The Malta Business Observer, 30th January 2020

NEWS

Issue 106

Distributed with Times of Malta

| January 30, 2020

PM’s first moves elicit mixed reactions by business stakeholders

NEWS Representatives of the financial services sector have urged all stakeholders, regulatory bodies and practitioners to acknowledge the urgency of repairing Malta’s reputation, stating that all hands must be on deck. see pages 5, 6 >

Helena Grech Prominent business stakeholders and constituted bodies have expressed varying degrees of optimism, yet underlined the need for caution, in response to new Prime Minister Robert Abela’s first moves since he took office on 13th January, 2020.

The Malta Chamber of Commerce, Enterprise and Industry, the Malta Hotels and Restaurants Association (MHRA) and the Malta Chamber of SMEs (formerly GRTU), together with the CEO of Eden Leisure Group and President of the Malta Business Bureau (MBB), Simon De Cesare, prominent hotelier Winston Zahra and iGaming stakeholder, Alan Alden, were somewhat divided on the signals being conveyed by the new administration.

Malta Chamber President, David Xuereb, said that the entity is “cautiously optimistic” about Dr Abela’s reaction to its recent manifesto on good governance, noting that the Government has already begun implementing some of the proposals suggested. He also praised the establishment of a committee dedicated to the purpose.

On the Chamber’s document entitled ‘Ethical Business calls for Change – a manifesto for Good Governance’, Perit Xuereb said Dr Abela’s reaction was that at a level of principle, the Government was on the same page with the Chamber.

“Both sides agreed that the foremost priority for the country was to safeguard Malta’s reputation.”

The CEO of the Malta Chamber of SMEs, Abigail Mamo, also agreed that, so far, Dr Abela’s ac-

ANALYSIS Economists Marie Briguglio, Gordon Cordina and JP Fabri analyse PM Abela’s proposals on workers’ salaries and foreign staff in part one of our two-part series, outlining the experts’ views on the new administration’s economic policy ideas. see page 9 >

tions have been “encouraging”, saying the Chamber “is not naive and appreciates how delicate the situation is, and hence the difficulty in taking certain decisions.

Yet there is no question of whether these decisions should or should not have been taken.”

After being officially sworn in, Dr Abela appointed one of the youngest – and largest – Cabinets, showing a lack of continuity from his predecessor. He also accepted the resignation of Police Commissioner Lawrence Cutajar, who was heavily criticised for his lack of action surrounding high-profile cases of alleged corruption, and gave instructions for the make-shift memorial to murdered journalist Daphne Caruana Galizia not to be

BUSINESS OPINION

“Many more big strides are necessary to show how seriously we take corruption and good governance. We are not a corrupt nation and, to show this, we have to get to the bottom of it all." – Abigail Mamo, Malta Chamber of SMEs CEO cleared. He also accepted the resignation of Gozo Minister Justyne Caruana over her husband’s links to murder suspect Yorgen Fenech.

Ms Mamo praised these developments saying that “Maltese busi-

nesses that also work outside our shores have already started feeling the change in attitudes.” Yet, the CEO underlined the need for caucontinued on page 3

Malta’s new Minister for the Economy, Investment and Small Businesses, Silvio Schembri, outlines his vision for the future, stating that the economic achievements of the last seven years are just a springboard for an even more dynamic economy. see page 11 >

CASE STUDY Peter Spiteri, the Chief Officer of Finance and Programme Management at the Malta Gaming Authority, discusses a report on the skills gap in Malta’s online gaming industry published by the MGA. see pages 18, 19 >

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Malta Chamber “cautiously optimistic” on Government’s take-up of good governance continued from page 1 tion when she noted that “many more big strides are necessary to show how seriously we take corruption and good governance. We are not a corrupt nation and to show this we have to get to the bottom of it all.”

And, indeed, recent developments have lent credence to her prudence: ex-Tourism Minister Konrad Mizzi was nominated to the Head of the Maltese delegation to the Organisation for Security and Cooperation in Europe (OSCE), causing widespread anger, and leading to the nomination being rescinded just hours after it was revealed in the press.

An €80,000 consultancy contract awarded to Dr Mizzi was also terminated. Moreover, a consultancy role given to former Police Commissioner Cutajar also caused people to question whether Dr Abela is set on the right track.

Elaborating on what further needed to be done, Ms Mamo stressed that the case involving Daphne Caruana Galizia must “be resolved in its entirety”. She lamented the shocking headlines that are still coming out of court proceedings and called for the country to be clear in its message against corruption by “calling a spade, a spade.”

Reflecting many of these sentiments, Tony Zahra commended Dr Abela for his initial decisions. However, he questioned whether such standards will be maintained. “If affirmative, then I think we are truly on the way to regaining our international credibility.”

Mr Zahra elaborated further, stressing that Malta “cannot be seen as at best being opaque in our governance. In our international dealings it is not just Government that must maintain high standards, but it is also the private sector that must

“In our international dealings it is not just government that must maintain high standards, but it is also the private sector that must ensure it adheres to the highest of standards.” – Tony Zahra, MHRA President

ensure that it adheres to the highest of standards. We must seek to do business only with those that can demonstrate a viable and clean business model and that the people behind the business are impeccable.”

Eden Leisure CEO and MBB President, Simon De Cesare also expressed mixed feelings. “The signal that he [Dr Abela] favours continuity in the economic vision for the country is positive for normality in the business community. Yet, non-continuity in certain other questionable activities and affiliations will also provide normality to business as well as the rest of society,” commented Mr De Cesare.

Mr De Cesare said it was imperative for the Prime Minister to bring about normality, and this could be achieved through the implementation of the recommendations within the Venice Commission and Moneyval reports; an analysis of the independence of all relevant authorities, in particular the Broadcasting Authority; and finally – echoing Ms Mamo – closure on the Daphne Caruana Galizia case with all involved brought to justice.

Prominent hotelier Winston Zahra was also cautious, stressing that there is still a long way to go “to ensure the proper level of confidence is reinstated in our institu-

tions”. He said that, in his view, such confidence will only be achieved “from the way thorough investigations are carried out on the protagonists that have been implicated in some way in suspicions of corruption, money laundering, and mostly the murder of Daphne Caruana Galizia.”

“Until the country is completely convinced that this happens, and that absolutely no one is beyond reproach, I think it will be difficult to establish the desired level of normality expected within a modern European country,” he underlined.

Yet, out of the business leaders interviewed, Alan Alden proved to

be the most sceptical when evaluating Dr Abela’s first few weeks, acknowledging that some actions taken have been positive, but cautioning that it is too early to make a judgement call. He also criticised the retention of certain controversial figures.

“Allowing people to resign, or to work in the background, does not reflect strength of character and power. That is why people are not yet convinced, as nothing drastic has happened to show that he means business or that things are about to change in a positive manner. Are we going to remain with all these persons of trust with everyone doing what they like with impunity?

Unless, of course, you’re just a commoner without the right connections,” Mr Alden questioned.

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NEWS

All hands must be on deck to repair Malta’s reputation, say financial services stakeholders Rebecca Anastasi Representatives of the financial services sector, including the Institute of Financial Service Practitioners (IFSP) and the Malta Banking Association (MBA), have urged all stakeholders, regulatory bodies and practitioners to acknowledge the urgency of repairing Malta’s negative reputation, stating that everyone must play their part.

Failure to do so could result in serious, and far-reaching, consequences, Marcel Cassar, the MBA Chairman said, in comments decrying the difficulties facing the industry in Malta. He further asserted that the problem has become worse as a result of the events of the past few months, and went so far as to say that the negative sentiment clouding Malta’s reputation has outshone the economic progress the country has made in the past few years.

Wayne Pisani, the President of the Institute of Financial Services Practitioners, also stressed the need to work “collectively as a country and an industry”, with all hands on deck to remedy the situation, using “correct demonstrable actions”. He went on to say that “the status quo is not acceptable” but stressed that “it is not right to judge a country by the misdemeanour of the few.”

These comments come in the wake of a rocky 2019, in which Malta’s financial services sector has faced substantial pressure, with the country increasingly being seen as a high-risk jurisdiction, as also recently stated by Bank of Valletta’s new CEO, Rick Hunkin. To add insult to injury, international news last week pointed to ten Maltese companies Angolan authorities believe to have been used by the country’s dictator’s billionaire

daughter, Isabel dos Santos, to siphon money out of state enterprises, leading local firm Ganado Advocates – the companies’ corporate providers – to sever links.

In response to questions sent by The Malta Business Observer, Mr Cassar said all “players, not just the banks” have their part to play in protecting the integrity of Malta’s financial services industry and the island’s reputation, and they must do all that was necessary to mitigate any further damage, underlining that the necessary structures are in place.

CSPs, lawyers, accountants, estate agents, and all who promote company registration in Malta, need to carry out proper due diligence – particularly in the case of PEPs – if necessary declining clients, with Malta’s regulatory authorities affecting their duties of oversight, investigation and enforcement, he said. “It ultimately boils down to that, it’s not rocket science!”

Failure to do so could result in further difficulties, he explained.

“Obviously the effects, whether directly or indirectly, can be severe.

Reputational damage to the financial services industry is likely to be mirrored by foreign investment ‘staying away’ from Malta. Even local investment may get postponed if not abandoned outright,” he noted.

Such a marked slow-down in economic activity “impacts on business and jobs, increasing the risk of firms and families postponing, or even defaulting, on their financial commitments,” and this would have a knock-on effect on the health of local banks, he continued. “Banks are also exposed to sectors, like hospitality, rental accommodation, hotels and real estate, that are very dependent on the financial services industry.”

Indeed, Malta’s “relatively small economy and high dependence

“e tone must start from the top and it has to be strong, urgent and consistent.

We must all walk the talk and the need for impeccable professional conduct and highest standards of governance must become part of our DNA.” – Marcel Cassar, MBA Chairman on services” make the island more vulnerable to “externalities”, he underlined, saying that “reputational damage is an added worry we can do without”. He pointed to “economic projects” such as the IIP scheme, and crypto-space together with “well-publicised incidents involving banks and the delay of Malta’s National Risk Assessment, coupled by a deterioration in AML/CFT enforcement” as having exacerbated the situation.

In addition, the 2019 publication of “the IMF’s Financial System Stability Assessment followed by the Moneyval report only served to reinforce the ‘highrisk’ stamp on Malta,” he asserted, saying that, for years, the MBA has been flagging the vital need to protect Malta’s reputation “since it is the bedrock of our financial services industry – it has always been and always will be.” He noted that, even in 2016, the MBA had warned about the risk of correspondent banks exiting Malta for a variety of reasons, which included “cross-border de-risking, regulation, international sanctions and risk of fines and penalties, to name a few.”

Mr Cassar noted that the “tone must start from the top and it has to be strong, urgent and consis-

tent. We must all walk the talk and the need for impeccable professional conduct and highest standards of governance must become part of our DNA.” In this regard, he sees a resolve on behalf of the new administration, to address the current situation.

“It is satisfying to note the overarching resolve of Government to raise governance standards in general, which should further support the efforts of the MFSA at strengthening supervision and enforcement over players within the sector,” the Chairman said, underlining that there is “considerable private investment in the Maltese economy at stake and history shows that our entrepreneurial spirit will do everything possible to safeguard our hardearned well-being.”

On behalf of the IFSP, Mr Pisani underlined that the Institute is “in constant debate with stakeholders”, both with practitioners in the field and with the authorities and the regulators, such as the MFSA, the MBR and the FIAU, to identify “effective measures to safeguard Malta’s reputation” and “to raise the bar in the effective application of good governance and ethical principles”, with the latter being a key topic in the entity’s forthcom-

ing conference, on 21st February.

Furthermore, to this end, it “has made proposals and representations to address identified weaknesses which we expect to be rolled out in the coming quarter.”

He noted that the Malta Business Registry, together with the sector’s corporate services practitioners, are “working closely to continue raising the bar on the type of businesses and legal entities setting up in Malta,” even refusing work and “shedding clients and relationship”, in accordance with the evolving nature of AML legislation and in response to the increasing awareness of “brand damage”. Indeed, “certain client acceptance or transactional fact patterns, particularly those relative to source of wealth enquiries, that might have been considered regulatorily acceptable in the past are less likely to be acceptable today,” he explained, saying that “this demonstrates the ongoing need for healthy professional scepticism at all times.”

Crucially, as a financial services practitioner himself, Mr Pisani noted the “association risk” potential clients are flagging, describing recent political events in the “post-Moneyval ‘cure’ period” as having been the “perfect storm”, and stressing that “how we deal with these matters over the next six to nine months will be of crucial importance.”

He also acknowledged that it has become more difficult recently to work in the sector, though he couldn’t pinpoint the reason why to a single event, but, rather, pointed to a series. “Aside from the global developments in fiscal and transparency policies, it is also a reality that it has now become easier for competing jurisdictions to dismiss Malta. Coupled with this, there is the difficulty to bank in Malta, continued on page 6

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NEWS

MFSA focused on building necessary regulatory capacity, improving effectiveness continued from page 5 when the jurisdiction is, ironically, simultaneously seen as heavy going in its AML compliance and documentation requests. And, in postBrexit work flows, we are losing out on what could be a positive cycle (given our language asset and so on),” he explained.

Echoing many of these sentiments, John Cassar White, a financial consultant, with extensive experience in banking and a former Chairman of BOV, stressed the need for stakeholders to “apply the anti-financial crime regulations scrupulously” and show that “we do not tolerate those who abuse our investment incentives”.

Strict enforcement was not optional and there should be no “cut corners when applying international anti financial crime regulations”, he asserted. “Only when we show commitment to respecting international AML regulations will we win bank the full respect of international institutions.” To this end, all investors – whether local

or foreign – must be subjected to tough scrutiny.

Mr Cassar White pointed positively to the strategies banks have recently employed to de-risk, though he noted – with reference to clients’ complaints of too much red tape – that investment in automated systems will be needed to make the due diligence process more reliable and faster. “I believe that all banks in Malta are now fully committed to observing their anti-money laundering obligations meticulously. This should help to restore the image of the financial sector in the eyes of international regulators,” he said.

Locally, increasing supervisory and enforcement effectiveness, and the building of the necessary regulatory capacity, in order to restore Malta’s image is a priority for the MFSA, the CEO, Joseph Cuschieri, said. To this end, the Authority is investing in more technology, information systems and process enhancements – as well as human resources, with more focused skillsets, he said,

going on to explain that it is making “good progress in changing the compliance culture” within the financial services sector.

He emphasised that, as a jurisdiction, Malta’s reputational challenges can be remedied with the necessary reforms in law enforcement, strengthening of institutions and overall improvement in the compliance culture. “In simple terms, we need to strengthen the effectiveness of our institutions, law enforcement and the overall quality of our regulatory system,” he said.

And, the MFSA plays a role in this. “The MFSA is also placing risk management and AML/CFT oversight at the centre of its strategy, having recently published its Risk Culture and Risk Appetite Statements for the better identification, evaluation and communication of its approach to risk. We need to become more effective in our oversight and the only way we can do that is by inspecting more often licensed entities which are deemed to be medium or high risk and take remedial action quickly.”

“It is not right to judge a country by the misdemeanour of the few.” – Wayne Pisani, IFSP President Yet, Mr Cuschieri – echoing what other stakeholders have said – stressed that “everyone needs to carry the weight” of the task ahead. “CSPs, practitioners, licensed entities and the rest of the institutions who are directly or indirectly involved in the financial services sector. If we work together, we will address all the challenges ahead of us.”

This must be a collaborative effort, he said. Indeed, the Authority is working with other stakeholders in the sector, improving outreach.

“As from last year, we started publishing our supervisory expectations and programme, through which we outlined a number of best practices which licensed entities are expected to adhere to,

and providing increased training and support to the industry. The MFSA is also working closely with international bodies, such as the ECB, CoE Moneyval, IMF, EBA and so on, explaining to them the work we are doing to achieve a more robust regulatory system,” he continued.

Effectiveness is key, he reiterated, positively noting that Malta still “continues to attract a steady flow of foreign direct investment” and that this has continued to grow even recently.

“This shows that at an international level there remains an appreciation of our legislative and regulatory framework. We simply need to improve effectiveness!” he concluded.

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ANALYSIS

What do Malta’s leading economists think about PM Robert Abela’s policy ideas so far?

Economists Marie Briguglio, Gordon Cordina and JP Fabri analyse proposals on workers’ salaries and foreign workers in part one of our two-part series.

Helena Grech Prime Minister Robert Abela was sworn into office on 13th January 2020, paving the way for a new Cabinet of Ministers and new ideas on how to tackle Malta’s most pressing issues.

On the campaign trail to become leader of the Labour Party (PL) and Prime Minister, and after his victory, Dr Abela made a number of remarks where he shed light on his vision for the country, including commentary on workers’ salaries, housing, the environment and foreign workers.

The Malta Business Observer spoke with three of Malta’s leading economists to gauge the expert opinion on the economic impact of Dr Abela’s policy suggestions.

In the first part of this two-part feature, Dr Abela’s commentary about improving workers’ salaries and the influx of foreign workers are explored.

IMPROVING WORKERS’ SALARIES In a debate with rival contender for the PL leadership Chris Fearne, Dr Abela had said he couldn’t “understand how so many businesses tell you that their profits have exploded in recent years but then say in the same breath that they cannot improve their workers’ salaries.” He had added that the next step was to improve workers’ salaries, while also pushing for equal work for equal pay. He has since been quoted on TVM as opposing the idea of introducing a living wage, describing it as “unsustainable”.

Asked about Dr Abela’s initial commentary on improving workers’ salaries, local economist and University of Malta (UoM) lecturer Marie Briguglio remarked that the discussion is “long overdue”.

Dr Briguglio added that it is “really the linchpin of many other ills including the rental affordability problem, work-life balance issues, and problems related to poverty.”

Turning to the outcome of such a discussion, she said that “fears of inflationary pres-

sures across the board will of course be flagged. We will of course need to have that discussion,” she noted, adding that “we cannot bury this under the carpet any longer”.

Local economist and UoM visiting assisting lecturer JP Fabri said that following years of fast-paced economic growth, “corporate profits have grown at a faster rate than wages.”

With an influx of foreign workers which has led to “suppressed wage growth,” cohorts of society did not benefit from the economic boom Malta has experienced, he said.

“It is central that the focus of growth is human and worker dignity, and that markets work for people and not the other way around,” Mr Fabri stressed.

In this regard, Mr Fabri said he looks forward to “seeing the Government engaging with social partners to discuss the matter.”

Economist Gordon Cordina concentrated his response on Dr Abela’s call to push for equal work for equal pay, when the Prime Minister called out how unfair it is that factory workers employed by contractors get paid less for the same work colleagues earn for the same job.

Dr Cordina said it is “correct” for Dr Abela to call for this push, adding that “it is in the best interests of those employers who look forward to an economy offering industrial stability and sufficient skills. The solution to this is to foster high-value-added activities where this issue would naturally not arise.”

He cautioned that attempts at regulation and enforcement “risk being self-defeating in the long run, serving more to discourage the creation of jobs rather than result in the desired outcomes.”

FOREIGN WORKERS Dr Abela had said that the influx of foreign workers has allowed certain employers to pay vulnerable workers below the minimum wage.

“We need to better regulate foreign workers and enforce existing laws, and we cannot have a situation of people living on €500 a month,” he had said.

Dr Briguglio stressed that there is a need for enforcement of existing laws across the board, from foreign workers to traffic, from road building to crime. “Growing economically while institutions erode, while workers are exploited, and while citizens experience a loss in quality of life is not sustainable,” she said.

She used the analogy of building a tower with toy blocks, commenting that one may use all the blocks to build the tower as tall as possible, but it will eventually collapse. Dr Briguglio said that, alternatively, one may choose to use some of the blocks to build a sturdier base – it will ultimately lead to a shorter tower. However, it will be stronger.

Mr Fabri agreed that enforcement should be prioritised. He also added that “job agencies need to have the resources required to

ensure that such abuses are not committed,” since “foreign workers have played and will continue to play a critical role in our economic model.”

Dr Cordina said he agrees with the importance of the contribution of foreign workers.

He added, however, that it was important to address “the ecosystems and support infrastructures” surrounding the process of attracting foreign workers, stating that “a more gradual approach to immigration” was, perhaps, required.

“This can be said for the entire economy,” he continued, “as the influx of workers is nothing but a reflection of the pace of demand that we have experienced in recent years. An overall, more balanced, approach to growth and investment, across sectors, and over time, is therefore warranted.”

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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

e jury is still out To say all eyes have been on Robert Abela’s every move – and those of his Cabinet – is an understatement. Over the past few weeks, following the drawn-out resignation of Joseph Muscat, and the election of Abela as his successor, businesses across the country have waited, with bated breath, to see if the country can get to some semblance of normality following the upheavals and revelations of the past few months.

And, despite Abela’s electoral rallying cry of kontinwità (continuity), initial indications have pointed to a break from the toxicity which had infected the Muscat administration. Fresh faces were put in charge of ministries, while old hands were shifted around or out, and controversial figures, such as Neville Gafà, were left out in the cold. The ‘resignation’ of Police Commissioner Lawrence Cutajar was also greeted with relief. Though overdue, these were bold, positive decisions. Indeed, only a short time had passed since Abela took office but, finally, it felt as if the island could – tentatively – breathe a sigh of relief.

But, can it?

Doubt is creeping back in. For while Mr Cutajar had resigned from leading the corps, he was, instead, given a role as a Government consultant on public safety and logistics to the Home Affairs Ministry, earning €31,000 a year. Why? And, this week, the news that Konrad Mizzi had been nominated by the Government to head Malta’s delegation to the Organisation for Security and Cooperation in Europe (OSCE) sparked anger and incredulity, pushing the nomination to be swiftly withdrawn. To add insult to injury, reports revealed that Dr Mizzi was given an €80,000 a year consultancy contract with the Malta Tourism Authority, just a couple of weeks after he resigned as Minister. This was another slap in the face to all who have been demanding good governance.

For, while this contract has also since been terminated, why had it been given in the first place? What were the decision-makers smoking when they thought either position was a good idea? Dr Mizzi should

be under investigation for alleged cases of corruption and abuse of power, and not given lucrative contracts or representing the country in any capacity.

Is transparency, accountability and respect for all hard-working, taxpaying residents and businesses too much to ask for? We don’t think so. Backroom deals, which are only rescinded upon discovery by the media, must be a thing of the past, if there is any hope for faith in our institutions and continued economic prosperity.

In this month’s edition of The Malta Business Observer, we ask business leaders and constituted bodies for their reactions on PM Abela’s first few weeks. Reactions varied, from the Malta Chamber’s cautious optimism that their good governance proposals will be taken up, to Alan Alden’s questioning of whether persons of trust will remain “doing what they like with impunity”.

Indeed, the need to ensure prosperity, while tackling the rot, was summed up well by Simon De Cesare, Eden Leisure CEO and President of the Malta Business Bureau, who said that continuity in the economic vision for the country “is positive for normality in the business community”. Yet, there is the need for “non-continuity in certain other questionable activities and affiliations” in order to return “normality to business as well as the rest of society.”

The latter is, indeed, imperative. We reiterate that there must be full accountability for those involved in the Panama Papers scandal, in money-laundering allegations involving PEPs and the murder of Daphne Caruana Galizia, as well as an investigation into all controversial contracts, such as the contentious hospital deal (before any re-negotiation occurs!). Moreover, trust and good governance need to also be restored in the arena of environment conservation if we are going to continue attracting people to come and work or holiday in Malta.

There must be no compromise on these. And, until these actions are effected, the business community will continue to watch and wait.

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BUSINESS OPINION

Towards an even more dynamic economy

Silvio Schembri On 20th January, the IMF published its World Economic Outlook. It is not a cheerful read. Global growth was revised downwards, reflecting negative surprises to economic activity and increased social unrest.

Central banks around the world have had to start pushing accommodative policies again to remedy for geopolitical tensions and risks to international trade. This environment poses major challenges for a small open economy. Yet, international agencies have kept a very positive outlook for the Maltese economy.

While growth prospects from external demand are conservative, domestic demand remains promising. Since 2013, Malta has experienced the highest employment growth among EU countries every year, and our average wage now exceeds €20,000 – a quarter higher than in 2012. Consequently, disposable income is at record levels, and household bank deposits are above €13 billion, or up 70 per cent from 2012.

This huge pot of savings provides us with a great opportunity to bolster our economic potential. As Minister for the Economy, one of my priorities will be to create the right environment for these funds to flow into productive investment, particularly into our SMEs. The latest Survey on the Access to Finance of Enterprises, carried out by the European Commission, shows that financing is, once again, an issue for Maltese firms. In fact, the proportion who state that access to finance is their most pressing problem – at 13 per cent – is nearly double the EU average. Despite being more profitable, our firms are finding it difficult to acquire the funds to boost their investment.

This is, in my opinion, a greatly missed opportunity. We should not amass such huge savings which we then leave lying idle. These savings need to flow into the most innovative and promising projects. Our Government has had the forethought of establishing institutions such as the Malta Development Bank that should help unblock this situation. It will be one of my priorities to ensure that this happens.

Another issue affecting the private sector is the lack of skilled labour. I understand how frustrating it is for our entrepreneurs to have to turn down projects because they cannot find staff. I will make it my priority to push for policies that increase the supply of labour and that support the training of our existing workforce. The previous administration did a lot in this area, but much more can be done.

Similarly, while the attraction of FDI has been one of our main successes – with the stock of FDI nearly doubling since 2013 – we cannot rest on our laurels. Increased diversification has been our winning strategy and has ensured our economy did not experience the slowdown that the rest of the EU has suffered in recent years. We cannot afford to miss the next big thing, and we have to continue striving to be the first movers.

In the coming years, we have to continue transforming our economy. We have to become the hub of choice for a wide range of sectors ranging from life sciences to aviation services, from marine engineering to information and communication technology, from the creative industries to telecommunications. In some areas, such as financial services, marine and air logistics, we are already well advanced and the challenge will be to safeguard our reputation as a serious and well-regulated jurisdiction.

In others, such as tourism, we have to continue reinventing ourselves, seeking to harness better our historical and natural heritage, while tapping new opportunities in the face of increased competition. In this regard, I am committed to continue pushing for the further expansion of Air Malta and the adoption of a vision that looks beyond its current role of carrying visitors to Malta. We have the potential to be a hub for air travel, with Air Malta cooperating with much larger airlines to provide optimum travel solutions.

“In the coming years, we have to continue transforming our economy. We have to become the hub of choice for a wide range of sectors ranging from life sciences to aviation services, from marine engineering to information and communication technology, from the creative industries to telecommunications.”

I have a vision where Malta moves beyond being an entrepot for the exchange of goods and services. I see us as the natural place for the exchange of ideas, finance, learning, new technologies and creativity between Europe, Africa and the Middle East, as well as beyond, as our re-

newed strong relationship with China has shown.

Our economic achievements in the last seven years are just a springboard for an even more dynamic economy.

Silvio Schembri is Malta’s Minister for the Economy, Investment and Small Businesses

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Budget measures “should go ahead as planned” despite current crisis, stakeholders say Ray Bugeja The implementation of Budget 2020 measures should go ahead as planned, according to the private sector and employers’ associations, though the Government’s main priority should be restoring Malta’s reputation.

In comments to The Malta Business Observer, the Malta Chamber of Commerce, Enterprise and Industry said that, in view of recent events, Budget 2020 “seems like history now”, but Joe Farrugia, Director-General of the Malta Employers’ Association (MEA), said he believes there should be a sense of continuity, with the Budget measures implemented despite the recent Cabinet changes.

This was reiterated by the Malta Chamber of SMEs, previously known as GRTU, which also insisted the Government must stick to its Budget commitments.

Some measures, like those affecting social services, pensions and labour, have already started being implemented.

The Family and Social Solidarity Ministry said that among the measures coming into effect in January were a €7 weekly increase for pensioners; a higher rate of aid assistance for the severely disabled; and a percentage increase for former civil servants who retired between 2016 and 2018 at age 62 or older and who have paid their social security contribution for more than 35 years.

However, the reality of these measures has not resulted in a substantial improvement to pensioners’ lives, according to Carmel Mallia, President of the Alliance of Pensioners’ Organisations, who questioned the Government’s statement that the pension was raised by €7 a week. “The €7 increase in pensioners’ income consists of €3.49 as cost of living allowance and an additional increase of €3.51 per week in the rate of pension,” he said.

“Therefore, contrary to what politicians say, the rate of pension has only increased by €3.51,” he insisted.

Pension rates were only raised in 2018 (up by €2.17), 2019 (€2.17) and this year (€3.51), Mr Mallia pointed out, quickly adding that such amounts are not considered enough to face the reality of the approximately 25,000 pensioners at risk of poverty. “It is a fact that

the erosion of pensioners’ purchasing power is taking place on a regular basis,” he complained, though adding that, despite this, one should hope for the best.

On the labour front, the cost of living adjustment; the 15 per cent flat tax rate on the first 100 hours of overtime for workers earning up to €20,000; as well as the extra day of leave have also all come into effect this month.

Commenting on these Budget measures affecting industry, Mr Farrugia, from the MEA, remarked that the cost of living adjustment mechanism is something employers have had to contend with for decades: a wage mechanism partly linked to inflation, not productivity. “However, the shortages in labour during the past few years have resulted in wage increases well above the cost of living adjustment increase and, today, many collective agreements, including the one prevailing in the public sector, also include the cost of living adjustment as part of the agreed wage increases,” he noted.

Employers also strongly oppose the addition of an extra day of leave. To Mr Farrugia it is “certainly inflationary” and will have a negative impact on output and productivity.

On the other hand, employers do not consider the 15 per cent tax on overtime as a cost increasing measure in itself, but Mr Farrugia warned it can cause problems in its implementation.

But, more than the Budget 2020 measures, employers feel the main priority should be to restore Malta’s reputation, the MEA Director-General underlined, saying that the recent political turmoil was not about Budget measures “but, rather, due to the progressive erosion of governance and the rule of law over the past years, which has severely damaged Malta’s reputation abroad and also affected consumer and business decision making locally.”

Action must be taken here, he stressed.

“The Government must act decisively to reverse the deterioration of Malta’s image. In the medium term, the Government must also ensure that the fiscal balance remains positive in view of an economic slowdown of our major economic partners, the impact of Brexit, and rising recurrent expenditure,” Mr Farrugia insisted.

Moreover, in the running of the economy, there should be a stronger emphasis

on sustainability, and the generation of wealth through higher-value-added activities through strategic planning rather than expanding in all directions simultaneously, he remarked.

Reflecting this tone, Abigail Mamo, the Chief Executive Officer of the Malta Chamber of SMEs, also argued that the Government has an obligation to deliver on the Budget 2020 commitments. The next Budget, and the end of the current legislature are months away, and, therefore, the measures, most of which are of a social nature, have to be seen to, she said.

Referring to the changes already implemented, Ms Mamo, contrary to Mr Farrugia, was quick to note that businesses are now used to the cost of living adjustment, saying that the present low levels of inflation are not leading to a high cost of living adjustment and, therefore, it is unlikely that its impact disrupts business. Wage increases, Ms Mamo added, are positive for business because they boost consumer spending power – the money being reinvested in the economy.

Moreover, the Malta Chamber of SMEs looks favourably at the 15 per cent flat tax rate on overtime, Ms Mamo continued. Not being very wide in scope, it is not deemed to have a big impact but is considered to be a first positive step. “The most important impact this measure can have is, not the financial aspect, but not losing employees,” Ms Mamo said.

She explained that, under the previous system, workers wanting to earn some extra money in overtime would limit their employment to a 40-hour week at their regular workplace and start a part-time job elsewhere to benefit from a lower tax rate. Now that will no longer need to be the case. Indeed, the SME Chamber is suggesting that a campaign is launched to create awareness about this measure. The Government, it thinks, should also monitor progress and consider extending the measure next year to reach a wider audience.

Moving on, Ms Mamo acknowledged that the public holidays measure is the most difficult one. Though it amounts to direct loss of productivity to a business, nothcontinued on page 15

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Employers, private sector lay stress on restoring Malta’s reputation continued from page 13 ing was done to balance off its impact, Ms Mamo complained. This, she remarked, implies a huge cost and leads to constraints in human resources.

Linking this to current political developments, Ms Mamo warned that “the Government would not be wise, however, to just focus on these commitments and not take stock of the situation and how our country’s priorities have to be revisited, because our scenario has changed drastically and action on the new priorities is time sensitive.”

The Chamber of Commerce, Enterprise and Industry, too, wants to see the crisis in good governance being addressed. It proposed an action plan on how the country should restore its reputation and re-establish good governance. The document was presented to new Prime Minister Robert Abela just four days after taking office and lists more than 60 concrete recommendations on how the country can return to normality and restore its good name.

“This, no doubt, should be the very first and foremost priority for the country today,” a spokesman for the Chamber said. “Every-

thing else will follow. In the past weeks, the business community has sensed an element of hesitation when it comes to investment and a decreased appetite for doing business in Malta from their international partners.

This cannot be taken lightly. While the Government needs to keep its eyes on the political ball, it is through the restoration of our reputation that the country can return to firing on all cylinders, as we were accustomed to in the last years.”

It is against this background that the Chamber commented that the Budget for 2020 “seems like history now”, though the spokesman recalled that it had praised the Government for not introducing any new taxes.

Still, he continued, in the light of Malta’s slippage in the World Economic Forum’s Global Competitiveness Index, the Chamber expects more investment in resources to strengthen the shortcomings exposed, namely the soundness of institutions, skills, market structure and financial systems.

On the measures already implemented, and, specifically, on the extra day of vacation leave granted in lieu of public holidays falling on a weekend, the spokesman noted

"e shortages in labour during the past few years have resulted in wage increases well above the cost of living adjustment increase." - Joe Farrugia, MEA Director-General this was the third day of additional leave given during this legislature. In the Chamber’s view, this measure would further intensify companies’ cost of employment, which, it stressed, reached levels of real concern. “This remains an issue, particularly for those economic sectors expanding at belowaverage pace or highly sensitive to international competition and cost structures,” the spokesman commented.

Yet, on the other hand, the 15 per cent flat tax rate on overtime is good news to the

Chamber, which said it looks forward to more ‘make work pay’ incentives to help alleviate the shortage of labour and skills.

In the meantime, while the Chamber’s spokesman spoke of a skills and labour shortage, Francois Grech, Managing Director of Exigy, which provides strategic software solutions, and Chairman of the Chamber’s Tech Business Section, looked to the implementation of further measures.

Mr Grech recalled that the Government launched the AI strategy late last year with a defined number of initiatives across a number of years. Such initiatives were prioritised within the strategy and budgets allocated to them, as mentioned in Budget 2020, with a kickstart of their implementation expected in the first quarter of this year, he noted.

He now expects that the different entities under which each initiative was defined would be evaluating the best course of action to bring forward such initiatives, though he raised the issue of “access to talent”, saying that it is one of the critical factors limiting the growth potential of the tech industry in Malta. It is, therefore, essential that the island is positioned as a highquality living country to ensure it attracts the best talent across Europe and beyond.

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Addressing the skills gaps in Malta’s online gaming industry Peter Spiteri Earlier this month, the MGA published a report highlighting the key findings of a survey carried out in 2019, covering the year 2018, to understand better the existing skills gap in the iGaming sector.

The majority of the surveyed companies expressed their satisfaction with the training offerings in Malta, although between 15 and 20 per cent of the respondents indicated that more needs to be done with respect to the availability, quality and value for money of the training opportunities.

This pattern of response indicates that training opportunities locally are, by and large, meeting the needs of the sector. Inevitably, there remain areas for improvement, primarily in the provision of apprenticeships and on-the-job educational experiences to make up for the lack of experience and the demand for this is strongly emphasised by employers.

Another important consideration is that, while a number of agencies are providing courses on key topics, including antifraud and payments handling, Anti-Money Laundering (AML), and responsible gaming, some

operators pointed out that most of the courses tend to be generic and geared towards casino-type games or sports betting. Their relevance to other gaming products and employees, who have more experience in the field, can be improved.

Through the survey carried out for the year 2018, we also found out that larger firms, in particular, tend to be less satisfied with the quality of training opportunities.

It has to be acknowledged that such companies have more resources to offer their own tailormade in-house training which satisfies the basic needs of the company. They might also send their employees abroad for more training opportunities.

Several policy efforts have already been made to address the skills gap and we are happy to see that the industry recognises that significant progress has been achieved over the years in providing quality education to the online gaming sector in Malta and the overall increase in the iGaming courses offered.

In November 2017, the European Gaming Institute of Malta (EGIM) was launched following an agreement signed between the MGA and MCAST. This strategic initiative aims to develop a talent pool in the gaming industry and create more long-term careers for both local and foreign students, through educational programmes designed to enhance the sustain-

“Several policy efforts have been already made to address the skills gap and we are happy to see that the industry recognises that significant progress has been achieved over the years.” ability and growth of the workforce in the sector.

Indeed, in 2018, we saw 56 students applying for the iGaming Diploma at MCAST and an additional 43 students enrolling by

mid-November 2019. Currently, there are also talks between MCAST and Gaming Malta to add more courses and opportunities, and our current plans are to strengthen the educational

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CASE STUDY

courses being offered, whilst at the same time looking at ways to keep developing these further.

Collaborating with the University of Malta, or other universities in future, is also not being excluded.

In addition, by mid-November 2019, 58 students had enrolled for the award in the iGaming course at the iGaming Academy (IGA), which is an MQF accredited course developed in collaboration between MCAST, EGIM and the IGA for students looking to further their career in the online gaming industry or gain a greater understanding of the sector. From the regulator’s point of view, we are delighted to see these numbers and look forward to seeing more students enrolling in the coming months.

Indeed, iGaming Academy has complemented the work being done by MCAST, and successfully filled the gap in the local market by providing high quality training courses, eLearning and masterclasses for businesses and professionals in the online gaming industry. Nowadays, training has become fundamental to most operators as well as service providers in the industry, which encouraged iGaming Academy to extend its courses offering.

Moreover, the Government and Gaming Malta recently initiated

the Student Placement Programme to reduce the mismatch which exists between the supply and demand for gaming skills in the Maltese labour market, and to ensure that candidates get the appropriate experience. In 2019, a total of 21 students were selected and matched with seven companies participating in the programme. The industry is also proactive in addressing this issue.

Many operators offer internships programmes to students and graduates that are the ideal start for those who would like to enter the iGaming industry, expand their knowledge, and benefit from on-the-job experience.

However, we do acknowledge that the industry still needs to see more initiatives tackling the issue of attracting the best talent.

Malta should concentrate on intensifying the impetus of the educational system to provide the skills in the required numbers, thus ensuring sufficient dynamism in meeting the rapidly changing technologies and skills set requirements.

Such initiatives and educational opportunities would continue to help meet the human resource requirements of the industry. At the end of 2018, there were a total of 730 unfilled vacancies in the gaming industry. When compared with

“Attracting talent has become one of the top priorities.” the 781 vacancies reported a year earlier, we can certainly say that the industry is in a constant search for experienced workers. Attracting talent has become one of the top priorities. From the last survey we conducted with our licensees, we know that most of the vacancies were at the operational level which could typically be filled by those just leaving formal education.

The results of our survey also indicate that nearly 70 per cent of the vacancies at all levels remained unfilled for no more than three months. This means that more than 500 positions are typically filled within 90 days. The gaming industry requires employees with high-demand skills resulting in a significant number of employees, on the operational level, changing jobs very often. The results of our survey confirmed that around 35 per cent of firms recruited workers who were already employed by other firms in the online gaming sector. Talent poaching is evident when there are not enough skilled candidates to satisfy the recruiting needs.

Therefore, the industry needs talent with more sector-specific skills. Our licensees reported that the predominant area of vacancies, as of the end of 2018, were those involving marketing, which accounted for 37 per cent of job openings. This category also includes jobs in customer care and digital marketing.

These vacancies would target mainly professionals with an ecommerce background and marketers possessing an insight into player psychology.

Vacancies within the technology category were also significant, accounting for nearly one-fifth of the total vacancies, while job openings within game operation and development reported the highest drop when comparing year-on-year results. These constituted around 13 per cent of the total number of vacancies. Yet, in 2017, vacancies in that category accounted for the highest share of all vacancies so, in reality, the requirements of the sector are changing constantly.

Jobs characterised by a strong demand elsewhere in the economy, in the areas of legal and compliance, risk and fraud, constituted for 11 per cent of all vacancies at the end of 2018.

Furthermore, vacant posts relating to data analysis were relatively small when compared to the other categories. This area requires highly specialised human capital quite specific to gaming, and, therefore, it is not subject to competitive forces from other economic sectors.

From the soft-skills perspective, teamwork and dedication are the characteristics needed in any industry, and this also applies to gaming, a sector in which companies also possess their own culture and values.

Thus, as with other important sectors of strong economic growth in Malta, the gaming sector needs more academia-industry dialogue to ensure that right courses are provided by educational institutions. Added to this, we also need to see more initiatives and events where participants could network and exchange ideas.

Peter Spiteri is the Chief Officer of Finance and Programme Management at the Malta Gaming Authority, responsible for the Information and Research Unit.

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BUSINESS UPDATES

How technology and gamification are revolutionising corporate team building Online tutoring and the gamification of learning has become increasingly popular over the last decade, used by the education sector and corporations alike.

Gamification creates exciting, educational and fun learning experiences, offering additional benefits that conventional systems are unable to achieve. Research shows that gamification in learning increases engagement, instils a sense of accomplishment and improves overall retention tenfold when compared to traditional learning methods such as reading and listening. In short, the application of game mechanics in team building has been shown to drastically increase its effectiveness.

Technology is playing an increasingly important role in the delivery of team building programs. Today’s team building provides opportunities for technology-centred activities that incorporate exciting gadgets and gizmos, taking a digital approach to its physical or mental challenges . Pen and paper are being replaced by digital tools such as smartphones, tablets and GPS systems throughout conventional team building activities.

Virtual reality also provides the opportunity for employees to step into a new, digital world, where the rules of the real one no longer apply.

Outdoor Living Ltd, the leading teambuilding events company in Malta, has always been at the forefront in introducing the latest team experiences to our island. In 2012, Outdoor Living introduced one of the most popular events to date – the iChallenge – which took treasure hunts to a completely different level as teams used tablets and followed GPS checkpoints to complete challenges and win points for their team. Real-time scoring, live communication and the large number of customizable

options ensures a level playing field where everyone is free to express their ideas and opinions.

These qualities made the iChallenge a popular teambuilding event in Malta, so much so that Outdoor Living was awarded multiple times as the top European seller of such activity.

Last year, Malta saw another major step towards technology team events as teams in Malta participated in the world’s first VR teambuilding event, The Infinite Loop. In The Infinite Loop players exchange roles in the real world to save a young man trapped in the virtual world. With the game’s objective to create competition between teams – and with a main screen showcasing the evolution of multiple teams in one game session – Danica Fava, Managing

Director of Outdoor Living Ltd explained how The Infinite Loop “offers a unique, interactive way for teams to focus on the importance of continuous improvement and lean management, while having fun in a fast-paced and highlycompetitive game”.

Following the success of different teambuilding experiences using the latest technology, Outdoor Living Ltd has more new events planned to be launched throughout this year. Amongst the new events Ms Fava talked about the new VR team activities specifically designed to be played pre- or during a company dinner such as La Casa de Dinero and Whodunit?

La Casa de Dinero is a highly engaging activity that captures the tension and drama of La Casa de

Papel in a multiplayer VR game.

Participants ‘puzzle’ their way through several game levels, swapping headsets between stages to ensure everybody experiences an array of next-level VR environments. During their adventure, teams must solve all manner of problems: cracking safes, defusing bombs, silencing alarms and, finally, digging their way out of their virtual world and back into reality.

In Whodunit? teams match the clues in the real world with those in the virtual world to find out the mysteries of the Grange Hotel.

Faced with a mass of data, participants must focus on the questions at hand and develop the ability to identify what is relevant.Ms Fava explained, how, over the course of the game,

process improvement is attained as team members learn to collaborate effectively using deductive reasoning to come to a conclusion which is driven by both logic and consensus.

And, if the above is not enough, another first for this year will be an Augmented Reality game - Pyramid Quest – a fun, table-based, team game where teams will watch in amazement as an ancient pyramid seemingly builds from the middle of their table. The pyramid is, of course, augmented reality, the over-layering of 3D models on immediate surroundings, viewed from all angles through a tablet. While socialising and having fun, participants will discover the talents of others, and learn how to work together to achieve their ultimate goal.

Ms Fava added that “the application of game mechanics to team building, results in a drastic increase in engagement, motivation, fulfilment and retention”.

These results explain why technology is playing an increasingly important role in the delivery of team building programs that incorporate game design techniques, creating more effective activities that benefit both businesses and employees.

Whether you are trying to increase conference engagement or simply hope to organise a team building exercise, including questions and challenges that centre around your desired learning outcome, Outdoor Living Ltd will ensure participants are engaged, motivated and able to effectively absorb the information, committing it to their long-term memory using the latest technology.

Outdoor Living Ltd are the exclusive licensees of Catalyst Teambuilding products in Malta. For more information, visit www.outdoorlivingmalta.com

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STOCK MARKET REVIEW

Integrity, transparency and efficiency

Doreanne Caruana Capital markets are an important source of financing in an economy, providing companies with alternative sources of finance to traditional bank borrowings, while creating an opportunity for the public to invest in companies and diversify their investment portfolio. Capital markets also provide liquidity, as securities are freely tradeable.

The Market Abuse Regulation (MAR), which came into force across the European Union member states as from July 2016, is based on three pillars – integrity, efficiency and transparency. These characteristics are important and have been the focal point of this regulation.

The scope of MAR extends to any financial instrument traded on both the regulated market and other trading facilities, including multilateral trading facilities (MTF). Taking the local context, this regulation applies to all securities listed or traded on the regulated market (including the Official List which is regulated by the MFSA) and prospects (an MTF, operated by the Malta Stock Exchange). Across the EU, MAR has some exemptions in terms of reporting and obligations that apply to securities listed or traded on SME growth markets. However, in Malta, there seem to be none (MFSA Circular dated 5th July 2019 – www.mfsa.mt/wpcontent/uploads/2019/07/201907

05_Market-Abuse-Regulation-–List-of-Insiders1.pdf).

Market abuse encompasses unlawful behaviour in the financial markets which is understood to include the disclosure of inside information; insider trading; and market manipulation.

INSIDE INFORMATION Inside information is defined as information which is of a “precise nature”, “not made public” and “relating, directly or indirectly” to the company’s securities and which “if it were made public, would be likely to have a significant effect on the prices” of the securities in question. As such, the unlawful disclosure of inside information arises when a person who is in possession of such information discloses it to another person (an exemption to this applies in instances where such disclosure is made in the normal exercise of an employment, a profession or duties).

In order to address this concern, MAR requires that each company maintains a register of insiders, namely the persons within the company, and outsiders, who are privy to inside information. There are two lists which an issuer may draw up – a list of permanent insiders and one for temporary insiders.

The former includes those people who are constantly susceptible to being in receipt of inside information because of their role, function or position within the issuer; these people may be, for instance, the Chief Executive Officer, or the Chief Financial Officer. In the temporary list, the persons listed, as the name implies, would include those who are not always privy to inside information, but are involved with the issuer on deal-specific or project-specific transactions. These could include advisers, bankers, accountants, auditors, consultants and/or other employees. A register should be kept updated with the date when the persons were in re-

ceipt of inside information and when the information ceases to be inside information (following which they can be struck off the list).

INSIDER TRADING Insider trading would arise when a person who possesses inside information uses such information for the acquisition or disposal of the securities, either for his or her own account or for the account of a third party, directly or indirectly.

In promoting transparency, the regulation also expects issuers to make public any inside information in order to avoid insider trading and ensure that investors are not misled. It is only when the disclosure of the inside information would be to the detriment of the issuer, or when the disclosure of the inside information could mislead the public, that MAR allows exemptions from the disclosure of the said information.

Such legitimate reasons may include, among others, any ongoing commercial negotiations by the is-

suer that give rise to price-sensitive commercial information that cannot be made public since it may hinder the same negotiations, or where the decisions taken or contracts signed are subject to attainment of approval from another body of the issuer and as such would not yet be confirmed.

MARKET MANIPULATION The third prohibition of MAR relates to market manipulation. Market manipulation activities include actions taken that (are likely to) give misleading signals in relation to the supply, demand or price of a security, or which result in pushing the price of a security to abnormal or artificial levels. Market manipulation can occur through a number of activities, such as the dissemination of misleading information through media and/or the Internet, or through the placement of orders or the execution of transaccontinued on page 24

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STOCK MARKET REVIEW

Investor confidence in market integrity is key continued from page 23 tions that are likely to mislead investors who may act on the basis of the price of the security on the stock market, as well as the creation of false or misleading signals of supply or demand or the price of the security, among others.

INTEGRITY The Market Abuse Regulation aims at preserving the integrity of the capital market. If there are cases where there is insider trading, the integrity of a capital market gets tarnished and, as such, the national competent authorities and operators of the markets are expected to ensure that issuers are made aware of the requirements and obligations vis-à-vis ensuring that there is no insider trading, particularly by those on the insiders’ list or by PDMRs (persons discharging managerial responsibilities) and their close associates.

In fact, whenever PDMRs (including members of the adminis-

trative, management or supervisory body of the issuer and/or senior executives who regularly have access to inside information directly or indirectly and who have the power to take managerial decisions affecting the future developments and prospects of the business) and their close associates (including partners, spouses, dependent and other family members who share the same dwelling and business partners, among others) trade in the securities of the company to which they are associated to, a notification has to be sent to the issuer and the national competent authority (the MFSA, in Malta’s case) of such trades. The specific form which is available from the MFSA includes details of the transaction, including whether it is a disposal or acquisition of the security, the quantity of units and the price, among others.

Such information has to be sent by no later than three business days from the execution of the transaction and has to be published on the issuer’s website. The MFSA also

publishes such information on a collective basis for all issuers. However, it is not obliged to do so – the obligation has been shifted onto each of the issuers.

INTEGRITY, TRANSPARENCY AND EFFICIENCY Investor confidence is a key factor for an efficient capital market. If investors are not willing to invest because they lack the confidence in the integrity of the market, then the market will no longer be attractive to issuers for them to diversify their financing options (particularly with the issue of debt instruments such as bonds) or to grow their business by allowing new equity investors via an initial public offering.

The MAR’s preamble states that “reasonable investors base their investment decisions on information already available to them”. Indeed, it is important for investors to have information made available for them to take on calculated risks. Information and transparency become key in improving confidence

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. © 2020 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved

in the market. Last but not least, equipped with confidence and information, the investor public will make the market more efficient and improve its liquidity. An investor who has no information forthcoming from an issuer will not have any basis for trading in or out of a particular investment. This is why company announcements made by issuers should include all information necessary in terms of both MAR and the rules of the market that they are listed or traded on.

THE OFFICIAL LIST AND PROSPECTS MAR applies to both the official list (main market) and prospects (the local MTF). It is encouraging to see an increasing number of companies taking a more active approach and making the necessary detailed disclosures as and when necessary or required.

Doreanne Caruana is the Head of Corporate Advisory at Rizzo, Farrugia & Co (Stockbrokers) Limited.

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Senior Appointment at ARQ Group ARQ Group have opened the new decade by appointing Dominic Fisher, a chartered accountant and qualified internal auditor, to head up their ex-

panding Risk & Compliance Advisory Team.

Before joining ARQ, Mr Fisher, a UK national, served as Chief Risk Officer and Executive Director at Sparkasse Bank Malta plc, possibly making him the youngest former bank director on the island. Prior to that, he spent over six years in a leadership role at a Big Four firm, where he drove the growth of the Enterprise Risk Services Department and oversaw assignments related to risk management, regulatory compliance and internal audit at leading local organisations.

Mr Fisher is also the immediate past President of the Malta Association of Risk Management.

Mr Fisher’s appointment strengthens ARQ Group’s capabilities in strategic AML consulting, banking regulation and enterprise risk management. Mr Fisher is also a privacy expert, having served as Sparkasse Bank Malta plc’s Data Protection Officer (DPO) since the advent of GDPR and ARQ will be leveraging on this expertise to promote its increasingly in-demand “DPO outsourcing service” to the local market.

Commenting on this appointment, ARQ Group’s Managing Partner, Manfred Galdes, said “Dominic’s background and expertise in risk management, AML, banking regulation and data protection strengthens ARQ in an area where we are already considered to be a leading advisory firm. His addition to our advisory team doesn’t just add depth to our compliance offering but it strengthens even further our capability to provide the highest standards across the entire spectrum of compliance services. Bringing the best talent together from different professional backgrounds in servicing the knowledge-based industries is what distinguishes us from everyone else.”

“Dominic’s background and expertise in risk management, AML, banking regulation and data protection strengthens ARQ in an area where we are already considered to be a leading advisory firm. His addition to our advisory team.”

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BUSINESS UPDATES

HSBC Malta unveils Qormi flagship branch plans

Great connectivity and great savings with GO Business GO is offering businesses the opportunity to kick off 2020 with great connectivity, whilst also making great savings on their monthly plans. New customers signing up to GO’s value-packed Internet package, Business Infinity, until the end of February 2020, can save up to €20 monthly on their pack.

With Internet speeds up to 1GB, GO’s Business Infinity Pack is the best-value package on the market, offering unmatched internet speeds, free telephony, as well as a TV offering and in-built back-up of your Internet connection. It is the ‘go-to’ product for businesses of any size.

The Business Infinity pack is offered in three different tiers, at three different Internet download speeds – 100Mbps, 300Mbps and 1Gbps – ensuring that the right tier is available for every business set-up, no

matter what stage of business they are in.

New customers signing up to a Business Infinity pack until the end of February 2020 will enjoy the following discounts: €5 (excl. VAT) monthly discount when choosing the ‘Small’ pack; €10 (excl. VAT) monthly discount when choosing the ‘Medium’ pack; and €20 (excl.

VAT) monthly discount when choosing the ‘Large’ pack. Monthly discounts are applicable for the duration of the two-year contract, making this an unbeatable offer.

Let GO handle your connections, while you get down to business!

For more details, and to sign up, visit: www.gobusiness.com.mt.

HSBC Bank Malta has unveiled plans for its new flagship branch in Qormi. The branch, set to open in 2020, will bring together all the bank’s personal and business services while providing a new and unrivalled customer experience.

HSBC Malta’s flagship branch will, in fact, be among the first new generation branches which HSBC Group is opening globally as it redefines the way in which it engages with customers to meet their evolving needs. The focus will, therefore, be on more digital services and on tailored personal assistance and advice from employees.

Distributed across three floors, HSBC’s flagship branch will welcome customers with an ‘explore and discovery’ reception area.

Here, customers will be able to make use of HSBC’s digital services via connected devices, ATMs and deposit machines, or seek advice on their personal banking needs. The second floor will feature private meeting rooms where customers can discuss

their requirements with specialist advisers. The third floor will offer HSBC’s Premier customers a VIP area with specific facilities and services.

In setting up its new flagship branch, HSBC is also investing to minimise the carbon footprint of the building. The new Qormi branch, in line with the bank’s Green building

policy, will be fitted with presence controlled LED lighting, solar film to reduce heat gain, photovoltaic panels for the generation of electricity, and will also be utilising two dedicated solar powered charging points for customer cars outside the branch. Water consumption will be minimised with low water consumption fixtures.

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What is AML transaction monitoring?

Even if you’re not directly involved in the banking and finance or gambling and iGaming sectors, there’s a pretty good chance that you’ve at least heard – or read – about AntiMoney Laundering (AML). It refers to a set of laws, regulations, and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income. Even though AML laws cover a relatively limited range of transactions and criminal behaviours, their implications are far-reaching and nearly impossible to detect without the right AML transaction monitoring software.

AML transaction monitoring software helps businesses automatically monitor their customers’ financial transactions so that suspicious activity can be identified in real-time. A proper automated system will achieve the following: Minimise false positives by applying a risk-based approach and adapting scenarios to customer and/or transaction risk levels; Spot patterns and outliers by monitoring behaviours alongside historical transaction data and other contextual profile data; Check each customer transaction against their individual profile to identify any transaction that does not meet their historical behavioural patterns; Compute running values and statistics to define complex scenarios which would need to consider past activity.

money laundering including structuring, double invoicing, and round-tripping – but that’s not all it does. A sophisticated transaction monitoring solution also plays a central role in sniffing out terrorism financing and any customers who might be trying to avoid international sanctions. The main benefits of AML transaction monitoring software are as follows: ▪ Comply with global regulations; ▪ Protect your reputation; ▪ Instill a positive customer experience; ▪ Minimise risk exposure; ▪ Avoid potential fines.

How AML transaction monitoring software works AML transaction monitoring software looks at everything, from deposits and withdrawals to international wire transfers, currency exchanges, credit extensions, or any kind of payments in or out of accounts. By identifying

patterns over time, the system learns to predict your customer’s actions, detect any unusual (potentially suspicious) behaviour, and send out immediate alerts to your compliance team for further investigation.

Companies big and small use this technology to fight against all kinds of fraud and

ComplyRadar – it pays to comply ComplyRadar utilises a full risk-based approach to eliminate disruption to genuine customers, detect potential criminal behaviour, and demonstrate full ongoing compliance. It sends you notifications on the transactions that matter and enables you to automatically apply a full-pattern analysis to instantly see suspicious transactions in real time. You can then manage flagged transactions through a comprehensive investigation process leading to the filing of a SAR when required. For more information on how ComplyRadar can help you avoid reputational risk and potential fines, visit www.comply-radar.com or email info@computimesoftware.com.

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e Malta Business OBSERVER

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January 30, 2020

BUSINESS UPDATES

Cybersecurity conference Cybersecurity is the state or process of protecting and restoring networks, devices, and programs from any type of cyber-attack. These attacks are designed to access or destroy sensitive data or extort money.

The headlines are peppered with news of security breaches and incidents involving all types of organisations, from critical infrastructure to schools, hospitals and companies. Given the increasing frequency and accuracy of cyberattacks, implementing a solid cybersecurity strategy is critical. The Internet can be compared to an intricate web of roads on a global scale with a set of common traffic rules to manage the network. A hacker is someone who tries to break through the defence of a specific network and exploit vulnerabilities in a computer system.

Searching for signs of an attacker on your network can be like looking for a needle in a haystack. In many cases, companies need an average of six months to detect a data breach. More than ever, a security team needs the right skills, competences and tools to identify and investigate critical security threats.

Expanding the knowledge, skills and competences of IT professionals is one of

“Cybersecurity can make or break an organisation.” – Carm Cachia eSkills Malta Foundation the roles championed locally by the eSkills Malta Foundation. With the support from security expert Keith Cutajar, the Foundation teamed up with specific partners MITA, MDIA, University of Malta and the British Computer Society. The Foundation is organising a conference on Cyber Security, which will be held at the Corinthia Palace Hotel and Spa in Attard on 5th February 2019.

Ian Fish, Information Security Specialist from the BCS (British Computer Society), will be presenting the Pros and Cons of Security Management. Security management is the identification of an organisation’s assets, including people, buildings, machines, systems and other information assets. This is supported by

the development, documentation, and implementation of policies and procedures for protecting these assets.

This will be followed with a session by Kirsten Cremona from PwC and Jean Michel Azzopardi from Kranalax who will discuss offensive security and penetration testing. Such an assessment helps determine the weaknesses in networks, computer systems, and applications.

The conference will also feature a European aspect and a representative from Europol will be debating incident handling and digital forensics. Digital forensics is the collection and examination of digital evidence residing on electronic devices and the subsequent response to threats and attacks. Digital forensics, if used well,

can greatly assist decision making during a cybersecurity incident.

Dr Mark Vella and Dr Christian Colombo will talk about the University of Malta’s research project in Cybersecurity, whilst a panel discussion with Pricewaterhouse Coopers, ISACA, University of Malta, MCAST and MITA will be moderated by Mr Carm Cachia, the Chief Administrator at eSkills Malta Foundation.

In the afternoon, various workshops relating to cybersecurity relating to Distributed Ledger Systems (DLT), Internet of Things (IoT) and Artificial Intelligence (AI), will be run and moderated by leading stakeholders so that a discussion forum is created in the areas relating to security in these emerging technologies. eSkills Malta Foundation invests in such events with the aim of upskilling individuals working in the digital economy.

Emerging technologies and their security management present a new dimension and challenge to the IT professionals and practitioners and, hence, the value for such a conference.