture,” concluded Franco Azzopardi.

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BUSINESS UPDATES

GO lowers call and text rates to the EU GO customers can stay connected in the EU with increased peace of mind as a result of lowered rates on international fixed and mobile call rates, as well as SMSs to EU countries.

International EU call rates have now been standardised.

This means that rates stay the same, irrespective of whether calls are made from a traditional fixed line or from a mobile. New lower rates also apply on SMSs sent to EU countries. This follows the implementation of a new EU regulation that applies to all EU operators.

“These regulations, which have come into force,apply to standard call and SMS rates. However, at GO, we

proactively focus on the value added to our customers.

We are proud of the fact that we are the first and only operator on the market offering these benefits as we fully appreciate the importance of staying connected with peace of mind,” said Antonio Ivankovic, Chief Commercial Officer at GO. The EU regulation stipulates a capping of €0.22 (including VAT) for fixed and mobile calls, and €0.07 (including VAT) for SMSs to EU countries. “We are continuously reviewing our mobile plans to seek new ways of adding value to our customers,” concluded Mr Ivankovic.

Embracing change in human resources David Dingli, who leads Dhalia’s human resources section, discusses how to embrace change within a human-based organisation.

Which characteristics make a good property agent?

Being an enthusiastic, authentic ‘people person’ is the most fundamental characteristic for success in this industry. Boundless energy, drive, a winning personality and a good business mind are, certainly, winning attributes.

How have the qualities that make a good property agent changed over the past years?

Technology has been the biggest game changer in all industries. The way agents are able to adapt with the latest technologies, such as digital communication and marketing, has certainly been a game changer.

as well as our ‘Dhalia Cares’ initiatives through which we reach out to others less fortunate. We have created a modern working culture based on professionalism, high performance expectations, flexibility, trust and respect. It is a culturein which we want to have fun and where people feel valued.

How is Dhalia adapting to embrace changes within its workplace culture?

Dhalia holds regular team-building events and social activities such as summer parties,

If you are interested in working with one of Malta’s leading real estate companies, please visit https://www.dhalia.com/become-a-property-consultant/ or call +356 2149 0681.

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BUSINESS UPDATES

Turkish Airlines continues its journey to the top with new cabin uniforms

HSBC Malta launches new state-ofthe-art digital solution for investments As part of its ongoing journey to become Malta’s number one bank for customer service, HSBC Bank Malta p.l.c. has developed a set of brandnew digital tools aimed at helping to simplify banking for all customers.

These digital solutions are based on worldclass technology and utilise an intuitive user interface that allows customers to interact online to see all of their assets – be it investments, insurance, current or saving accounts.

“This improved system is aimed at enhancing customer experience through a holistic platform,” said Gregory Inglott, Deputy Head of Retail Banking and Wealth Management at HSBC Malta. “Initial feedback has been positive as cus-

tomers said that it has significantly improved the way they can engage with the bank,” he noted.

“Our customers want to understand their investments and overall financial well-being in an easily digestible way. This new approach enables us to better connect with our customers in yet another way, while providing the service they expect from a modern, digitally-advanced bank,” he added.

The new digital tools also allow customers to identify and monitor accounts within their portfolios, with a key feature being that all accounts and investments are tracked and presented using illustrations within the context of the respective customer’s current financial picture.

Turkish Airlines cabin crew redefine elegance in the sky. And, now, the cabin crew will greet passengers wearing new uniforms on long haul flights of the national flag carrier.

The new cabin crew uniforms of Turkish Airlines, the carrier which flies to the most countries in the world, were designed with the aim of celebrating the airline’s 85th anniversary and have been visible on the entire cabin crew servicing its long haul flights since 6th August 2019.

The new uniforms - in flag-red and anthracite grey colors - were rigorously tested on longrange flights in different climates, and have been tailored to 25,000 employees in order for cabin crews to serve passengers comfortably.

Inspired by the many classical details found in Turkish culture – from the currents of the Bosphorus to the artisanal glassware, ceramics and calligraphy patterns produced by local artisans – the cabin, cockpit, ground handling personnel and flying chef uniforms came to life under a single design in order to give the airline’s passengers a holistic brand experience.

In his statement regarding the new uniforms, M. Ilker Aycı, Chairman of the Board and the Executive Committee of Turkish Airlines said: “The elegance and comfort of our cabin crews, which constitute the most important element of our unrivaled service quality, are of great importance for our brand that continues to fly at the top of its industry. I believe that our brand’s presence in the skies will be much more impressive when the new cabin uniforms, which bear elements of our culture, are combined with the elegance of our cabin crews.”

Italian haute couturier Ettore Bilotta designed the new cabin uniforms, which were specially sewn by Vakko.The main fabrics were produced by Altınyıldız, based on the compliance standards of Turkish Airlines.

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e Malta Business OBSERVER

| August 29, 2019

BUSINESS UPDATES

Key challenges financial institutions face when tuning AML transaction monitoring software Financial institutions across the globe are under unprecedented regulatory pressure to improve their AML transaction monitoring systems and ensure they are correctly tuned to detect money laundering and terrorist financing. Recent fines given to institutions who failed to detect suspicious activity and, therefore, meet regulatory standards have served to demonstrate the importance of having an effective compliance program and the right rule-tuning in place.

FINDING THE RIGHT BALANCE IN RULE-TUNING Getting the tuning right can be challenging without the appropriate configuration. Solutions can either generate too many false positives, or the scenarios can be “turned down” so that genuine suspicious activity goes undetected. While triggering excessive false positive alerts costs both time and resources – as compliance teams struggle to handle the high number of alerts in depth – doing the opposite and performing tuning to reduce the amount of false positives can lead to officers overlooking suspicious activity. This undermines the efficacy of the compliance program and, potentially, subjects the company to reg-

ulatory scrutiny and eventual penalties.

THE VARIOUS AML TRANSACTION MONITORING RULES Rules can vary in complexity depending on the monitoring needs of the institution in question and are designed to monitor customer activity outside the scope and ability of profile-based monitoring.

For example, a structuring rule is used to identify attempts to avoid regulatory reporting of a large cash transaction by breaking the transaction into smaller amounts that fall below the reporting threshold.

Likewise, the aim of a velocity rule is to identify suspicious activity and flag accounts where there is rapid movement of funds into and out of an account, such as a large part of a deposit which is debited from an account in a short period of time. The challenge with most rules is that they require continuous fine tuning to identify potential new risks that are not covered by the current monitoring process in place.

ENSURE EFFECTIVE AML TRANSACTION MONITORING WITH COMPLYRADAR ComplyRadar minimises false positives by tailoring scenarios to cus-

tomer or transaction risk. It enables you to increase effectiveness over time by fine tuning rules through back testing without the

need of technical personnel. For more information on how we can help you give regulators and banking partners confidence with a

clear audit trail of monitoring and investigations visit www.complyradar.com or email info@computimesoftware.com.

How can we make blockchain work for us?

We are living in a digital world and blockchain is leading the future. The world’s largest businesses are offering blockchain solutions to billions who have never heard of this technology before.

Top brands are engaged Two months ago, Facebook announced that it will issue its own cryptocurrency called Libra.

This will give around 2 billion users easier access to blockchain. If Facebook succeeds with Libra, this will have a massive impact on customers as a result of the 27 companies, including VISA, Uber and Spotify, listed as members of the Libra Association.

The influence of blockchain goes beyond cryptocurrencies. TradeLens members - a joint venture of IBM and shipper Maersk that controls 60 per cent of the world containership capacity - have also integrated blockchain into their systems. Customers of IBM’s Food Trust Ecosystem (including Walmart, Carrefour, Albertsonsand so on) are able to use a QR code in some retail locations to verify the source of their food using blockchain technology.

Apple’s iPhone has also launched the iPhone CryptoKit. This allows developers to implement hashing, key generation, exchange and encrypt on iOS apps. Even Samsung has integrated its Galaxy S10 model with a crypto wallet alongside decentralized apps, merchant payments and other blockchain features. Enabling a cryptocurrency wallet in a smartphone means that millions of people are introduced to blockchain and cryptocurrencies. Moreover, Forbes has announced a list of 50 companies that are working to adapt decentralized ledgers to their needs.

Activity continues unabated Patent applications are regularly being filed in relation to blockchain and cryptocurrency by the likes of IBM, nChain, Walmart, Intel, Al-

ibaba, Mastercard and Bank of America. One of the patents consists of linking cryptocurrencies to traditional bank accounts and enhancing the privacy afforded by blockchain. Others have filed patent applications in relation to payment settlements related to crypto-trading.

Even while Initial Coin Offering (ICO) activity has slowed, every month there are different projects being funded through ICOs. Apart from ICOs, Initial Exchange Offerings and Security Token Offerings are gaining ground. According to the Worldwide Semi-annual Blockchain Spending Guide, the worldwide spending on blockchain solutions forecast shows that it will increase to nearly $2.9 billion in 2019.

Governments are embracing blockchain The governments of Estonia and Dubai have set their goals for digitizing government records with blockchain technology. Dubai International Financial Center, Mashreq Bank and fintech firm Norbloc will launch a blockchain-based Know Your Customer (KYC) data-sharing consortium in 2020. The parties will establish a consortium agreement to amalgamate the KYC efforts of financial institutions and government bodies participating in the future.

On the other hand, the Bank of China, has posted a pro-bitcoin infographic on their website after Chinese courts legally recognized bitcoin, considering it digital property. If China will decide to open its doors to blockchain and crypto, this would be a huge step towards the globalization of blockchain technology.

All this goes to show that blockchain technology is growing and gathering allies around the world and its ecosystem is building new products and services every day.

Dr Sara Leka, Legal Associate at E&S Law, a Maltese lawfirm operating under the E&S Group brand.