The Malta Business Observer July 2018

NEWS

Issue 88

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July 26, 2018

Distributed with Times of Malta

More than 2.5 million tourists expected to visit Malta in 2018

e extension of Malta International Airport’s apron will benefit Malta’s tourism industry and cater to growing airline demand. see page 3 >

ANALYSIS Malta’s growing aviation industry may soar even higher after Britain’s exit from the European Union, stakeholders say. see pages 5, 6 >

Marie-Claire Grima Tourists in Malta are expected to exceed 2.5 million this year, making it another record year for the industry, according to the Malta Tourism Authority (MTA).

“Following last year’s record 2.3 million tourists, 2018 is proving to be another strong year in terms of growth, after a very good winter season,” a spokesperson from the MTA said. “The initial results for summer 2018 are also very positive and it is being conservatively estimated that tourism figures will exceed 2.5 million this year.”

The spokesperson said that there is a range of factors contributing to Malta’s success in this area. “These include expanded airline connectivity, spearheaded by Air Malta’s growth in fleet size and served routes this year, and the attractiveness of Valletta 2018 to Malta’s tourism source markets,” the spokesperson said. “Based on current estimates and forecasts, next year is also expected to be a positive year.”

While Malta’s economy has diversified greatly over the years, travel and tourism still count as its main source of income, with total contribu-

tion to the GDP amounting to around 27 per cent. However, backlash against this lucrative industry is starting to raise its head, especially in the places that, on paper, profit from it most. SET – the Southern European front against Touristification – was founded in April this year, and includes representatives from Malta and various Mediterranean cities, which have seen their popularity as tourist destinations skyrocketing, with the introduction of cheap flights offered by low-cost airlines.

Such organisations claim not to be against tourism overall, but simply want to curb the problems brought on by mass tourism. It’s an issue that the MTA is aware of, and has been taking steps to improve.

“As tourism continues to grow worldwide, with World Tourism Organisation (UNWTO) estimates forecasting close to two billion trips per annum within the next decade, the phenomenon of over-tourism is starting to be identified and highlighted by a number of overcrowded and popular destinations across the globe,” the MTA commented.

“Organisations such as UNWTO list factors such as better seasonal spread, and more pro-

fessional management of tourism flows as potential antidotes to this. Malta has been at the forefront of spreading its tourism growth, mostly in the off-peak months, and attracting different streams of tourism which complement each other without overlapping, so as to avoid peak concentrations, whilst maximising on tourism’s returns. Nevertheless, this needs to be continually monitored and addressed, particularly in terms of infrastructural responses, and care taken to ensure that the host-guest relationship remains at the current high levels that it is.”

The MTA added that with the fast evolution of tourism worldwide, Malta needed to continually seek out new market segments to be able to sustain its role as a destination of first choice, amongst ever-increasing competition.

“New markets can include geographical ones, such as North America, Latin America, and South East Asia. They can also consist of new market segments, focusing on experiential tourism, and ranging from cultural to gastronomic, musical, and activity-based tourism, in which the Maltese tourism industry is continually investing, and creating new products and services.”

NEWS ‘Significant progress’ has been made in negotiations between White Rocks Consortium and Government on the €400 million project. see pages 9, 13 >

STOCK MARKET REVIEW How trade wars create uncertainty and economic hardship, and why they’re bad news for investors. see pages 24, 25 >

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NEWS

Apron extension puts MIA in better position to deal with growing airline demand The extension of Malta International Airport’s (MIA) apron will benefit the Maltese tourism industry, by allowing the airport to cater to a greater number of commercial airlines which want to commence or boost their activity on the island.

“MIA will be kicking off the project immediately by engaging a firm to develop the designs for the area,” Alan Borg, CEO of MIA told The Malta Business Observer. “With the development of this new apron, the airport will be in a better position to cater for growing demand by commercial airlines wishing to start or increase their operations to Malta.”

The expansion of MIA’s apron on a piece of land located within the boundaries of the airport perimeter was granted through a parliamentary resolution passed earlier this month. The area is around 48,000sqm in size, and is located between the current Apron 8 and Apron 9.

The new aircraft parking area will be able to accommodate up to seven Code C aircraft, such as the Boeing 737 or Airbus A320, the likes of which currently make up 98 per cent of the airport’s schedule, according to MIA. This new parking area also gives the airport the alternative possibility to accommodate four Code E aircraft, such as the Boeing 777.

In comments to this newspaper, the Malta Tourism Authority (MTA) said that the airport apron extension is a measure that “improves the airport’s handling capabilities, giving more flexibility, particularly during periods of peak arrivals and departures.”

“The new extension will be useful for a number of uses, including new routes. A move like this obviously improves the airport’s – and therefore the country’s – capacity to handle incremental movement and therefore traffic flows,” a spokesperson for the MTA said. “Having more handling flexibility also means that there is improved potential for the attraction of increased seat capacity, apart from easing pressures arising from existing peaks.”

Meanwhile, MIA’s investment programme is already looking into plans for the next phase, which is the expansion of the terminal, a €40m investment which will

“e new aircraft parking area will be able to accommodate up to seven Code C aircraft, such as the Boeing 737 or Airbus A320, the likes of which currently make up 98 per cent of the airport’s schedule.”

equip the airport with more check-in desks, increased circulation space, additional seating, as well as more dining options to continue to amplify the experience for passengers passing through MIA. This phase follows the completion of works related to the €12 million terminal reconfiguration project, which started in September 2016. “This project has already improved key processes in the passenger journey. This coming October we will enter the last phase when works will be resumed on the new baggage handling system situated behind the check-in desks, in advance of the next summer schedule,” Mr Borg said. Additionally, this year, works are set to start on a €20 million multi-storey car park, which will provide around 1,300 parking spaces within the airport campus, and will also accommodate car rental facilities within.

Furthermore, plans have been set into motion for the construction of SkyParks II –

a €40 million project with commercial and office space, as well as a business hotel, six years after the inauguration of the first SkyParks Business Centre.

“Following our master plan approval and in line with our aim of developing the airport campus, our team is currently working on putting together a business plan which will then enable us to enter the design phase of the project,” Mr Borg said. “The new building will comprise commercial and office space totalling 18,000sqm, and a 4,100sqm business hotel. Detailed plans are still underway for the business hotel, and we are currently in discussions with a number of operators.”

Mr Borg said that the success of the SkyParks Business Centre, which was inaugurated in September 2012, had generated further demand for quality office space, “not just externally but also from existing tenants wishing to expand their footprint.”

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ANALYSIS

Malta’s aviation industry could benefit from Brexit, stakeholders say Rebecca Anastasi Malta’s aviation industry may fly even higher following Britain’s exit from the European Union, according to government and industry stakeholders, who have emphasised the island’s bilateral relationship with the United Kingdom and strategic geographical position as potential assets.

This follows on reports of exponential growth in the sector: the number of registered aircraft has doubled since 2012 to more than 280, and the number of Air Operator Certificate (AOC) holders has increased from 18 to 35, according to Dr Ian Borg, Minister for Transport, Infrastructure, and Capital Projects.

In reference to questions sent by this newspaper on the opportunities presented by Brexit and the overall growth of the aviation sector, Dr Borg emphasised the dynamism of the industry, stating that “the word ‘static’ doesn’t feature any-

“Malta is determined to maintain its strong bilateral relationship with the United Kingdom, and the possibility of companies having a supporting infrastructure in Malta is also part of that relationship.”

– Transport Malta

where” and that Government was constantly maintaining “an open-minded, pro-active, reliable approach, which an avant-garde jurisdiction truly deserves.”

He also noted the recent addition of the first Airbus A380, the world’s largest passenger jet, on Malta’s aircraft registry, as testament to this fact.

Elaborating on the Minister’s comments, a representative from Transport Malta noted the uncertainty surrounding Brexit, underlining the necessity for clarity “to what the imminent future holds vis-à-vis Brexit,” particularly in such a highly-regulated industry. “Malta is determined to maintain its strong bilateral relationship with the United Kingdom, and the possibility of companies having a supporting infrastructure in Malta is also part of that relationship,” the spokesperson said, further noting that “one has to duly consider the importance of connectivity, choice and value for money for UK and European citizens and workers alike.”

Transport Malta’s representative went on to assert that “opportunities to establish Malta as a platform for aviation-related activities exists.” The positive steps taken in recent years to boost the sector were also delineated, with specific mention of the Aircraft Registration Act in 2010, and its subsequent amendments; and Malta’s acceptance as signatory to the Cape Town Convention in 2016, allowing it to qualify for a discount of up to 10 per cent on aircraft finance transactions supported by export credit agencies.

These initiatives are part of Government’s commitment to “encourage quality and value-added to the sector as a whole,” according to Dr Borg, who emphasised that this was not about “mere volume” but about a commitment to “keep facilitating the dayto-day operations of aviation companies.”

Transport Malta’s representative echoed this, stating that “as Malta responded to past opportunities related to the maritime Continued on page 6

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e Malta Business OBSERVER | July 26, 2018

ANALYSIS

Establishing Malta as a platform for aviation Continued from page 5 and financial services sectors, it is important to put in place, maintain and sustain the basic building blocks which are required for the aviation sector to grow, and not come to a standstill or dwindle down.”

The representative noted the “regulatory, administrative, educational, financial and fiscal requirements” which form part of these building blocks, whose end goal is “to create a high value-added aviation sector, where new job opportunities are created, and existing ones are sustained through the availability of a skilled workforce, revenue generation and economic growth.”

Dr Silvana Zammit, the Partner in charge of Aviation Law at Chetcuti Cauchi Advocates, which deals with the registration of aircraft in Malta as well as the transfer of ownership, aircraft finance and registration, reiterated this cautious optimism in the potential for Malta to excel following Brexit. “Being part of the European Union and signatory to the Cape Town Convention, together with having a trustworthy and efficient register, Malta is proving to be a feasible and advantageous option for business owners and aviation enthusiasts alike,” she asserted.

Dr Zammit stated that the aviation industry is “undergoing its fair share of turbulence” in light of current geopolitical changes, such as Brexit, referring to a recent IATA report which evaluated the future of the airline industry, listing Britain’s exit from the EU as one of the main influential factors shaping the industry. “Any restrictions to aircraft entering and leaving Britain post-Brexit, together with the requirement for EU airlines to have effective management and control in the EU, might hit hard operators setting up or dealing with the UK,” she explained.

Indeed, this might force them “to look for feasible and practical solutions,” according to the lawyer, who also stressed that time was of the essence for stakeholders seeking to navigate the thorny issues surrounding Brexit. But, she sees opportunity in this for Malta, since the island “seems to be on the radar of operators affected by such changes.” She also noted that Malta’s strategic location might help, since this goes “beyond an ever-growing tourism industry, having far-reaching effects on increasingly respected areas of trade and investment.”

“Malta is proving to be a feasible and advantageous option for business owners and aviation enthusiasts alike.”

– Dr Silvana Zammit Echoing Minister Borg, Dr Zammit referred to the registration of the Airbus A380, as evidence of the strength of the aviation industry in Malta. “This acquisition forecasts a bright future for the aviation industry. Major stakeholders and governmental entities alike have been working with the

scope of creating an environment which would be the natural choice after the triggering of the famous – or infamous – Article 50,” Dr Zammit remarked.

Erik Weisskopt, Managing Director of Hyperion Aviation, an aircraft management, maintenance and leasing provider, who specialises in providing turnkey management for, mainly, individually-owned aircraft, reiterated these thoughts, saying that he would expect Brexit to make an impact on the company’s client lists. He stated his belief that Malta is “already a winner,” noting that Tag Aviation and European AOCs “have all shown overall growth in Malta.” He asserted that this success was due to two main factors –“the overall economic growth and rebound of the economies and the service and quality that we can offer in Malta.”

This quality, according to Mr Weisskopt, was evident in Malta’s “high density of resources, with specialised aviation people available” and the “unrestricted commitment the government is showing to the in-

dustry.” He further emphasised that Malta can offer a lot to aviation companies seeking to move their base, particularly in relation to aircraft finance. “Several major aircraft financiers have advanced credit to owners for the purposes of purchasing aircraft which are registered in Malta. Such financing is secured by virtue of a Maltese-registered mortgage. Moreover, the recent introduction of the Aircraft Registration Act further strengthens the position of such financiers,” he explained.

However, he also advised caution, asserting that stakeholders and operators have to wait in order to fully understand the knockon effect of Britain’s exit from the EU on the sector in Malta, and internationally, stating that he doubted there would be as big of an impact on aviation as in other sectors. “Although aviation will continue to operate under the current terms until the end of 2020, we await clarification about aviation to see exactly what impact this will have on clients,” he concluded.

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NEWS

‘Significant progress’ in negotiations between White Rocks Consortium and Government Project expected to last five years from start to finish and exceed €400 million in investment.

Marie-Claire Grima ‘Significant progress’ has been made in discussions between the White Rocks Consortium – which was chosen as the preferred bidder on the White Rocks site – and government officials, following a lengthy and detailed tendering process, and complex negotiations lasting over two years, hotelier Tony Zahra, Director of Alpine Group and a leading member of the White Rocks Consortium, has confirmed to this newspaper.

“The next steps will now involve the signing of the concession agreement, and following that, submissions with the Planning Authority. We hope that works will start being carried out as soon as the Planning Authority issues permits,” Mr Zahra told The Malta Business Observer, adding that the consortium has “contractual obligations” with Government for the project’s start and finish dates. “This will not be an open-ended project. We are contractually committed to a period to start and to complete. Overall, we expect the start-to-finish timeline to cover approximately five years.”

The total investment of the consortium – which consists of London & Regional Holdings, Alpine Group, Bonnici Brothers, Mizzi Holdings Ltd, Michael Bianchi, Sea Estate Ltd and Elma Ltd – in the project will exceed €400 million, a first for Malta, and is, according to Mr Zahra, who is also president of the Malta Hotels and Restaurants Association (MHRA), “the most significant investment in tourism, hospitality, and residential development of its kind in Malta’s history.” He said that official prices will be disclosed at a later stage, as they “are still wrapped by confidentiality agreements with the Privatisation Unit and Government.” However, he insisted that the consortium was paying above market prices per square metre for development of leisurehospitality facilities and villas, “and more than has ever been paid to date for transfer of

THE WHITE ROCKS SITE, BAHAR IC-CAGHAQ.

government land. The price/value offer has been confirmed by reputable, independent valuers. Our consortium is composed of one of Europe’s foremost and respected developers, together with local blue-chip companies, and this is reflected not only in our vision for this project but also by the fact that this consortium is fully funded and ready to proceed.”

When asked whether any household names have signed on to be part of the White Rocks project, Mr Zahra again said that at this stage, “for the sake of confidentiality, no names can be revealed,” but hinted at their prestige levels. “We are currently in advanced discussions with many high-end luxury hotel brands and operators worldwide, especially since our strategic partner already operates similar properties, one example of which is Cliveden House in Berkshire where Meghan Markle resided with her mother on the eve of her wedding to Prince Harry.” (The operator in question is Iconic Luxury Hotels Ltd). He also underlined the fact that all stakeholders in the consortium’s vision are global leaders in their respective fields, ranging from consul-

“We can only aim to achieve the high-end quality that will position Malta the way it needs to be by engaging the best of the best in everything that we do.” tancy to design, to infrastructure. “We can only aim to achieve the high-end quality that will position Malta the way it needs to be by engaging the best of the best in everything that we do.”

In a past interview with The Malta Business Observer, Mr Zahra’s nephew, Winston J. Zahra, cautioned about the proliferation

of building and overurbanisation in Malta.

He noted proudly that three out of the four properties that the Zahra family built as the International Hotel Group had been old properties that were then rebuilt, and mentioned the Zahra family’s reputation for building environmentally-sustainable properties. It’s a principle the White Rocks project is expected to follow too. “Our vision for White Rocks is not that of simply developing – our focus is also on planning. The last time a city was actually ‘planned’ in Malta was when Valletta was being built,” Tony Zahra said. “With careful planning and infrastructural investment, we will achieve an environmentally sustainable and pioneering project that will make Malta proud the world over. We want to add value with our investment and we intend on doing this through the level of quality we will give back to Malta with our vision.”

According to Mr Zahra, ‘large portions’ of the site will be committed to public spaces – “not only the 100,000sqm garigue heritage 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.

Managing Editor Marie-Claire Grima

EDITORIAL

Publishers Allied Newspapers Ltd. Content House Group Ltd.

A place in the sun Summer in Malta immediately conjures up a few mental images common to us all. Sweltering heat, days at the beach, barbeques at sunset, and of course, masses of tourists. From enthusiastic language students who come here to learn English, to gentle retirees entranced by the edifying warmth of the Maltese summer, Malta’s growing population swells even more in summer with the arrival of shiploads and planeloads of visitors from different countries. We have grown to expect them, and for the most part, to welcome them enthusiastically. But are we really giving them the best that Malta can offer? And are important aspects of life in Malta, for those who live here all year round, being trampled on in the process?

Malta’s economy has diversified greatly in the past few years, but tourism remains a cornerstone of the economy, contributing to more than 25 per cent of the GDP. In fact, tourists in Malta have been steadily increasing since Malta was put on the low-cost airline map in 2006.

Many of Malta’s leading figures in the tourism industry would agree that putting Malta on the low-cost airline map was a life-saving decision, which was met with opposition at the time, but which has proved to be fruitful. And the tourist figures certainly seem to support this. Twelve years on, Malta is set to hit yet another tourism record, with the Malta Tourism Authority (MTA) producing a ‘conservative estimate’ of 2.5 million tourists in 2018, with yet more expected in 2019. Additionally, the extension of the apron at the Malta International Airport (MIA) will be able to cater to a greater number of commercial airlines which want to commence or boost their activity on the island, which should translate to even more tourist arrivals.

But Malta, like many other countries and key tourist cities, particularly in the Mediterranean, has also experienced some of the less-thanpleasant repercussions of mass tourism, and the backlash is starting to be felt. The manifesto of the Southern European front against Touristification (SET), which includes representatives from Malta and various Italian, Spanish and Portuguese cities, mentions a wide range of problems caused by ‘touristification’, including housing and rent problems,

rising prices and poor working conditions, black market employment in the tourism sector, high rates of pollution, and the unsustainable and constant expansion of infrastructure which ruins and exploits the natural and built environment. All of these are problems which are all too familiar to us who live here. While it would be foolish to blame tourism for the core issues causing these problems, the fact that every summer the population rises by nearly 50 per cent certainly doesn’t help the situation.

In comments to this newspaper, the MTA said that it was conscious of the phenomenon of over-tourism, and stated that the World Tourism Organisation’s (UNWTO) suggestions on tackling this issue, including better seasonal spread, and more professional management of tourism flows, some of which Malta has already taken up, could go some way to improve the situation. “Nevertheless, this is a phenomenon which needs to be continually monitored and addressed, particularly in terms of infrastructural responses and care to ensure that the host-guest relationship remains at the current high levels that it is,” the MTA said. This is the right approach to take, but there has to be real and efficient action taken to back up the talk. We need to make sure the problems are tackled at the root, rather than pasted over with stop-gap solutions.

In Barcelona, you can walk around the beautiful city and be simultaneously stirred by the incredible architecture and buzzing atmosphere, and stricken by how many posters and signs there are, bearing the legend TOURISTS GO HOME. I don’t think Malta will ever reach that point – we recognise all too well that without the precious lifeblood of tourism, we would be in a very sorry state indeed. But we certainly need to tackle the problems that mass tourism has exacerbated on this island, before the deficiencies and problems that used to be written off as quirks end up bubbling over and causing huge problems, to those who are visiting the island, as well as those who call it their home. We’re already seeing evidence of this all around us. We need to think smart and move fast – the sand on the beach may not be running out, but the sand in the hourglass eventually will.

Advertising Enquiries Tel: 2132 0713 Email: info@contenthouse.com.mt Advertising Sales Matthew Spiteri Head of Advertising Sales Jean-Mark Meli Senior Brand Sales Executive Advertising Sales Coordinator Lindsey Napier

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BUSINESS OPINION

Charting the development of the IT profession in Europe

Carmel Cachia The ICT sector is a buoyant sector which is always experiencing change as a result of rapid technological developments, and without which most of the other sectors in the economy cannot operate effectively and efficiently. The sector is renowned for its highly-paid jobs, mainly due to the fact that there are many more vacancies than there are available resources. This situation is the same all over the world, and the long-term forecast is that it will remain this way.

By 2020, it is estimated that Europe will create 750,000 new ICT jobs, although this figure could be adjusted downwards, due to the extra efforts currently being made worldwide to produce more ICT specialists through routes other than formal education, thanks to EU initiatives such as ‘e-Skills for Jobs’, and its follow-up, the ‘Digital Skills for Jobs’ campaign. The gap between the IT skills demanded and those supplied hov-

ers between 3.2 per cent and 3.5 per cent of employment.

In view of this global scenario, one may become sceptical about the level of professionalism being adopted by ICT professionals. After all, one may think that the sector is developing so fast that it does not leave enough time to think about professionalism. But this is an incorrect and short-sighted view. In fact, at national level, many European countries have an academic and professional education system working to develop professional ICT specialists, through colleges, universities and several professional bodies.

In 2006, members of the European Committee for Standardization (CEN) agreed with national ICT framework stakeholders and the European ICT industry to develop a European e-Competence Framework (eCF). This framework is a common reference for ICT knowledge, competences and attitudes that an ICT professional should have, whether they work in the public or private sector. e-

CF Version 3 finally became a European standard in April 2016, and a technical committee was set up to develop and maintain this standard. Malta is represented in this technical committee by the eSkills Malta Foundation, on behalf of the Malta Competition and Consumer Affairs Authority (MCCAA). Currently, the committee is working on the fourth version of the e-CF. Furthermore, in January 2017, the Framework for IT professionalism was launched, which identified other important pillars for an IT professional. These include the foundational body of knowledge, education and training qualifications and certifications (be they academic or industry), and finally code of ethics and code of conduct. This framework was officially launched in Malta in a pan-European conference by the eSkills Malta Foundation in June 2018, during Malta’s EU Presidency.

The European Foundational ICT Body of Knowledge references the foundational knowl-

edge required from IT professionals. It is a go-to reference for IT in Europe, which provides the fundamental basis to set standards, qualifications and certifications. It should inspire educational providers for IT curriculum design and development, provide a basis for IT certifications for IT professional associations, and support HR in talent acquisition and development.

Continuous professional development is essential for IT professionals in a knowledge-based economy, and life-long learning is the main ingredient for the development of an IT professional’s career. Formal, non-formal, informal learning, together with industry certifications, can give a picture of an individual’s IT competences and skills, and are main components for the maturing of the IT profession.

There are various initiatives to recognise and validate an IT professional’s career which is based on formal education, industry certifications, non-formal and informal learning, including expe-

“Continuous professional development is essential for IT professionals in a knowledge-based economy, and life-long learning is the main ingredient for the development of an IT professional’s career.”

rience. In Malta, the National Commission for Further and Higher Education (NCFHE) already has validations for formal education, and is working towards the others.

Ethical behaviour is an element sometimes taken for granted in the IT sector, and professionalism dictates that it is as important as all the other pillars mentioned earlier. Agreement among the relative ICT stakeholders was reached for the first version of the European Ethical Guidelines for IT professionals.

The wrongful application of IT has the potential to harm industry, commerce and society – therefore, these guidelines should fill the gap between those ethics taught at universities and those in the workplace.

The European Framework for IT Professionalism is more than the sum of its parts and presents a flexible approach for all those involved in ICT. The framework components, namely the e-CF, the European Foundational ICT Body Of Knowledge, education and certification, and ethical guidelines, can also be adapted through the rapid change and advancement in technology.

The eSkills Malta Foundation is working towards the national and local development of these four important pillars of the IT profession.

Carmel Cachia is the Chief Administrator of the eSkills Malta Foundation

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NEWS

Project aims to reposition Malta as a leader in quality tourism Continued from page 9 park, but also public access to the shoreline, as well as coastline restoration.” These efforts are expected to make the site more accessible and enjoyable to the public than it currently is. “We want the natural public spaces to reflect the indigenous heritage of the Maltese islands and offer visitors, both residents and tourists, a chance to enjoy typical Maltese countryside with open sea views and a fully restored public shoreline.”

White Rocks Consortium’s plan also includes the development of low-lying buildings on the same area which is currently developed. “The views currently enjoyed by Madliena and other residents in the area, and motorists using the Coast Road, will remain uninterrupted, and improve this view through extensive landscaping and reorganisation of the site into dedicated public spaces. Furthermore, the project will be setting a benchmark in sustainable construction and operation by managing a self-contained site that limits disruption to the country’s daily activity and re-use of materials and on-site waste management policies, never seen before locally.”

The impact that Mr Zahra expects the project to have on Malta’s tourist offering is nothing short of revolutionary. “Frankly, Malta doesn’t offer a great choice to the luxury market that we consider our project to be worthy of. Whilst there are trends towards high-end luxury and offerings for high-net-worth markets, we will be pretty much setting the bar with White Rocks. Put very simply we will be offering an opportunity to reposition Malta as a leader in quality. This is good news for Malta and we plan on making Malta proud to be the home of the White Rocks address that gains recognition globally as a one-of-a-kind concept. Economically speaking, the project will have a pronounced multiplier effect locally, by attracting high-spending quality tourists and residents to the market, which gains will be amply felt by, among others, the retail and services sectors. Our vision for White Rocks will be to deliver a development like no other, the first real foreign direct investment (FDI) project in the tourism sector for many decades, which will reposition Malta as a prime destination in Europe through a best-in-class tourism offering.”

“But much more needs to be done across the board in the context of luxury

WHITE ROCKS CONSORTIUM MEMBER TONY ZAHRA, DIRECTOR, ALPINE GROUP.

“Economically speaking, the project will have a pronounced multiplier effect locally, by attracting high-spending quality tourists and residents to the market.” real estate planning, service, infrastructure, quality of finish, recognised brands, and even the detail given to areas such as landscaping and sustainability. It is a holistic and consistent quality offering that

defines the essence of a luxury product, in our view. This is something we have seen in specific parts of the world; we know it works, and we believe it is time that Malta forms part of it.”

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e Malta Business OBSERVER | July 26, 2018

CASE STUDY

Western Union Business Solutions supports international growth for business clients Marie-Claire Grima Western Union was one of the pioneers of cross-border business payments, connecting its customers by helping them move their money around the world, since its foundation in 1851. Now, Western Union Business Solutions is transforming how businesses can expand globally, through one of the largest and most diverse payment networks in the world.

“At Western Union Business Solutions (WUBS) Malta, we provide our clients with access to over 130 currencies thanks to our pay-out capabilities spanning more than 200 countries and territories,” said Christian Traversini, Director, Southern Europe. “We enable companies of all sizes to send and receive cross-border payments and to manage their foreign exchange exposure. With deep expertise in moving funds around the globe, we help companies spend less time managing international financial transactions and more time growing their businesses. Given the history of WUBS and the innovative solutions we have developed over the years, we strive to stay on top of the latest trends and create new products, with the latest development being our online payment platform, WU EDGE.” “WU EDGE creates seamless financial connectivity to support international growth and more profitable trade. By effortlessly connecting buyers and sellers – from order to global rapid payment, from expert insight to FX management – in one integrated, digital platform, WU EDGE helps businesses create stronger connections, empower smarter decision-making and grow profits.”

Besides WU EDGE, Mr Traversini said that WUBS Malta also

CHRISTIAN TRAVERSINI, DIRECTOR, SOUTHERN EUROPE. PHOTO: INIGO TAYLOR

“e needs and demands of clients in Malta are continually changing, along with the increased pace of globalisation and international trade.” has a team of experts who are available to discuss with customers how they can use WUBS solutions efficiently to maximise their bottom line. “Our clients range from SMEs to large corporations with international trade exposure. The many industries we

service include imports and exports such as pharmaceuticals and white goods, and others such as travel and iGaming, to name but a few. We tailor our services to meet the needs of each specific client. In addition, we provide services to financial institutions

with enabling infrastructure to operate international payments for their customer base.”

Mr Traversini observed that the financial services industry is experiencing a lot of changes in 2018, with new regulations coming into force to safeguard both the industry and its users. “The introduction of PSD2 and MIFID2 in particular has improved the level playing field in the payment services landscape, encouraging competition and offering new service providers the opportunity to compete in a fair environment. Both consumers and businesses will benefit in terms of more transparency, increased security of transactions, as

well as a broader offer of services available on the market.”

Mr Traversini also highlighted the geopolitical risks present on the world stage, which might have a negative effect on the industry.

“In the immediate future, trade restrictions such as those recently enforced by the US administration on China and EU could impact the global economy, and that might have a knock-on effect on crossborder trade, too. Moreover, the continuous rise in fraud schemes and the level of sophistication made possible by new technologies can also impact international trade. Western Union Business Solutions significantly invests in

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CASE STUDY

risk prevention as well as in compliance and terrorist financing policies in order to further enhance the protection of its clients.”

With all these changes unfolding at such a rapid pace, all businesses which are internationally exposed need a payment provider they can trust and rely on, Mr Traversini said. “Growing companies require fast and efficient payments, which is something WUBS is able to ensure thanks to our extensive bank account network. In addition to flawless execution, we ensure clients’ peace of mind thanks to our ability to quickly track payments, detect problems early in the settlement process and ensure funds are delivered securely to the beneficiary. But not only do they need a service provider that can enable them to move their money securely in and out in various currencies, clients are also looking for efficient ways to reduce their foreign currency exposure and protect their bottom line from the volatility of foreign currencies. WUBS has the expertise to help with that.”

From a local perspective, Mr Traversini remarked that Malta is a small but thriving economy whose development strongly relies on the ability to build strong links at an international level. “The needs and demands of clients in Malta are continually changing, along with the increased pace of

globalisation and international trade. Businesses are asking their international payment providers for new solutions to increase security and efficiency of communication with their business partners overseas, both suppliers and clients. The continuous digitalisation also drives the need for autonomous online trading, any time anywhere. Moreover, we have been seeing an increased sensitivity of businesses towards hedging of foreign currency exposure.”

He highlighted the industries that are experiencing the most highly-pronounced rates of growth in Malta. “The first one that comes to mind is clearly the online gaming sector, for which Malta represents one of the most important hubs in Europe. With over 200 operators registered in the country, this industry currently accounts for approximately 12 per cent of the country’s GDP. Second, Maltese exports increased by €259.8 million in 2017, with significant growth within the sectors of machinery and transport equipment. Third, with the recent creation of the Malta Digital Innovation Authority and the three bills on Blockchain which were passed into law this month, the government is working hard to create the conditions for the economy’s long-term growth and to attract potential investors.”

“Last but not least, financial services continue to be a pillar of the Maltese economy, and Western Union Business Solutions is proud to be part of this ecosystem, as one of the leading providers of international payments and FX risk management services. Our aim is to be the leader in crossborder, cross-currency money movement globally, and to continue to grow and contribute to the Maltese economy.”

“In one integrated, digital platform, WU EDGE helps businesses create stronger connections, empower smarter decision-making and grow profits.”

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e Malta Business OBSERVER | July 26, 2018

TRAVEL

Five-star ‘yacht hotel’ brings elegance Jo Caruana As the sun beats down on Malta and we know there are at least two months of searing heat to go, the mind wanders to cooler climes, seaside holidays and destinations for complete relaxation.

Florence – just an hour or so away by plane – is already tempting for its rolling hills, more moderate climate and world-famous cuisine. But, if you look a little closer, there’s also another discovery waiting to be made.

Situated in the heart of Tuscany, Relais Borgo Santo Pietro merges a luxury five-star boutique hotel and spa concept with a luxury farm philosophy on a 200-acre estate, with 20 individually-styled rooms and suites located throughout the magnificently restored 13th century villa and gardens.

I will go so far as to guarantee that you have never experienced anything like it.

From Meo Modo – its Michelin-starred restaurant led by acclaimed Italian chef Andrea Mattei delivering the ‘farm-to-plate concept’ – to its on-site cooking school and own-brand, hand-crafted luxury skincare range, there is something very special about every inch of this 200-acre estate. Oh, and not to mention the 41.5m sailing yacht, Satori, that was recently added to the incredible list of facilities.

When asked why they chose to add a fivestar yacht to their five-star hotel, owners Jeanette and Claus Thottrup say it came completely naturally to them. “We had been on a number of sailing holidays ourselves, so we knew what we were looking for,” said Claus, whose dynamic property development career has seen him successfully complete projects ranging from private residences to luxury hotels.

“The Borgo Santo Pietro ethos – that you can have what you want, when you want and where you want – has been both popular and award-winning in the years since it opened,” continued Jeanette, a successful fashion designer. “But when we assessed the market, we struggled to find a sailing option that could live up to what we had in mind, both in terms of design and service, and in terms of innovation. That was when we decided to merge the comfort of a five-star boutique hotel with the look and

Space and luxury on this scale is far beyond the normal sailing-boat cabin experience.

feel of a traditional hand-built wooden schooner to create the ultimate classic sailing experience.”

Inspired by the understated elegance of 1920s and 1930s-era sailing, Satori presents state-of-the-art living, dining and leisure facilities that anticipate guests’ needs to the utmost detail. But, while traditional sailing boats often compromise on space and privacy, Claus, a mastermind of design, was determined to give his Satori guests the same level of comfort at sea as they would find on land. With this in mind he created five luxury guest rooms – each with spacious marble bathrooms – as well as a spa cabin with a steam room, and a five-star concierge service managed by the Borgo Santo Pietro team. Space and luxury on this scale is far beyond the normal sailing-boat cabin experience.

And why stop there? The bespoke dining options are managed by the Borgo’s Michelin-starred restaurant, Meo Modo. Here, again, Claus decided to turn the traditional sailing boat design on its head to create a beautiful open-view kitchen on the front deck, making the dining experience on Satori feel like a fashionable restaurant while still giving guests the thrill of the sea air.

Other highlights include the coffee lounge-style area on the aft deck, the outdoor cinema, a spa with massage, gym and hammam facility, an air-conditioned wine cellar, and the top deck for private sunbathing. And for the more energetic guests, there are plenty of watersports to choose from. If bliss could float, this would be it.

“As always, we believe the devil is in the detail and have stopped at nothing to align the Satori standard with the Borgo standard,” Claus continued. “We have brought the five-star luxury of our estate to a lifestyle on the open seas, and our guests now regularly choose to combine days on the yacht with days on the estate, crafting the ultimate multi-experience holiday that leaves you wanting for nothing. It is a concept that works – already much of the season is booked up. And most of those bookings have come directly, as opposed to through the usual channels. We believe we are reaching to the very particular guests that are looking for this kind of experience.”

And why wouldn’t they? The attention to detail the Thottrups give to everything they turn their hands to is unsurpassable – they curate the ultimate in luxury hospitality.

They are inspiring their clients to take new adventures, revealing a need their guests weren’t even aware of. Put simply, there’s a reassuring sense of security that comes from knowing your yacht operator is actually in the business of running a five-star hotel, and guests can certainly expect a very seamless experience from one to the other. “This is a yacht wholly crafted around the needs and wants of our guests; it is there to serve, just like the crew that operate it. Complete flexibility and a can-do service attitude are as core to Satori as its design and state-of-theart facilities,” enthused Jeanette. “For me, Satori is the timeless sailing experience: riding on waves of emotion that connect you to the natural world.”

Of course, what all of that adds up to is an Italian vacation that really does live la dolce

vita – with Michelin-starred wining and dining, luxury wellness facilities, gorgeous countryside views, and, of course, the option of hopping aboard the Satori, whether for a simple sunset cruise or even a few days at sea to explore the Italian, French, Greek, Turkish, and even Croatian waters.

“The true secret of what makes the Borgo Santo Pietro Group so exquisite?” Claus repeated my question back to me. “I think that would have to be our acute attention to detail, which is delivered in such a way that it appears effortless. And what could be better?”

For more information, visit www.satoriyacht.com, www.borgosantopietrogroup.com or email cruises@satoriyacht.mt

“We decided to merge the comfort of a five-star boutique hotel with the look and feel of a traditional hand-built wooden schooner to create the ultimate classic sailing experience.”

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and luxury to the high seas

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e Malta Business OBSERVER | July 26, 2018

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Betsson looks to the future as plan to get back on track starts reaping results Marie-Claire Grima

CORINNE VALLETTA, GENERAL COUNSEL, BETSSON.

“While the first quarter showed that more work needed to be done, the second quarter was extremely positive for us. It’s important that we continue on that road to make sure the third quarter is even better.”

– Corinne Valletta, General Counsel, Betsson

It’s an exciting time to be at Betsson, Malta’s largest gaming company, and one of its longest-standing. The company’s second-quarter results, released a week ago, showed positive organic growth for the company across different markets, which was aided and abetted by the 2018 World Cup. After a bumpy start to the year, when it made local headlines for shedding 130 of its employees, prompting speculation about what could have been going on within the company as well as the gaming industry in Malta as a whole, the company is ready to put its best foot forward once again, and get back on the right track.

“It was a very difficult decision, but it had to be taken to make the company stronger,” said Corinne Valletta, Betsson’s General Counsel, referring to the lay-offs at the beginning of the year. “The group was acquiring different companies, and we ended up with a lot of layering. On top of that, we weren’t fast enough to bring out new products.

Consequently, the company started being seen as inefficient; while it was still turning a profit, it was just not doing as well as it should have been. The restructuring was one of the initiatives to help Betsson get back to where it was.

We had to consolidate and get everything in line, rather than keep on acquiring companies and piling them on. But hiring never stopped – we still need resources in particular areas of the business, and that has never changed.”

“While the first quarter showed that more work needed to be done, the second quarter was extremely positive for us,” Ms Valletta went on. “It’s important that we continue on that road to make sure the third quarter is even better. We’re in the

right direction, on the right track. At the moment, Betsson is one of the most exciting places in the industry to be – not just because of the young and fun environment, and great offices, but because of everything that’s happening within the company. The results show that what we’re doing is working.”

Ms Valletta, who joined the company in 2017 as Head of Regulatory Affairs and Group Compliance after more than five years at the Malta Gaming Authority (MGA), was promoted to her current role as General Counsel early in July, heading Betsson’s legal, regulatory and compliance affairs. She is the first Maltese woman in Betsson’s history to be appointed to the operational management team and says she could never have dreamt she would end up at the topmost legal position. “Usually, you hear a lot of chatter about everyone in iGaming being a foreigner, and in this sense, we’re proving them wrong.” In fact, Maltese people make up 35 per cent of the employees at Betsson Group, the biggest single-nationality cohort within the company, and one of the largest percentages in any gaming company in Malta.

Explaining the responsibilities of her department, Ms Valletta stated that, “regulatory and compliance has more to do with licences and what one can and cannot do in a market, while legal deals with more general legal affairs of the business – for example, ensuring that Betsson is entering appropriate business arrangements when it decides to go ahead with a particular initiative in a market. While it’s important to keep a split, we have to make sure that the synergies of both departments are in sync. Although they have different areas of expertise, it’s important that legal is sensitive to what compliance is doing, and vice versa.” She said that her

role involves bridging the gap between the two parts. “It is challenging – while there are similarities, each department is made up of people who have very different expertise. I’m taking my time to understand how both departments operate, and see if improvements can be made in that regard to make us stronger.”

Indeed, there are plans for growth in Betsson’s legal department, to gear it up in order to be able to respond and properly advise the business accordingly. “Gaming and gambling are converging as time goes by, and the changes to Malta’s gaming law show that the MGA recognises this. Meanwhile, cryptocurrencies and DLTs are fascinating and exciting developments for businesses all over, and for us they are creating new but interesting challenges,” Ms Valletta said.

Since every country in Europe has its own regulations when it comes to gaming, and standardising – or even streamlining these regulations – has been a slow process, the General Counsel of the company is essential to Betsson’s operations. “If you want to run a campaign, the legal team needs to understand the rules of that particular jurisdiction and make sure the arrangements with the supplier who is going to be helping with the campaign are in place, while compliance checks whether it is even legal to have that kind of campaign in that particular jurisdiction – they have to talk to each other,” Ms Valletta said.

The million-dollar question, for Ms Valletta, is whether EU gaming law will ever become standardised.

“When I set out in the industry, standardisation was something that people thought was going to happen very soon. The truth is that states have taken a protectionist approach to the industry, so while de-

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“Maltese people make up 35 per cent of the employees at Betsson Group, the biggest singlenationality cohort within the company, and one of the largest percentages in any gaming company in Malta.” velopments have been made, some states are much less open to it than others. There have been some efforts to at least streamline certain procedures, such as the ongoing efforts through the European Committee for Standardization (CEN) in regard to technical requirements,

BETSSON’S HEADQUARTERS IN TA’ XBIEX.

which would be quite an achievement. But it’s taking its time – progress is slow when you’re dealing with so many countries and so many different ideas.”

Betsson currently has 11 licences to provide its services in different countries, and is moving to get its

12th, in Sweden. Asked whether this will change Betsson’s relationship with Malta once the company has a Swedish licence, Ms Valletta’s response is an emphatic ‘no’.

“Operators that wish to offer their services to people in Sweden need to have a Swedish licence.

It’s the same thing that has happened in many different jurisdictions, including Italy, England, and Spain. It may increase costs for the company in terms of compliance and complexity, and we may need more people in our Stockholm office, but it doesn’t

change the fact that we’re still totally committed to Malta. Malta is where our headquarters are, and that’s not changing. We’re not going anywhere.”

For more information about Betsson Group, visit www.betssongroup.com

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CASE STUDY

Mazars launches ‘Netflix for CFOs’ Marie-Claire Grima International financial services firm Mazars has launched a one-of-a-kind web TV and media series, created by Chief Financial Officers (CFOs) for CFOs. Titled The Next CFO, the web TV series features seven programmes and candid interviews with CFOs from around the world, on topics ranging from how they spend their money, to the way their career path has evolved, to an investigation into the way that technology is shaking up the designation of CFO, as well as the world of finance as a whole.

“The purpose of the series is to help CFOs embrace their evolving role in a changing world, whilst giving the upcoming crop of finance professionals the inspiration that they need to continue along this path, and there’s no better way to do this than by having real CFOs sharing their stories,” said Managing Partner Anthony Attard. Mr Attard co-founded Mazars Malta (then Attard Giglio and Co.) with his school friend Paul Giglio, a few years after the pair left University, and the firm is celebrating its 20th anniversary this year. “We’re looking at CFOs from various generations and backgrounds, small or large companies, who are quite au courant with what is happening out there.”

Mr Attard said that the look and feel of The Next CFO was also inspired by the pop-

“e purpose of the series is to help CFOs embrace their evolving role in a changing world, whilst giving the upcoming crop of finance professionals the inspiration that they need to continue along this path.”

MAZARS’ THE NEXT CFO.

ular streaming service Netflix. “With The Next CFO, Mazars is embracing current media and tech trends, including bingewatching – if you want to watch three or four episodes in a row, you can. Uptake has been good, both from CFOs willing to take part, and from the people who have watched the episodes.” So what makes a CFO compelling viewing, worthy of being selected to be interviewed for this exciting new series? “What I would consider to be a worthy CFO is a CFO who is both interesting and interested,” Mr Attard explained. “Interesting as a person, in the way they handle

their role, but also interested in our changing world, paying attention to what is happening, having the ability to adapt. The idea is to focus on the CFO of the future, not just of now, and certainly not of the past. I believe it makes for very interesting viewing for CFOs, or potential CFOs, who want to know what they are doing wrong, what they are doing right, and how other people are handling the challenges that a CFO faces.”

Mr Attard said that the role of a CFO has changed substantially in the past few years, and with it, the requirements that one needs in order to be a capable and effective

executive in this position. “As a CFO, you need to have a wide range of skills. For example, the amount of information you receive nowadays in a company can be overwhelming, even in a small firm like ours, let alone in a major firm. So an effective CFO needs to be skilled at data analysis, knowing what numbers to look out for and what to do with them – the ability to parse what information is important for the company, and how they will analyse it, and put it to good use.”

Another important skill Mr Attard mentioned is a soft skill, one that may not be the first people think of when they think of a CFO. “You have to be able to understand people. You can no longer be what we used to call a number-cruncher – just sitting behind the desk ordering people around. The changes that have happened over the course of a few generations are massive, and unless you understand what the people around you think, and how they reason, you will not be able to get the best out of them, and the company will not be a success. You have to know what their expectations are, and how you can meet them. Otherwise, you’ll disrupt your own functionalities.”

CFOs, Mr Attard remarked, tend to be connecting agents between the older members of a company and the younger generation whose careers are just starting out, allowing them to mediate and find a compromise between two starkly different perspectives. “Indeed, any managerial position has to be able to bridge the gap between members of the board who tend to be of a certain age, and employees who are younger, and who think a lot differently and expect very different things from their job.”

This is something Mr Attard has experienced first-hand – the company’s 70-strong workforce in Malta spans at least four generations, and the changes that have happened since the company was established have been monumental. “Back when we started this firm, internet was still on dialup, and a laptop was a luxury – now it’s something you take for granted. Social media was non-existent – now clients expect you to have a presence on a corporate level, but interact with them as you would a friend. If you snub that, it might affect your professional relationship. But everyone has to understand and accept the

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changes in trends, particularly in an industry like ours, which is so reliant on technology. We have to be aware of both the threats and the potential that technology holds, and manage and meet the expectations of clients of all ages.”

Although The Next CFO may seem like a niche title, appealing only to a very select group of people, Mr Attard said he is confident that it has value for anyone who has an open mind, with an important lesson to impart. “The Next CFO showcases every aspect of the way these CFOs live – including the way they balance their lives and their work. Sometimes, addicted to work as we are – and I’m talking about a lot of people in business here – we may forget that there’s a life outside of work. When you see people who are managing to be successful in their job, in their profession, but finding ways of having a healthy private life too, I think there’s definitely something to be learned from that.”

The Next CFO is a venture that opens up the debate on business-related issues. “Our forte is that every single one of us is very much focused on the client and their ecosystem at large. We are very committed and very involved. We have built strong relationships with clients, institutions, and business partners, and they often recommend us to other companies, which is the biggest indicator that what we’re doing is working,” Mr Attard said.

Mr Attard added that since Mazars is a challenger in its field, it has to ‘work smarter’ and it is distinguishing itself through this type of initiative. “We have a

“We are growing steadily, but it’s not our ultimate goal. What we truly want is to be the firm that people instinctively turn to, that they can trust our professionalism, products and services.” growing, global presence – we are growing steadily, but it’s not our ultimate goal. What we truly want is to be the firm that people instinctively turn to, that they can trust our professionalism, products and services.”

“Out there it’s a changing world; everything is transforming, from the way people do business, to legislation and compliance, to increased awareness about the expectations of an auditor, and what an auditor’s obligations are. Even though Malta is at the forefront of legislation for products such as cryptocurrency and Blockchain, at Mazars Malta we strive to ensure that from top to bottom, everyone understands the new world, even though it may seem alien to our traditional ways of doing business.”

ANTHONY ATTARD, MANAGING PARTNER. PHOTO: INIGO TAYLOR

“As Mazars Group, we are investing heavily in knowledge since the main driving force in today’s world is technology. We have invested heavily in technology, in particular with the hiring of a Group Chief Technical Officer, the creation of our Mazars Lab and the acquisition of several companies in advanced analytics and data science services. We also have developed Mazars U – the online version of Mazars University – where webinars and courses are organised on-line with easy access for every Mazarian. We also launched an app which keeps clients, staff and external users involved and informed on what is happening – MazarsLive! – so that they can stay up-to-date with the trends shaping their industry, or hear more from our experts.”

Laurent Choain, Chief People Officer, Mazars Group

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CASE STUDY

Aviation industry sees steady increase yearon-year in registrations and ancillary work Martina Said Just days ago, the first Malta-registered Airbus A380, which is the largest passenger airliner in the world, was formally revealed at the Safi Aviation Park. Hailed as a feather in the cap of Malta’s aircraft register, which now has more than 280 aircraft registered under it, it is also a positive reflection of the growth of Malta’s aviation industry.

“The aviation market in Malta never sees a huge influx of clients.

The market is what it is; that is, the number of aircraft is limited and cannot be compared to the maritime industry, where the numbers are much larger,” said Dr Cedric Mifsud, co-founding partner at Mifsud & Mifsud Advocates.

“However, each year shows a steady increase in registrations and ancillary work. The quality has also improved – evidence of this is the first Airbus A380 to be registered in Malta.”

Since its establishment 11 years ago, Mifsud & Mifsud Advocates – which has been practicing in the field of aviation since its inception – has witnessed Malta’s aviation industry become what it is today; “from a stagnant position to a vibrant sector of our economy,” said Dr Mifsud. “While witnessing a considerable growth in the set-up of aircraft structures, we have also been heavily involved in a number of high-profile aviation litigation cases. Aviation law has definitely become one of the main areas we practice, and we have assisted clients to grow within the Maltese jurisdiction. We have seen clients coming over with a structure that had one jet, and eventually mature into a company that has a whole fleet of aircraft. This proves that our clients are trusting, not only of us as service providers, but of the jurisdiction as a whole.”

DR CEDRIC MIFSUD, CO-FOUNDING PARTNER, MIFSUD & MIFSUD ADVOCATES.

The firm, co-founded in 2007 by Dr Mifsud and his brother, Dr Malcolm Mifsud, offers clients a breadth of legal solutions. “The firm’s corporate services arm assists the corporate and taxation aspect of client structures. When it comes to the technical aspect, experience has shown that the client is usually well-placed to handle this, but if not, we are in a position to recommend a number of technical experts to assist our clients. Litigation is another area we have strong experience in and

“e charter market seems to be developing fast, as high-net-worth individuals are opting out of ownership in exchange for chartering business jets.”

it has proven to be handy for our clients who want reassurance that adequate support is given in important disputes.”

Dr Mifsud asserted that the growth of Malta’s aviation industry is linked to a number of factors, “primarily the introduction of the Aircraft Registration Act in 2010, which rejuvenated Malta’s aviation legislation, adapting it to the current needs of the industry, and a new impetus by Malta’s service providers, with law firms at the forefront, to promote Malta as a

leading jurisdiction for aviation.”

He added that growth did not happen overnight, and it took a while for the key players in the industry to trust the Maltese jurisdiction.

“However, Malta’s Civil Aviation Directorate was always on the ball when receiving enquiries, and handled applications in a swift and professional manner. This gave the industry a feel-good factor when dealing with Malta, and consequently led to a steady growth that can now be described as a success story.”

In what’s proving to be a nationwide issue that is afflicting many sectors and industries, Dr Mifsud said that the biggest challenge for the industry was, and still remains, the sourcing of qualified personnel to fill in the technical roles required by aviation companies in Malta.

“Many companies have opted to source their personnel from other countries; however, this comes at an added cost for the companies. It is therefore of utmost importance that Malta, as a jurisdiction, looks more closely at the needs of aviation

companies in Malta, and determines their human resources requirements with the aim of training enough people locally to satisfy their needs,” he stated. “Another challenge remains to keep the Civil Aviation Directorate at the same pace of the industry and to never lag behind. If this were to happen, Malta will start losing out to other jurisdictions.”

Notwithstanding the challenges, Dr Mifsud added that Malta’s small size means the country can easily adapt to changes without a huge amount of bureaucracy, but it needs to keep its ears to the ground and quickly detect changes in the market in order to remain competitive. “The charter market seems to be developing fast, as high-net-worth individuals are opting out of ownership in exchange for chartering business jets. Malta has to continue focusing on attracting operators which cater for charter operations and facilitate their entry into Malta.”

With Brexit officially less than a year away, Dr Mifsud asserted that the UK’s departure from the EU will definitely present opportunities for Malta in the aviation sector, in terms of UK-based companies choosing to domicile in Malta instead. “One of the main concerns of any aircraft operator is be able to operate easily within the EU and adhere to its rules, as the EU is one of the biggest aviation markets in all aspects. However, Brexit on its own will not mean an automatic opportunity for Malta. As a jurisdiction, we will have to work to show the operators that we are better placed than other competitors to offer an alternative solution.” Furthermore, Malta’s efforts should not be limited to luring companies looking to leave the UK in light of Brexit, Dr Mifsud said. Malta has to re-

e Malta Business OBSERVER

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main an approachable and business-friendly jurisdiction at large, which not only means that service providers and the authorities have to act efficiently, but that they also provide the necessary resources that the industry requires.

“An increase in facilities for aircraft and the training of personnel will definitely help,” he said.

“From an international aspect, I believe that the more the industry becomes charter-based, the more our jurisdiction will benefit. While the Isle of Man is very strong in the registration of privately-owned aircraft, Malta has always been strong in servicing aircraft operators. The chartering market will definitely bring more business.”

Looking ahead, Dr Mifsud said that the firm will continue to analyse developments in the aviation market, while continuing to assess the challenges faced by operators and owners through aviation conferences. “One aspect of aviation which continues to be a cause of concern for owners and operators is crew management.

Employment of pilots and crew is haphazard and their tax situation is often overlooked. Just as we did with the maritime department, we are looking at offering solutions to crew employment, which offer peace of mind to both the employer and the employee.”

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e Malta Business OBSERVER | July 26, 2018

STOCK MARKET REVIEW

e repercussions of trade wars

Adrian Gafà Trade, in various forms, has always played a role in human history. Over time, trade evolved and expanded, especially with the introduction of money as a medium of exchange, the development of more efficient and reliable modes of transport, as well as increasing demand for goods and services on the back of an expanding population in a globalised world.

In more recent history, countries around the world recognised

the importance of trade with the establishment of the World Trade Organisation (WTO). Its origins date back to the late 1940s following the ramifications of World War II. The WTO currently comprises 164 countries, and its goal is to “ensure that trade flows as smoothly, predictably and freely as possible,” in line with the belief that apart from the economic benefits that could be derived from trade, a well-functioning global trade system could also contribute to international peace.

Nonetheless, international trade has been faced with numerous challenges even in recent decades, as countries and their respective leaders seek to justifiably or unjustifiably protect their own economy. Protectionist measures can take various forms, including import tariffs, import quotas, domestic subsidies and administrative barriers. Naturally, such measures are not well-received by the counterparty which generally tends to retaliate with protection-

ist measures of its own. Such actions could escalate, as one party continues to retaliate against the other, spiralling into a trade war which in turn has negative economic implications for both parties, as trade wars create uncertainty and potentially economic hardships if prolonged.

Protectionist policy and its ensuing retaliations have recently become a source of much discussion and debate as US President Donald J. Trump imposed various tariffs on a wide range of items being imported to the US from a number of countries, including China, Canada, Mexico, and the EU. Some of the measures included an additional 25 per cent tariff on steel and 10 per cent on aluminium imported from the EU, China and Mexico, as well as a 25 per cent import tariff on USD50 billion worth of Chinese goods. Such countries retaliated by imposing tariffs on imported goods from the US. As an example, the EU applied tariffs across three major sectors: US-im-

ported steel, industrial goods, and agricultural goods. The scope of such retaliation was to send a strong political message by targeting symbolic American items. Furthermore, the EU, China and Canada have lodged their complaints before the WTO, claiming that the imposed tariffs are inconsistent with existing trade agreements.

One of the main aims of the trade barriers being imposed by the US is to address the country’s large trade deficit, a situation where the level of imports is significantly higher than its exports.

This results in a higher amount of US Dollar flowing out of the country compared to the amount of foreign currency entering the US. The large trade deficit has been heavily criticised by President Trump who reiterated his views and started taking action ahead of the midterm elections to be held in the US in November 2018. As such, the measures imposed by the US have been implemented as promised in a bid to reduce this trade deficit, which reached USD566 billion in 2017. However, it is important to note that President Trump implemented such protectionist measures on the premise of safeguarding national security. In fact, in contrast to previous US presidencies during which tariffs were imposed, President Trump has significant discretionary legislative powers to impose, escalate or remove such tariffs.

As evidenced in recent months and weeks, the implications on financial markets are wide-ranging.

Although it is very difficult to discern the direct consequences of trade wars given the variety of factors that affect today’s globalised economies and financial markets, trade wars have definitely contributed to the volatility across financial markets seen during recent months, given the uncertainty that they produce. The adverse implications of a trade war were excellently captured in an article published on 21st June 2018

by The Economist under the heading ‘Battle lines drawn’, in which the journal noted that “whatever form this conflict takes, and however long it lasts, there will be no winner.”

Naturally, currencies are heavily influenced by trade, given that goods and services are exchanged for money. After the initial announcements by President Trump revealing his intentions on trade tariffs, the US Dollar weakened somewhat against the respective currencies of the countries against which the tariffs were imposed.

On the other hand, as the tariffs

were implemented, the US Dollar rebounded, possibly in view of the demand for safe-haven assets amid growing uncertainty.

Nonetheless, other factors, such as escalating political risk across the eurozone, also played a part in the aforementioned US Dollar rebound against the euro.

The trade war between the US and other major countries is also likely to impact economic growth.

The US had been registering substantial economic progress which also led the US Federal Reserve to hike its benchmark interest rate by 175 basis points (25 basis points in each of 2015 and 2016; 75 basis points in 2017 and a further 50 basis points in the first half of 2018). Meanwhile, the eurozone is lagging the US in terms of economic growth, which in turn has led to further delays in rate hikes by the European Central Bank (ECB).

Despite this divergent growth path for gross domestic product (GDP), both the Federal Reserve and the ECB have indicated material downside risk following their respective latest monetary policy meetings. The Federal Reserve noted that until now, its projections have not included any impact from the trade war, but it still poses downside risks to the future economic prospects of the US. Meanwhile, the ECB has already shown signs of economic weakening, whilst noting that rising tensions could erode confidence to an extent that is difficult to gauge at this point in time.

Similarly, the European Commission reduced its 2018 real GDP forecasts by around 0.2 percentage points, given the initial adverse effects of the trade war.

Nonetheless, the European Commission clearly warned that its forecasts are subject to significant downside risks, as they do not account for any escalation of measures. Such risks could materialise in the coming months as the US prepares to launch other tariffs on an additional USD200 billion worth of Chinese imports, which could be raised to USD500 billion following recent statements by the US President. Recently, the International Monetary Fund (IMF) noted that although it kept its global growth forecast unchanged, the escalating trade tensions are threatening to derail a global upswing that is already losing momentum. Moreover, the IMF also warned that financial markets seem complacent to such downside risks.

Other potential adverse impacts of a trade war include the unintended rise in inflation as imports are more costly. In turn, this could

“e trade war between the US and other major countries is also likely to impact economic growth.”

e Malta Business OBSERVER

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July 26, 2018

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STOCK MARKET REVIEW

“Investors should be aware of the direct consequences that protectionist measures have on specific industries, as well as individual companies.” limit the effectiveness of monetary policy tools in counteracting any economic downturn, since loosening monetary policy in a bid to support economic activity should also lead to higher inflation. Therefore, a central bank facing a situation of declining economic activity but rising inflation would need to strike a balance between expanding monetary policy and keeping inflationary pressures in check.

From an investment perspective, investors should be aware of the direct consequences that protectionist measures have on spe-

cific industries as well as individual companies. US steel producers may benefit from the protection provided by import tariffs on steel, at least in the short-term, but on the other hand, in view of the retaliatory measures implemented by the trade partners of the US, North American exporters may suffer.

Although it is very difficult to predict whether the US will manage to effectively lower its trade deficit or for how long this trade war will last, it can be safely assumed that volatility will continue to be a prominent feature across financial markets in view of the uncertainty and geopolitical tensions being created. Furthermore,

if the trade war persists and escalates even further, it can have unquantifiable adverse effects on economic growth, and on the performance of individual companies across the globe.

Adrian Gafà 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. © 2018 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved

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e Malta Business OBSERVER | July 26, 2018

BUSINESS UPDATES

Aviation Cosmetics – Malta’s first ever dedicated aircraft-painting facility Tom Jansen Aviation Cosmetics Malta is a company specialising in aircraft paint application projects. We have over 25 years’ experience painting commercial aircraft and have painted over 1,100 so far, in all imaginable liveries and decorations. Our company operated in the Netherlands for over 22 years and is the first ever dedicated aircraft-painting facility to operate in Malta, having been established here since November 2016.

Relocating our company to Malta enabled us to expand our services to include wide-body aircraft, including the Boeing 747 and the Airbus A380, and even more importantly, to increase our capacity by servicing more than one aircraft at a time.

We are proud to include all the major airlines and aircraft leasing companies from all over the world as our clients.

Aviation Cosmetics Malta provides full aircraft-painting services, such as paint removal procedures, including paint stripping, selective paint stripping, sanding and cleaning, application of new top coats, producing and applying mandatory

markings and technical lettering in multiple languages or scripts if required, application of liveries as desired, including livery engineering to ensure consistency between individual aircraft, special artwork applied by airbrush, and in-house capability for the generation of specialist stencils.

Our facility is equipped with air treatment and climate-control installations to

meet the most stringent environmental regulations. The wide body hangar features custom-built suspended platforms (flying carpets), which allow full and unhindered access to the aircraft being painted, regardless of make or model. This is a first for Malta and is still the only such installation.

Aviation Cosmetics Malta has the advantage over its competitors as it operates one of the largest painting hangars in the world

and can accommodate the Airbus A380, one of the largest aircrafts in use today.

Due to the increase of the local aviation sector, we create synergies with the local aircraft maintenance organisations, which in turn can provide a wider scope of work.

Our highly experienced, motivated and dedicated workforce, plus strategic location, makes us a sought-after aircraft painting facility.

2018 has been a very exciting year with a robust order book. Our facility has been operating at 85 per cent capacity. We value all our clients and aircraft painting projects.

This month, we have proudly welcomed our second A380 aircraft and we will be completing a total of four A380 paint projects by the end of this year. Another exciting milestone will be welcoming our first B747 which is scheduled to arrive for a new livery application project this week.

Our aim is to continue to grow Aviation Cosmetics Malta at a steady pace, with safety and quality standards being paramount, while continuing to train and invest in our local workforce.

Tom Jansen is Company Director of Aviation Cosmetics Malta

e Malta Business OBSERVER

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July 26, 2018

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BUSINESS UPDATES

Medavia celebrates 40 years in aviation Mediterranean Aviation Company Limited, better known as Medavia, celebrates its 40th anniversary in August this year. The company was set up with the specific aim of servicing the oil and gas industry in North Africa through the chartering of its aircraft between Malta and Libya and to the various oilfields. Today, it has evolved into a world-leading specialist aviation organisation.

In addition to the continued offering of aircraft charter brokerage, the company now also provides a variety of other services including

aircraft operations, ground handling, CAMO, and Part 145 MRO works, as well as being the only Part 21J design organisation in Malta. Medavia offers aviation solutions tailored for each individual customer’s needs.

The company today boasts a multicultural workforce comprising many different nationalities.

One remarkable fact is the significant number of qualified technical personnel within its workforce, who have grown through the ranks, building a sound and rewarding career.

With the rapid growth currently experienced, more employment opportunities are now being offered at all levels, starting from aviation apprenticeship levels, right up to the licensed staff levels.

Medavia seeks to reaffirm itself as a model employer with full respect for cultural differences as well as providing a safe and supportive work environment. The company aims to remain flexible and sensitive to changing customer demands and to continue to be a quality leader for all the services offered.

Loyalty pays with BOV Premium Cards

LEFT TO RIGHT: IVO CAMILLERI, BOV EXECUTIVE, ELECTRONIC BANKING SERVICES; STEVE FENECH, MANAGING DIRECTOR, CLASSIC GROUP LTD; CHRIS DEGABRIELE, BOV HEAD OF CARD BUSINESS.

The BOV Cards Loyalty Rewards Programme has just become richer, as Bank of Valletta welcomes Montblanc Boutique among its partners.

BOV customers who use their BOV Visa Platinum, Gold, or Skypass card to effect purchases at retail outlets or online automatically earn BOV loyalty points. BOV points may be redeemed against the annual card fee, cashbacks against airline tickets, or store credit redeemable at one of the bank’s 11 partners, including now the Montblanc Boutique in Valletta.

One point is earned for every €1 spent, and a card holder may keep track of the BOV points earned through their monthly card statement.

This programme has been designed to reward customers’ loyalty through added value benefits.

For further information, one may visit www.bov.com. Alternatively, customers may visit any BOV branch or send an email to customercare@bov.com Bank of Valletta p.l.c. is a public limited company regulated by the MFSA and is licensed to carry out the business of banking in terms of the Banking Act (Cap.371 of the Laws of Malta)

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e Malta Business OBSERVER | July 26, 2018

BUSINESS UPDATES

e ins and outs of responsible gaming iGaming has fast become one of the most popular pastimes over the last 10 years or so, with the industry currently enjoying massive growth and success across the globe. Hav-

ing said that, it’s important for industry providers to protect their players and to respect high standards of quality. Whilst gambling is ostensibly a recreational activity, to

some it may become dangerously addictive and can have serious effects on their personal or professional lives. Enter Responsible Gaming – a ‘code of conduct’ devel-

oped by numerous regulators, trade associations, and non-profit organisations to ensure acceptable gambling behaviour. A handful of the areas covered are as follows:

Underage gambling – Underage gambling is one of the major areas that Responsible Gaming falls under, and gaming operators must take the most stringent of measures to ensure that their customers are all of legal age.

Protection against crime and money laundering – Full AML compliance must be carried out to detect and block any suspicious activity, with components designed to perform risk assessment, KYC requirements, and player profiling.

Secure payments and transactions – Security tools protecting financial details and personal data must be implemented to provide a reliable and safe platform that players feel comfortable using.

Data protection – Unauthorised disclosure of numbers, addresses, names, and email addresses is a serious breach of trust on the company’s part, and it can have severe repercussions for all parties involved.

Ethical marketing – Operators should comply with the relevant regulatory advertising codes of practice and not target underage gamblers, or players who have self-excluded themselves from gambling.

SAFEGUARDING THE VULNERABLE Player activity must be recorded in a way that it gives companies an idea of their gambling behaviour.

Deposit limits, self-exclusion procedures, and time-out options should all be available for access within a user’s account.

HOW CAN AXON GAMING HELP? AXON Gaming assesses online player gambling habits to highlight early indications of problem gambling. It provides operators with guidance on how to communicate with players based on their individual risk profiles. AXON achieves this through the real-time collection of various types of player data such as intensity, risk and volume.

There is a wide range of configurable rules and alerts within AXON to help manage Responsible Gaming. These automations provide operators with control through the live monitoring of potential player issues where gambling behaviour is problematic.

For more information on how AXON can enhance your Responsible Gaming capability, visit www.computimesoftware.com/ax on-gaming or email info@compu timesoftware.com

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e Malta Business OBSERVER | July 26, 2018

BUSINESS UPDATES

FIMBank receives top worldwide factoring rankings The FIMBank Group achieved strong recognition and won top industry rankings at the annual meeting of the Factors Chain International (FCI) association in Amsterdam, at its anniversary meeting in June.

FCI, headquartered in Amsterdam, is a global network of the world’s best factoring banks and companies, counting over 400 institutional members in 90 countries. It connects, educates and influences crossborder and domestic factoring, as well as supply chain financing, across the global financial community comprising the biggest international banks, amongst others. Members of FCI account for over €75bn of global factoring volumes in 2018.

FIMBank Malta, generating an annual turnover exceeding €200m in 2017, ranked first in Malta, with an overall service quality score of 100 per cent. FIMBank Greece ranked 12th best export factor in the world, 30th best in the world overall (export and import) and second in Greece, with a turnover exceeding €175m, an 8 per cent international market share, and a service qual-

ity score of 98.41 per cent. Egypt Factors, a fully-owned subsidiary of FIMBank, ranked second in Egypt with a 20 per cent market share and turnover exceeding €100m in 2017, and a service quality score of 95.83 per cent. India Factoring, a majority subsidiary of FIMBank, ranked second in India with a 15 per cent market share and turnover exceeding €250m, and a service quality score of 94 per cent.

“Factoring is a technically sophisticated product and one of the most important components of supply chain financing globally, and is a cornerstone of our business,” said FIMBank Group CEO Murali Subramanian.

“These results are a reflection of our constant efforts at improving our standing as a provider of quality and reliability, in the markets we operate in. With these results we are better placed to offer superior supply chain financing and risk management solutions to our clients and partners worldwide.”

For further information on FIMBank’s Factoring services, visit www.fimbank.com

Gabi Sultana and Mirek Coutigny end Teatru Manoel’s season with a boom

HSBC Malta installs new ATM in Sliema HSBC Malta has installed its newest Automated Teller Machine (ATM) in Sliema, near Marks & Spencer at e Strand Seafront, to better meet the needs of the general public. is new addition in Sliema brings the total number of HSBC Malta ATMs to 81. e walk-up ATM offers a range of automated services, including cash withdrawals as well as cheque and cash deposits. is new teller machine also offers voice guidance and enlarged font capabilities, making it more accessible for customers with special needs or impaired vision.

Gabi Sultana and Mirek Coutigny will be closing Teatru Manoel’s season programme for 2017/18 by ‘tickling the ivories’, with an all-American piano-duo programme on Tuesday 31st July 2018.

From Massachusetts (Frederic Rzewski and John Adams) to California (John Cage and David Lang), Maryland (Philip Glass), New York (Morton Feldman) and finally, Washington (William Bolcom), they take us on a roadtrip through five different states with the works of seven of the most important American composers of our time.

Programme Frederic Rzewski – Winnsboro Cotton Mill Blues; John Cage – Experiences No.1; Philip Glass – In Again Out Again; Morton Feldman – Piano Four Hands; John Adams – Hallelujah Junction; David Lang – Gravity; William Bolcom – The Serpent’s Kiss.

Tickets can be bought from the Upcoming Events section on www.teatrumanoel.com.mt, through an email on bookings@teatrumanoel.com.mt or by calling 2124 6389. Ages six and over.