The Business observer 3rd July 2014

INTERVIEW

Issue 4

|

July 3, 2014

Distributed with Times of Malta

Tension growing between new and used car importers

Vince Cassar is not particularly happy with the way things were done at Mepa in the past but he is trying to draw a line under it and ensure things are done right from now on. see pages 7 and 9 >

INDUSTRY FOCUS Vanessa Macdonald Tension is growing between new and used car importers with both claiming that there is not a level playing field. The car industry has changed dramatically since 2009, when sales of used cars overtook those of new ones.

Since many owners will this year be paying off their five-year bank loans and face higher road taxes once their cars hit the five-year benchmark – they may be considering buying again. Both sides are anxious to see what whether the trends will change.

For decades, the sector was fairly stable but in 2009, the registration tax was changed to a formula which included emissions as well as the car’s value – and was cut to almost a third.

The market was thrown into turmoil.

The new car and used car importers were suddenly faced with a new ball game: people were flying up to the

e insurance sector is strong and vibrant in Malta but that doesn’t mean that it is not facing competitive and regulatory pressures. see pages 11 and 12 >

UK to buy second-hand cars – lured by a favourable sterling rate – and drive them down. And as people showed off their purchases, others jumped onto the bandwagon, eventually encouraging transport companies to offer transporters to bring their cars down to Malta.

Until now, the statistics masked the extent of this phenomenon as the figures issued by the National Statistics Office only listed the number of cars licensed each year as new or used – for the latter category without distinguishing between cars bought by individuals or through dealers.

However, correlating the figures with trade statistics (representing the cars brought in by dealers) has given the first indicative numbers.

Between 2009 and 2013, 29,223 used cars were brought in by individuals, compared with 13,555 by used car dealers.

NEWS After years waiting for Mepa’s high rise policy, developers finally found out whether they can build on their land or not. ere are going to be some smiles but a lot of tears too. see page 4 >

Continued on page 3

Sex and drugs: unusual boost for GDP The National Statistics Office is going to include the estimated revenue from narcotics and prostitution in its GDP reports as from September – but with its eyes wide open with regard to the problems withcollecting data about illegal activity.

“Getting an estimate of undeclared revenue is never easy but I can assure you that we have to gather the data in the same professional way that we gather all data,” director general Michael Pace Ross said.

These statistical requirements have actually been in place

for years now, at both EU and international level – in fact, smuggling should also be included.

“The reason for this is that GDP is about measuring all economic activity. Both declared and undeclared need to be taken into account, in order to have a full and accurate picture of the value of

production/consumption in a given period. This is necessary to reflect the real state of the economy.

“Therefore, UN international standards require that estimates of the non-reported economy are included in the calculation of GDP. Continued on page 3 >

CASE STUDY Jeff and Kevin Buttigieg had to compete with established family firms when they decided to start tackling property sales and not just letting. see pages 14 and 15 >

e Business OBSERVER

|

July 3, 2014

3

NEWS

< Continued from page 1 This includes illegal activities, the shadow economy, misreporting, and so on,” a European Commission spokesman said after the media in other countries – particularly Italy – had a field day with the concept.

Mr Pace Ross said that the NSO

5,749 5,267 2,076

5,884 5,754 1,399

6,362 7,269 2,244

4,572 5,363 3,670

4,166

5,404 5,570

During these same five years, new car dealers only sold 27,971 cars – just under 40 per cent of the total.

This means that 41 per cent of all the cars licensed here were not bought through either new or used-car importers.

The associations representing the two sectors were not willing or able to comment at this stage and dealers from both sides of the fence were reluctant to add fuel to the fire by speaking on the record.

But there is clearly a lot of bad blood.

The new car importers feel that there is an unlevel playing field which is distorting the market, for a variety of reasons. Some of them who have been around for decades are clearly incensed by what some described as “cowboys”, who only set up a few years ago.

“The attitude is that used car importers are trying to earn a living while new car importers are the rich who make huge profits off the backs of the customers. No one takes the trouble to understand where the difference in price comes from!” one new car importer said angrily.

“We have spent literally millions over the years to abide by the very high standards imposed by the companies we represent. We have to have top-level showrooms and servicing facilities, and we have to be able to help owners throughout the whole lifetime of their car.

We have annual audits and intense training.

“But used-car importers rarely specialise in any particular car and they have no servicing centre or spare parts. If the client has problems with their car, they usually have to come to the official agent,” the importer said.

“It does not help that we are scrutinised by Mepa and the

NEW CARS AND USED CARS IMPORTED BY INDIVIDUALS AND THROUGH DEALERS

4,424

< Continued from page 1

“Of course you do not hear about many cases. Do you think someone is going to admit that they were cheated? We know about the problems because they come to us to sort them out. And we find a number of cases of tampered mileages and so on,” the source said. Most of the tension emanates from the registration system and the Transport Malta valuation on which it is based.

vises the valuation of a new car upwards at regular periods. If a new car remains unsold in the showroom, the registration tax on it will be charged at the higher valuation, eating into the dealer’s profits. But if the car is used, then its value does not change or goes down, meaning that the used car dealer makes more money if the car remains in the showroom for any length of time.

It does not help that the valuation was adjusted for non-EU cars in the last Budget, which raised a number of eyebrows – and resulted in not only Japanese cars like Toyota being brought in from there but also European brands like BMW. Used-car importers have their own gripes. They cannot understand why only exclusive agents should be able to sell particular brands as new cars.

“We can buy unsold new cars from dealers overseas – they usually have to take a certain quota if they want to keep the franchise – for a considerable discount as they need to get rid of them to make room for new stock.

“But we can only register them as used, and to qualify as ‘used’ they must be at least six months old or have 6,000km on the clock. So we end up registering them in another member state, or driving them down from the UK, or putting them into storage... Does that make sense?” a used-car dealer asked.

tapped into the experience of a number of entities to compile the data, ranging from police and government agencies like Sedqa and Appoġġ, to hotels, nightclubs and councils.

“Clearly, we acknowledge that what we know about will be the tip of the iceberg but in spite of this we do not expect it to have a

significant impact on our GDP here.,” he added.

In spite of the obligation, national statistics offices did not include these activities in their reporting but member states recently agreed to fine-tune the way in which they approach this data, to ensure consistency and coherence.

The new statistical rule-book (ESA 2010) also affects the way in which R&D is reported which will now be considered as an investment rather than expenditure, as will military spending, and there will be a more detailed analysis of pension schemes.

The UK could add as much as £10 billion to the value of its GDP by

authorities when we want to invest in our showrooms while used-car importers just park their cars on the road!” one bitter importer said.

The new car importers claim that those buying used cars themselves are often duped.

With a new car, the registration tax is paid on the total invoice, a considerable proportion of which might be for extras. However, with used cars, the valuation – and subsequent registration tax – is based only on the price of the car itself.

Another anomaly is that TM re-

OF CAR OWNERS REJECTED % 41 BOTH NEW & USED CAR DEALERS

“If this clause were removed, customers would not be forced to get new cars only from the exclusive agents but would have more choice and the competition would drive down prices. Isn’t it in the government’s interest to encourage more new cars rather than used ones?”

What is the impact on the customer of all this? Perhaps one aspect that has been overlooked is the value of cars on the second-hand market, which plummeted.

“The price of a second-hand car is based on the price of a new one so clearly there was an impact,” one new car importer said.

Another impact of this shift is environmental. The average age of passenger cars had gone down to 11.5 years at one point but has now crept up again to 14 years, according to one importer.

“Individuals tend to buy cars that are a few years old, but dealers would get older ones as they want to maximise their profits,” another new car importer said.

What is their solution?

The new and used-car importers seem to agree on one thing: removing the registration tax completely.

“Of course it would have an impact on government revenue! But we employ over 1,000 people.

Why doesn’t the government worry about what would happen to them if the situation goes on as it is now?” another new car importer said.

“We have been discriminated against for years. Our problem is that we are patient and try to find a solution instead of shouting and stamping our feet.

“Why do you think that there have been so many mergers over the past years between car agents? It is the only way to survive. But for how much longer?”

including prostitution and illegal drugs by one estimate, enough to boost the size of its economy by 0.7 per cent. Austria, Estonia, Finland, Norway, Slovenia and Sweden have all begun including these figures.

France is resisting even though there are estimates that it could lead to an increase in French GDP of 3.2 per cent.

4

e Business OBSERVER

| July 3, 2014

NEWS

Only six high-rise applications potentially fall within new policy Only six of the current 13 applications for high-rise buildings potentially fall within the designated areas covered by the new approved policy announced recently by the Malta Environment and Planning Authority. This means that a number of applicants will have to rethink their projects even though they have

been on the cards for as long as a decade.

Of the six that could potentially be approved under the new policy, five (three in Gżira and two in Tigné) are not completely surrounded by streets and would have to find a way to incorporate these into the project. These include the site of the

THUMBS DOWN Xemxija – Site at Triq is-Simar Applicant: Jesmond Manicaro (Polidano Group) Garages and maisonettes, 118 apartments and six penthouses.

Naxxar – Former Trade Fair Grounds Applicant: Vince Curmi Residential, commercial and office space.

Naxxar – Triq il-Seneskalk Applicant: Paul Xuereb Garages and overlying residential units

former Union Club, the Empire Stadium and the Fortina Hotel.

Only one project – the site at the Westin currently used for parking – is a detached urban block. This application has been pending for 15 years.

Among those applications that fall outside the designated areas for

high rises are the site of the former Trade Fair Grounds in Naxxar, The Palms in St Julians and Pjazzetta in Sliema.

Under the new policy, Mepa has not imposed a minimum site size but it has determined that there should be no third parties adjoining the proposed development. If on

site parking cannot be provided, then the developer can opt to use parking in another building within a 250-metre radius.

Note: The details below are based on the original application, some of which have evolved over the years to a high-rise project.

THUMBS UP ... but with conditions Gżira: Site at Misraħ Turu Applicant: John Aquilina Demolish factory and replace with complex of 60 apartments (4+1 floors) and 10 penthouses

Gżira: Empire Stadium at Rue D’Argens Applicant: Baron Salvino Testaferrata Demolish existing buildings and replace with flats, commercial and retail, and garages.

Marsalforn: Site at Triq il-Forn Applicant: Michael Farrugia Residential units

Gżira: Muscats Motors Applicant: Hugh Mercieca Part-demolish existing building and construct residential and office building.

St Julians: The Palms Applicant: Nicolas Borg Demolish wedding hall and construct 359 garages, 347 apartments, 24 penthouses, and shops.

Tigné: Site of old Union Club Applicant: Michael Soler (Gasan/Townsquare) Mixed development with residential, shopping and commercial with underground parking.

Tigné: Fortina Hotel Applicant: Fortel Services Permanent residential floors and additional three floors.

THUMBS UP Sliema: Pjazzetta Applicant: Mark Gasan Apartment block with offices and commercial outlets, with two levels of underground parking.

St Paul’s Bay: Parades Street Applicant: St Paul’s Bay Council Construction of civic centre

Paceville: Westin Dragonara Applicant: Mark Portelli Residential (78 units), commercial and retail with landscaping.

e Business OBSERVER

|

July 3, 2014

5

NEWS

Gaming legal notice by autumn A draft legal notice for the licensing of digital games of skill with prizes is being sent to stakeholders for feedback after it was approved by Cabinet – and could be enacted as law as soon as September.

The head of the Lotteries and Gaming Authority Joe Cuschieri said there was considerable interest from companies wanting licences but there was as yet no legal mechanism for these to be issued.

“It is a €5 billion market globally and it will grow as young people are very interested in this form of entertainment. For Malta, it is a very important way to diversify from online gambling to a new sector, even though it is not as lucrative. It will certainly mean more jobs: although you tend to have smaller companies, there will be more of them. And it will have a large multiplier effect,” he said.

Malta Enterprise is concurrently working on attracting digital games development, which would complement the LGA’s efforts as it tries to “futureproof” the industry, currently under pressure from other member states trying to protect their own gaming industry.

Indeed, the LGA is looking at a wide variety of options, including the possibility of linking up with Asian and Latin American markets where there are “huge” opportunities.

“These are enormous markets of hundreds of millions of people but gaming is very restricted. For example, online gaming is banned in China and only digital games of skill are allowed.

“I believe that these countries will eventually open up and I want Malta to be a pioneer, to host companies from these countries and eventually to also have access to these markets. We have started dialogue with regulators there and I have commissioned a report on these markets. Once this is done, it could perhaps be followed through at diplomatic level.”

At a recent seminar in the Philippines, contacts were also made with companies specialising in casino tourism – especially for very high net worth individuals – which is already being spearheaded by casino operators in Malta but which the LGA will also help to promote.

Malta has been careful to remain a user-friendly jurisdiction for the numer-

ous operators here, which are being squeezed by new regulations and directives, such as the need to have a licence in each member state in which they operate. The latest onslaught is coming via the Council of Europe’s sports convention, with the European Commission claiming joint competence to establish that online or land-based betting would be illegal if it takes place in a country where the operator is not licensed.

“Cabinet has decided to take this very seriously and make our case with a certain determination. We are willing to take our position as far as we need to,” he warned. Malta has already tried to stop the convention without success.

“If an operator is licensed in Malta, they should not be illegal in another member state. The EU Treaty enshrines freedom of movement of establishment.”

In some cases, the LGA takes a pragmatic approach. For example, the UK has a new remote gaming regime which means operators need to be licensed there. It affects a considerable proportion of companies in Malta but Mr Cuschieri does not believe that the UK will succeed in enticing companies to repatriate there as there are still many

“It is a €5 billion market globally and it will grow as young people are very interested in this form of entertainment” – Joe Cuschieri

other competitive advantages in Malta, not the least of which is the tax regime: companies here only pay a total of €26 million in tax. However, he opted to

work with the British regulator in the interest of local companies and agreed on a simplified process so operators do not need to go through the entire due diligence process.

“For example, we will give the UK regulator a letter of assurance that we have already carried out certain checks,” he said.

Following consultations with a number of stakeholders including the Malta Remote Gaming Council and the Chamber of Commerce, Enterprise and Industry, the authority also launched a series of “quick wins” which came into force with immediate effect.

“They are not very major things but they are changes that the industry has been clamouring for,” he said.

“There is more planned. We are reviewing legislation covering a number of aspects – but it takes at least a year, given the consultation and drafting process.

We are contemplating taking some aspects of it which are very important to the industry – like a multiplatform licence – to see if we can speed up the process. Big companies can have dozens of licences so it would be a great help to them.”

e Business OBSERVER

|

July 3, 2014

7

INTERVIEW

DEVELOPERS CAN NO LONGER ASSUME THAT AN OUTLINE PERMIT WILL AUTOMATICALLY MEAN THEY WILL BE GIVEN A FULL DEVELOPMENT PERMIT AFTER THE DCC BOARD IGNORED THE RESULT OF AN APPEAL ABOUT A WINERY IN BIDNIJA.

Planning for change – through carrots and sticks VINCE CASSAR is no newcomer to the property sector, having spent some time as the president of the Chamber of Architects. When he took over as Mepa chairman just over a year ago, he was determined to set a new course for the authority, looking forward rather than wasting too much time on past mistakes. He spoke to VANESSA MACDONALD about changes, some of them subtle.

Mepa extended the deadline for permits, which used to be five years from issue. What is the significance of this decision?

For business this is a very positive thing. Your permit is valid for a five-year period and if you do not manage to complete the development within that time period, you would have to reapply from scratch, paying the fees all over again, having to go through the board again.

In summer 2013, we extended the deadline for all permits until the end of December 2013. Now this was recently extended again until March 2015.

This is being done to incentivise the building industry and developers – as well as individuals.

How many properties does this affect?

Mepa does not have a database of pending applications as each case could be at any stage of development or might have not even started.

A recent decision by the Mepa board about a winery at Bidnija implies that an outline development permit does not give an automatic right to a full development permit...

Until now it was always the practice that if you have an outline permit, you have an automatic right to get a full development permit in accordance with the parameters established at outline stage. But the board recently took a decision which changed this.

However, it is important to understand the context of this case.

The developer’s application for an outline permit was turned down but

he won his appeal. When the project was then submitted to the board for a full development permit, the board voted against it.

The original board refused the winery as it did not respect the policies at the time. Even though the appeal was won, this board was faced with the same proposal and the same conditions – and it felt that the

original refusal was justified since the policies were still in force.

Each case has to be seen on its own merits and the particular context. It is not a blanket statement by the board.

Isn’t this a worrying precedent?

People who have outline development permits would have made

substantial investment in the site, the designs and so on... This is not a good thing for an investor!

Yes, you have to take into consideration that the outline development permit might not be automatic. The board there now is not the one that approved the outline development permit and it may see things differently.

It is a difficult situation.

The previous administration had suggested that there should no longer be outline development permits and that applicants should go straight for a full development permit. Is this the best option?

I think the situation could be Continued on page 9 >

e Business OBSERVER

|

July 3, 2014

< Continued from page 7 resolved by having a development brief –which is not necessarily a permit in itself but a framework of the planning parameters on how the land can be developed – and you would then go on from there with near certainty that the brief would translate into a permit, even if there are changes to the parameters eventually approved by the board.

You could still have a situation where the board approves something that differs from the development brief though.

Mepa has now decided that a room built on top of a two-storey house in Sliema’s Rudolph Street will have to be demolished after all. What is going on?

When the case went before the Development Control Commission (DCC), they had the case officer’s report, which said that the structure would be allowed if the width of the street was more than 7.8m. The DCC asked the applicant’s architect to measure the street and it was reported as being 8.5m. So the DCC accepted this and said the construction was allowed. However, there was an outcry about the aesthetics of this room and when we checked the width of the street ourselves, we found that it was below what it required for that structure to go up.

And what has happened to the applicant’s architect who made the declaration?

We cannot do anything. It is up to the Kamra tal-Periti.

But if an architect gives you false information, is nothing going to done by Mepa?

I directed the Planning Directorate to sort out the situation with regards to the room, and to report the architect to the KTP, which will then have to take action as needed.

Had the road been wider, that room would have stayed there as that is what the policy says. So it is the policy which needs to be changed if we want to prevent such situations.

How do you see the construction industry going now? We have gone from 11,700 permits in 2012 to around 3,000. Has the sector

stabilised? Is this the end of the building boom in Malta?

I do not think it is the end of the boom. We need to rethink our strategies, not necessarily Mepa on its own but also developers and individuals need to try to maximise our land and what we have. We are currently revising local plans and we have to think afresh.

We are also doing so, for example, with the floor area ratio and policy, where we are trying to go vertical instead of horizontal, giving up some of the land which is already developed and making it accessible to the public as open space to be enjoyed by the public.

Our first principle is that we do not extend any further outside the areas already in the local plans. But we still have a number of areas within the existing local plans that can still be developed.

People talk about 70,000 vacant properties – but many are below standard. Those have to be knocked down and rebuilt to a better standard.

9

areas that can be developed, I think there is probably a surplus of developers.

There is a good interaction between Mepa and the developers, and we agree on a number of lines of action... but not on others.

We also need to respect the NGOs’ line of thought which at times makes sense and, at other times, does not. There has to be a balance between development and the environment.

I would definitely say that we as Mepa make mistakes. We cannot hide behind that. Some are the result of decisions taken in the past, perhaps by other boards, perhaps based on policies which were put in place by previous administrations.

I believe we are losing some of our architectural identity. For example, the 2006 policy allowing people to build another storey with a penthouse on top meant we lost a lot of our two-storey houses with wooden balconies. There are still some areas and streets with such houses which I think we should pre-

“ere is a good interaction between Mepa and the developers, and we agree on a number of lines of action... but not on others” Our policy is to try to go for quality in design and quality in our built environment. We do not want to end up with below-standard properties that cannot be either rented out or sold.

There are also the forces of supply and demand – not only policy and local plans. Is there really demand?

There is still demand for new property. You still get people who want to buy their home or who want to buy land and develop it. The market is still vibrant – would you believe that there are over 200 developers who are members of the Malta Developers’ Association? And there must be others who are not in the association.

When you consider the size of the island, and the size of the

serve. Or if we have to allow some development in those areas, we should respect the aesthetics of that row of houses and not necessarily build another storey or two on the current alignment – but at least have a setback.

One of the decisions taken was to do with Urban Conservation Areas (UCA), where we practically reduced our fees to zero for applications for rehabilitation of residences and in scheduled buildings. There are quite a number of areas that could be addressed here.

Over the past few weeks, we also looked at the interpretation of policies with regard to the extent to which you can build in gardens, to preserve garden enclaves within urban development. We are trying to restrict the development to not more than 30m and to leave the gar-

THE APPLICANT’S ARCHITECT REPORTED THE STREET AS BEING WIDER THAN IT ACTUALLY WAS. ONCE MEPA GOT THE REAL MEASUREMENTS, THE ROOM ON THE ROOF WAS FOUND TO BE OUTSIDE THE POLICY.

dens as they are. That is, in my opinion, a positive move.

These are all the carrots. What about the sticks? What about enforcement?

I would say that we issued quite a good number of enforcement orders on properties...

The problem has never been issuing the enforcement order but actually getting them enforced and seeing the wrongs put right...

There are now daily fines... We issued €132,000 worth since they were introduced in November 2012. Don’t forget that this only applies to developments since then and cannot be applied retrospectively.

The enforcement on properties before then can only be tackled by direct action, which we have to pay for and then try to recoup the costs from the developer.

We set up a small unit which is looking at these cases and trying to collect about €800,000 due for direct actions (as at March 2013). So

far, we have managed to collect €50,000. It is not much but it is a start.

You have to research what the money was due for, and there may be many that are time prescribed.

Do not forget that daily fines accumulate very quickly and it is the interest of those who are incurring them to sort the situation out as soon as possible.

There was a time when the pending caseload ran into the thousands...

It now stands at around 1,697, one of the lowest it has been in a long time. It will never go much below 1,500 because there are always going to be ones in process.

It has been coming down steadily for a few years. Of course, there are fewer new applications, but also we have a self-imposed deadline since 2010 for decisions within 12 weeks and 26 weeks for small and major projects respectively. We are meeting that target.

e Business OBSERVER

|

July 3, 2014

11

INDUSTRY FOCUS

All about risk: Getting insurance right The insurance sector in Malta is under increasing competitive pressure and while the Malta Insurance Association said that it has no concern about any of the existing companies – thanks to their prudent management – there are some red flags with particular segments.

The association director general Adrian Galea points to a number of issues, such as pressure on premiums and fraud, with one main solution: increasing the takeup of insurance.

In 2013, the Maltese spent €782 per capita, a far cry from the EU average of €1,843. And even then, a large proportion of what is spent is on mandatory insurance such as motor insurance and insurance mandated by banks for mortgages.

And the story does not end there.

ONLY 35 PER CENT OF MOTORISTS TAKE OUT COMPREHENSIVE INSURANCE.

“e priority should be the protection of your life and your assets” When it comes to motor insurance, only a third of motorists go beyond the basis third party, fire and theft and purchase comprehensive insurance, and with life and house insurance, holders tend to terminate their policies as soon as the mortgage has been paid up.

“People are only taking out policies because they are asked to do so.

This is a very important aspect of financial planning and your priority should be the protection of your life and of your assets.

“If you really care for your family and you die, you have to ensure that your family is well catered for. Unfortunately very few people do this,” Mr Galea said, adding that the association clearly needed to do more to raise awareness out there.

He admitted that there is still the perception – which he insisted firmly was wrong – that insurers will take the client’s money but do anything to get out of paying a claim.

He referred to 2012, when insurance companies settled €2.2 million in claims relating to floods and €3.3 million and €1.7 million for damage to cars and properties respectively resulting from the hailstorm.

However, he explained, the scrutiny by insurance companies of claims is all too often justified as policyholders do not appreciate that insurance is “a contract between the policyholder and the company”.

“If you don’t give a good explanation of what sort of risks you are prepared to transfer to the insurers, you are going to have problems. The insurer needs to know what sort of risk he is taking on for the price he charges,” he said.

Another problem is the information provided by the policyholder – for example about an existing medical condition – as if this is not

given in full, they cannot expect the insurer to pay up.

“Every policy has its exclusions and people need to be aware of what they actually bought. If they do not bother to read the policy itself, they should ask the company to help them out. This is a service which each insurer provides and there is a very established procedure to handle complaints to the company first and to the Malta Financial Services Authority if they are not happy,” he added.

Of course, deliberate fraud is also a growing concern, not only locally but also abroad. The latest statistics show it exceeds €1.5 billion in Europe alone.

“It is a hidden cost for every honest policyholder. Fraud has become very sophisticated. It happens in every class but is most predominant in things we use most: motor insurance, travel insurance and medical insurance.”

And then, of course, there is the issue of competition. The association has no problems with that – and unlike many other sectors, it did not complain about unfair playing fields. But there are red flags.

“It is definitely healthy to have more companies in Malta offering insurance. People are shopping around and looking for the cheapest rates possible.

“But there are now several companies competing for motor insurance, and premiums have not risen over the past four to five years.

They were €64 million in 2012, rising to €64.2 million last year.

“It could very well be the case that with motor insurance, the industry is at breakeven” “But there are many more cars in circulation so in reality the companies are getting much less premium per car. As there are more cars on the road, you get more accidents

and more claims. And the value of the cars has gone up,” Mr Galea said.

In 2013, there was a 27.5 per cent spike in claims, which went up from €37.4 million in 2012 to €47.7 million.

He attributed this to the influx of higher-end used cars over the past few years, which were technologically advanced so it was very often not a matter of repairing panels as replacing them outright, for example.

“For every €100 a company receives in premiums, €75 goes out on claims. And that does not even take into consideration the direct costs for selling the policy, the administration and some profits.

“It could very well be the case that with motor insurance, the industry is at breakeven – if not working at a loss,” he warned.

Will all the six companies vying for this business survive?

“They are all strong. Look at their results! The profits are there because they are well managed and are careful about how they invest the money paid as premiums.

Treasury is a very important function for insurance companies,” he said.

12

e Business OBSERVER

| July 3, 2014

Voluntary pensions need incentives The MIA is urging the government to offer attractive fiscal incentives in order to encourage the take-up of the voluntary third pillar pensions.

Pension reform was put on the table in 2004, but so far only the mandatory state pension has been implemented, with the raising of the retirement age among other changes. However, there are two other reforms yet to be tackled: an occupational second pillar and the voluntary third pillar.

The Finance Ministry launched a consultation process last November with stakeholders. In May, they were briefed about the proposals for the third pillar – and the fiscal incentives that would be offered.

“Of course, private pensions would be welcome as long as the fiscal incentives are enough to encourage people to invest in their future. People will take into account their situation and their tax rate and they will not invest in the products

unless they are tax efficient,” Mr Galea said.

The five companies providing life insurance companies have a particular interest in third pillar pensions, especially since they have been providing quasi-retirement products for some time and know the market well.

“Clearly we want to participate when they are launched,” he stressed.

Citadel believes it is well placed to offer customers products to achieve their future financial goals.

“Based upon EU mortality statistics, the current life expectancy of 76.7 years for men and 82.6 years for women is set to rise to 84.6 and 89.1 respectively by 2060. Coupled with reducing birth rates, relying on state pensions alone may prove to be insufficient. Without making our own provision, in future we may expect to be healthier but not necessarily wealthier,”

Citadel managing director Angela Tabone said.

The government had promised third pillar pensions in the electoral manifesto but had not mentioned second pillar occupational schemes.

“We applaud government for moving this far at long last. However, the MIA does have some reservations as to whether it is the right approach to start off with the third pillar rather than the mandatory second pillar,” Mr Galea said.

“We would encourage the government to go for second pillar now. Employers are not ready because putting aside money for their own employees means siphoning off some of their profits.

“It would need an awareness campaign and it is not something the insurance industry can do on its own. It has to be done with the government and several other stakeholders,” he said.

Warden off trouble?

The government is proposing to reform the warden system and the Malta Insurance Association is anxious that the current system should not be changed.

“If the system is working well at the moment, it should not be changed – unless it is improved.

That is what we are interested in,” MIA director general Adrian Galea said.

The front-to-rear collision form has been a great success, cutting down on congestion as the drivers would otherwise have to wait for a warden, as well as on the expense involved. It is not widely known that the charge for calling out a

warden is shared equally by the insurance companies covering the cars involved, irrespective of who is to blame for the collision.

Around a third of collisions are front-to-rear and the MIA believes that the self-reporting system could easily be extended to other types of collision, but only if there were an appropriate awareness campaign.

“Abroad the drivers take photos and then move their cars out of the way, leaving it up to the insurance companies to sort out. We are not at that stage yet. Perhaps we are Mediterranean and do not trust each other?” he asked.

Clock ticking to Solvency II After numerous postponements, it now seems that Solvency II, the EU Directive that harmonises EU insurance regulation, will be adopted on January 1, 2016. Primarily this concerns the amount of capital that EU insurance companies must hold to reduce the risk of insolvency.

The MIA said that most local insurers were well prepared, both in terms of how strong they were financially, as well as for the reporting that will be required.

At the moment, guidelines are being issued by the European Insurance and Occupational Pensions Authority, via the MFSA, to help them.

“What is of a concern to Insurance Europe and to ourselves is that these guidelines and regulations are putting a lot of strain on insurance companies because there is a lot of reporting to do,” MIA director general Adrian Galea said.

“There are no allowances for our size and we have to do

practically all that insurance companies in Europe do.”

Middlesea’s president and CEO Alfredo Munoz believes the effort will pay off if it is approached with the right frame of mind.

“Implementation of Solvency II is one of the major tasks the Maltese insurance sector has to face in the short to medium term. From an operational perspective, it will be a challenge and will demand huge efforts and employment of resources with an impact on the margins of our companies, already under stress.

“But it could also be an opportunity to improve the management of our entities, whose stakeholders will benefit from more accurate solvency modelling, enhanced governance and risk monitoring. The role of supervisors is key to ensure that our focus stays on customer needs and regulation will not be an excessive and formal burden,” he said.

e Business OBSERVER

|

July 3, 2014

13

e Business Observer is a new business newspaper distributed with Times of Malta every fortnight.

Editorial Vanessa Macdonald, Head of Content (Business), Times of Malta.

EDITORIAL

Consumer is king of the road?

We all realise that the car industry in Malta has changed but have we really understood to what extent?

When the registration tax changed in 2009, and the sterling exchange rate was in our favour, people started looking at the prices of second-hand cars in the UK and realised that they could buy a sporty, high-end brand, just a few years old, for the price of a new, relatively boring family sedan. Who would not be tempted?

Until then, authorised dealers used to sell over half the new cars – 4,424 out of 8,381 in 2008. All of a sudden, everything changed. In 2009, a stunning 15,140 cars were purchased and registered in Malta – and only 5,404 were bought new from the importers. The rest were used.

The ensuing years saw over 13,000 cars a year brought into Malta and used cars surpassed new ones each year, even though the gap has narrowed somewhat.

But perhaps what has gone unnoticed is how many cars were bought by individuals who rejected not only the new car importers but also the used car dealers: 41 per cent of them over the 2009-2014 period.

Such a dramatic upheaval in any sector would be hard. It is perhaps even more dramatic when you look at its history. The new car importers are mostly family firms who have been around for decades, some of them building empires that were founded on their car business.

Used-car dealers, on the other hand, cover a whole spectrum, from those who trade second-hand cars parked by the side of the road with handwritten signs on them to ones whose showrooms are packed with luxury cars.

The two sides, as is clear from the main story in this Observer, detest each other, insisting that each side is exploiting loopholes and regulations that distort the level playing field. As we tend to do so often in Malta, we caricaturise the issue, reducing complex situations to black and white: New car importers write off used car dealers as “cowboys” who tamper with mileage and offer warranties that are impossible to invoke. Used-car dealers portray authorised dealers as greedy titans rubbing their hands with glee because they have exclusivity over their brands and can raise their profit margins.

Maybe that was true. Maybe it still is to some extent. But the reality is that some authorised dealers lost their brands because they could not invest sufficiently to meet the never-ending demands of the manufacturers. Others have had to merge to survive in the competitive market. Yet others had to start importing used cars themselves.

Used-car importers have been forced to invest in showrooms and trained staff, and to offer warranties. And the consumer has not a shred of sympathy for either. He knows that the price in Malta is the result of government-imposed registration tax, transportation costs and economies of scale, for cars as it is for nearly everything else. But he also knows that he has a choice.

The importers are arguing that the government should forego millions of euros in registration tax in order to level the playing field.

They might be better off educating customers about cost structures and valuation lacunae, servicing requirements and warranties, emissions and fuel efficiencies, so that customers can weigh up the cost against the risks involved with getting a used car and make an informed decision. Because as it is, 41 per cent are making that choice.

Publishers Allied Newspapers Ltd. Content House Group Ltd.

Allied

N E W S PA P E R S

A M E M B E R O F T H E A L L I E D G R O U P O F C O M PA N I E S

Advertising Enquiries Tel: 21 320713 Email: info@contenthouse.com.mt Advertising Sales Petra Urso Publications Sales Manager

Printer Progress Press Ltd.

Progress PRESS

A M E M B E R O F T H E A L L I E D G R O U P O F C O M PA N I E S

BUSINESS OPINION

Impact of expatriate labour

Lino Spiteri Various figures are being bandied about concerning the number of expatriates living and working in Malta, but little effort is being made to determine the effect of this phenomenon. In a small country like Malta, the negative impact can be high, both in terms of employment as well as in terms of leakages of funds from the economy. On the other hand there are also positive effects.

The exact figures are elusive. A broad brush depiction suggests that there are some 30,000 foreigners living in Malta. Of these around 20,000 are said to be in employment.

Presumably the other 10,000 are made up of expatriates living but not working in Malta. Their effect should be positive. They should be transferring funds to Malta to finance their living requirements.

The net effect of such transfers, after allowing for leakages of expenditure on imported goods and services, should be a positive factor. Similarly the allocation of such expenditure.

They require a place to live, which

they either rent or buy. That helps the property market and explains in part the continuing demand that has kept the market ticking while domestic demand was weak. They also provide work through their shopping and by requiring personnel to help with the housework and with maintenance when required.

The 20,000 or so who are supposed to be working suggest a mixed story. A number of them, going by details given recently in the House of Representatives, are doing low-skilled work. They act as cleaners, as companions, or work in the construction industry. Anecdotal evidence also suggests a large number of foreigners working in the hospitality industry.

It is difficult to go into an established bar or restaurant these days and not find a good proportion of the staff being foreign. The

individuals doing such work also require a place to live and there are signs that they rent accommodation in flats included in the large pool that has not been sold. They also spend on nourishment and looking after their health.

If employed legally, as many of them are, they contribute to the revenue raised by social security contributions. Are they taking the place of Maltese workers? There is no manifest outcry to that effect. In which case they are filling a developing gap in the economy, a conclusion also fed by recent statements that two-thirds of jobs created are going to foreigners.

Suggestions that some of those on the unemployment register do not want to work, at least not legally, also shore up this conclusion.

As for the other net effect on the Maltese economy – what do they do

with their net income after outlays – the reply depends on how much money they transfer abroad, for instance to help their relatives.

This might be a negative effect, comparing a Maltese worker who puts his savings to work here in Malta, to an immigrant who transfers his savings or part thereof abroad.

One then moves to the other end of the scale: highly-skilled jobs which are being filled by expats.

Surprisingly no significant estimate of this expatriate population has been given so far, possibly because such jobs tend to be filled by citizens of the European Union, who do not require a working permit.

Again, anecdotal evidence suggests that the incidence of such workers is high. Their impact would also be strong since they are high

“Immigrant labour, made up of high- and low-skilled personnel is not a burden on the economy”

earners. They tend to pay income tax at a good rate, though a relative few get by on heavily discounted tax rates. They usually rent accommodation at the top end of the property market.

And their consumption pattern is also strong. Their savings transfer, or placing deposits in what become non-resident accounts, also tends to be high. But that probably does not count as a negative factor since they are not taking jobs which can be filled by Maltese personnel.

Many of the factors detailed above also apply to illegallyemployed workers. They tend to be in low-skilled jobs no longer wanted by Maltese workers, which is why there is not much of an outcry against them. They do not pay social security contributions and, by probably being in precarious employment, increase the profit margin enjoyed by their employer.

Broken down in some detail, as is attempted in the above by no means exhaustive exercise, the suggested conclusion is that immigrant labour, made up of high- and low-skilled personnel is not a burden on the economy. Rather the opposite, it helps the economy to be in a better shape than it would otherwise be.

The indicated action is not to bring a heavy fist to immigrant labour, but to winkle out those areas where immigrants are employed in the black economy to make them and their employers pay social contributions and, if applicable, taxes on income.

14

e Business OBSERVER

| July 3, 2014

CASE STUDY

From rentals to sales: How Re/max shook up the industry When brothers Jeff and Kevin Buttigieg set up their real estate company in 1999 – taking the initials of their names – Kevin knew that it was not much point going head to head with the already established family firms that dominated the business.

He already had several years experience working as a letting agent and he believed that this area was all too often seen as just a side business.

“I was the top letting agent on the island as I handled almost half the contracts on behalf of agencies that did not even have a

“I sold 18 units in 24 hours,” Kevin said. “It was quite a feat.”

Clearly, their clients were hungry for sales opportunity – but the brothers decided the best way to compete would be to do something ‘revolutionary’: to get an international franchise.

“Everyone thought we were crazy to bring in an international brand but because we were the first to consider it, we had the chance to look at all the franchises and pick the top brand in the world – Re/Max,” Kevin said.

The American company was not at first interested but, a few

“A franchise is not cheap but we felt that it would bring great value to us” rental department in those days. They referred rentals to me and I referred sales to them,” he recalled.

All that changed with the exciting new developments at Portomaso and Midi, as Kevin’s landlords started showing keen interest in purchasing units there.

J&K Properties was until then only known as a letting agency. Had the time come to branch out into sales?

By the time the brothers decided to act, Midi had already chosen six agents to sell the properties but at the very last moment, Kevin asked them to add J&K to the list.

months later, they came to Malta and checked out other companies before they chose J&K Properties in 2003.

“A franchise is not cheap but we felt that it would bring great value to us, as Re/Max brought us standards, a code of ethics, an IT infrastructure and training... For example, we have a trainer working for us virtually full time. And there are other things like strategies, marketing and educating the public. It was a steep learning curve but we never looked back,” Kevin said, saying it was this combination which had made them the market leader in such a short time.

KEVIN (L) AND JEFF BUTTIGIEG CHALLENGED ESTABLISHED FAMILY FIRMS.

“We hold around 28-30 per cent of market share by value of property, the largest by a considerable margin. And don’t forget that 60 per cent of the property in Malta is bought direct from the owner, not through an agent. That has changed considerably, in no small part because of us. It used to be 80 per cent,” he said.

The company’s website was an important tool. Within a few years of taking on the franchise, they introduced new functions like the ‘buyer match’ where the person seeking a property can input their criteria and be informed by e-mail whenever a property comes in that matches them.

“Our site is one of the most userfriendly for sure. Others copy us but we are always developing it so that we can stay one step ahead,” he said.

When they opened their doors as the rebranded Re/Max, they had one office and six people and they have since extended at a breakneck pace.

They now have 180 agents and 14 branches, with two more open-

ing in the coming days and two more by the end of summer – with possibly another one at the end of the year, bringing the agent count up to around 250. They will also shortly be moving their management offices to a 400sq.m. townhouse next door, having long outgrown their offices.

The expansion is a clear indication of their optimism about the market.

“We are heading into – in my opinion – quite a huge boom.

Property prices are going to skyrocket, especially in upmarket areas. Last week there were nine properties which sold for over €3 million each.

“In certain areas, there will be heavy demand as there are lots of foreigners interested in investing in Malta. For the moment, those interested in the citizenship scheme are renting, especially since the government gave them such an easy threshold for rent.

But eventually I think some of them will buy.

“Also high net worth individuals wanting to invest in property look

at places like Milan, London or Paris first but there they would be lucky to get 1-2 per cent as a rental return. Here in Malta, people get 5-7 per cent rental return plus capital return as prices in the middle to upper market sectors in Malta are all going up at the moment. We are feeling it, seeing it and touching it,” Kevin said.

Is it sustainable? The brothers certainly think so as the supply will always be finite – even though they are excited about projects that will commence in the future, such as Mistra and Marsa port.

The recent high-rise policy announced by Mepa will also help as it will increase the supply of luxury apartments – but they are more concerned about villas, which are in short supply and which are snapped up immediately even if prices are high.

Jeff is, however, anxious to correct the Maltese perception of what constitutes a ‘luxury’ property.

“The problem is that many of the Maltese have a different perception of luxury to our clients,

e Business OBSERVER

|

July 3, 2014

15

“If they don’t price it at market value, we don’t take it.

We are very strict.

Otherwise it is a waste of our money. And we spend a considerable amount!” especially Scandinavian ones.

They do not want heavy antique wooden furniture, no matter how expensive. It is not to their taste.

And you need to have all the gadgets and all the toys,” he warned.

In fact, with their new product, Re/Max Exclusive, one of the services – besides the marketing package – is a bespoke service, with an expert staging the property to make it more appealing – mainly by removing clutter.

But one of the main factors that the brothers hold up as their mantra is getting the valuation right. Kevin does valuations of top-notch properties himself, in all the Special Designated Areas, Madliena, and townhouses in Sliema and St Julian’s. But even he bows to the insight of his agents when it comes to other areas.

“Obviously owners are sometimes given higher valuations which they find very alluring. But after a few months they do not sell and come back to me… and we market it at the right price. And I win the battle 99.9 per cent of the time.

“I give a 5-10 per cent leeway. I hate negotiating – even though it is Mediterranean. I do not like the mentality of asking for €200,000 when you intend to settle for €150,000, a 25 per cent discount! I think that is ridiculous. If I say €200,000 it is because I intend to

SCANDINAVIAN CLIENTS LIKE A MINIMALIST STYLE. THEY DO NOT LIKE HEAVY ANTIQUE FURNITURE NO MATTER HOW EXPENSIVE IT IS

settle for €196,000 or €194,000,” Kevin said with a shake of his head.

Jeff pointed out that properties in the Exclusive package sell within 35 days on average, also helped by the intense marketing, from a website to an FB page and advertising on varied channels, and the brochure for that property.

“If they don’t price it at market value, we don’t take it. We are very

strict. Otherwise it is a waste of our money. And we spend a considerable amount!” he said.

Getting the valuation right is all down to research and experience.

Re/Max Malta does a market analysis of each area, looking into the selling price.

“If you want to sell within three months you need to sell at the right price. If you can af-

ford to wait longer, then you can put the price up – but in that case, you cannot put it on Exclusive.

“That is the education we are giving the public. Our blog goes on and on about this point. Malta is a good property market when a property is priced right.”

The coming weeks are going to be busier than normal. The

company is celebrating its 10th anniversary by bringing to Malta a hot air balloon, as seen in the logo. It will also be launching a charity foundation.

“We agreed with all our agents that from now on, a sum from every property we sell will go into a fund and, by the second year, we should raise €250,000 a year for charity,” Kevin said.

16

e Business OBSERVER

| July 3, 2014

NEWS

Number of banks in Europe falls again Figures published by the European Central Bank have shown another drop in the number of domestic banks in the EU in 2013, but a far smaller one than the previous year.

In 2011, there were 4,244 banks, which dropped by 634 to 3,610 in 2012. The drop between 2012 and 2013 was of just 49, with no changes to the number of large domestic banks, a slight increase in medium-sized ones, and the drop only in the small domestic banks.

There were also 1,027 foreign-controlled subsidiaries

and branches in 2013, down from 1,032 the previous year.

The ECB report also shows a considerable decline in assets, from €43.6 billion in 2012 to €39.5 billion in 2013.

The Consolidated Banking Data provides statistics about the EU banking system on a consolidated basis.

It refers to 395 banking groups together with 4,193 stand-alone credit institutions, including data for 695 foreign-controlled branches and subsidiaries operating in the EU.

Countdown to simpler and fairer VAT system The six-month countdown has begun to a major change in the EU VAT system.

From January 1, 2015, VAT on all telecommunications, broadcasting and electronic services will be due where the customer is based, rather than where the supplier is located.

In parallel, a mini one-stop shop will be launched, so that businesses supplying e-services to customers in more than one EU country will be able to declare and pay all their VAT in their own member state. Under current rules for e-services within the EU, VAT is due where the supplier is based, and at the rate set by that member state.

With the standard rate varying from 15 to 27 per cent across the EU, businesses frequently establish in a member state with a low standard rate, which then applies for the eservices they supply to all private customers throughout Europe.

“is change will bring important benefits” The change in VAT rules from January will mean an end to this, as it will be charged at the rate of the customers’ country. This will apply whether it is an EU or non-EU business doing the sale. So a customer living in Copenhagen will be charged the Danish VAT rate, regardless of whether the supplier is from Denmark, Luxembourg or the US, for example.

This change will bring important benefits. First, it will ensure fairer competition between domestic and nondomestic businesses selling the same services. Second, it will create a more level playing field for SMEs and other companies that cannot relocate to a lower-tax member state and who, up to now, may have lost out to more mobile competitors. Finally, it will ensure fairer distribution of tax revenues between member states, as they will receive the tax on the services consumed by their own residents.

Businesses will be able to make a single declaration and payment in their own member state through a web portal to account for the VAT due on sales in other member states.

Member states agreed on these new VAT rules in 2008.

However, entry into force was set for 2015, to give enough time to all stakeholders to prepare for such a transition.

e Business OBSERVER

|

July 3, 2014

17

NEWS ??

Commuting costs €4.1 million It costs €4.1 million a year for Gozitan workers to commute to Malta and reducing travelling time by just five minutes per crossing would save a minimum of €1.6 million every year, according to E-Cubed Consultants.

A report prepared by the firm estimated that there were 1,800 Gozitans working, and a further 1,100 studying in Malta.

It calculated lost working time at a rate of €15.07 per hour and that of non-working time at €4.61 per hour.

The report was drawn up as part of an exercise to look at the cost benefits of transport options for Gozo – particularly the construction of a permanent link whether through a bridge or tunnel.

“Improved access has the potential to generate economic benefits through job creation and reduced commuting times,” consultant Gordon Cordina said.

A survey among employers identified accessibility and transport costs as the main obstacle to investment in Gozo, rating these as being more than three times more important than skills and fiscal incentives.

Gozo Business Chamber president Michael Grech said that the

cost of constructing a permanent link – whether a tunnel or bridge – had to take into consideration the cost of commuting.

“The time saved in travelling would average approximately two hours for each round trip. This means that a Gozitan normally wastes around one month of working days a year in travelling,” he said.

Mr Grech also pointed out that even if there were no permanent link, the ferries would need to be replaced within the next 12 to 15 years.

“The cost to replace the ferries could be anything between €150200 million at today’s prices and not including inflation. This does not include the running costs.”

Mr Grech is a fierce supporter of the tunnel option. At present, a Chinese state-owned company is carrying out a feasibility study which is meant to be concluded by September. However, he has already started delving into similar projects to get an idea of the cost.

“The Faroe Islands have built two tunnels in the past 15 years, one measuring 4.9km and another 6.2km. These cost £35 million and

AVERAGE TRAVELLING TIMES £46 million respectively and had a considerable impact on the number of vehicles crossing between the islands. With the former, some 100,000 vehicles crossed by ferry in 2005, but this has since grown to nearly 800,000 a year, thanks to the bridge.

“The government could easily give out the project on a land concession proposal of, say, 50 years and I am sure that the private sector

MALTA

GOZO in minutes

Airport

17.2

94.1

Cargo seaport

23.6

106.1

Commercial hub

18

will go for it. In that 50-year period the amount of money saved on the time taken to cross by ferry

would probably well surpass the original cost of a tunnel,” he said.

86.1

e Business OBSERVER

|

July 3, 2014

19

APPOINTMENTS

New CCO for Salvo Grima

CIO for Maltapost

Karl Aquilina is the new chief commercial officer for the Salvo Grima Group (SGG), part of the group’s complete restructuring.

“Salvo Grima is a young company that is constantly on the move,” said SGG’s chairman and chief executive officer Robert Aquilina.

“We give great importance to our core businesses but always have two or three projects in development at any one time.”

Mr Aquilina began his career as a sales representative as part of SGG’s ship supply department, the group’s principal original operation. He eventually took charge of other areas of the business, including the company’s logistics sector.

He will be heavily involved in three important new businesses

Maltapost has appointed Mark Vella as its chief information officer with effect from July 14.

Mr Vella previously occupied the post of IT senior business relationship manager within the commercial division of Baxter Healthcare Corporation.

and the simultaneous restructuring of the entire group operation. He will also be responsible for the local distributorship of British American Tobacco products.

Maltese CCO for Go Kurt Camilleri is taking over as chief commercial officer at Go on July 16, taking over from Markus Golder.

Mr Camilleri is the seventh commercial/operations officer since Go’s privatisation (one of whom was appointed but never actually took up the position, and another who held it on an interim basis), and the first Maltese for almost six years.

He has more than 15 years’ experience with different operators, joining Go in 2012 where he currently heads the marketing function.

New partner at PwC Malta PwC in Malta has appointed Mirko Rapa as a partner with effect from July 1.

Mr Rapa joined the firm in 2002.

During the past 12 years, he formed part of the tax service line but was also involved in assurance engagements. He has gained international experience, which included a secondment to PwC Berlin. Some of the assignments in which he was involved included assisting leading multinational groups with tax due diligence exercises and structuring their operations in Malta.

For the past 10 years, Mr Rapa has also lectured in advanced

taxation to students preparing for the ACCA and the Advanced Diploma in International Taxation examinations.

Re/Max trainer reappointed As part of its commitment to improve the service level standards in the real estate market, Re/Max Malta has extended trainer Paul Vincenti’s contract for another two years.

Mr Vincenti has been providing training for the real estate market for over 10 years. He has recently succeeded in penetrating the international market where he is providing training to other Re/Max agents in Italy, England, Turkey and Ireland.

Earlier this month 18 associates completed their foundation course and another 20 agents have started the course.

The Re/Max Malta managers recently commenced a new 12week training course entitled Managing People in Real Estate.

Changes at Premier Capital Bertrand Attard has resigned from his posts as executive director and chief executive officer of Premier Capital, to take up a new – as yet unspecified role – at Hili Ventures.

The company said that the managing directors for the two key regions of its operations would be appointed to the board but that it will not be appointing a CEO. The managing directors are Victor Tedesco (above right), responsible for the Mediterranean (Greece and Malta), and Tomasz Nawrocki (above left) , responsible for the Baltics (Estonia, Latvia and Lithuania).

20

e Business OBSERVER

| July 3, 2014

NEWSNEWS

Insurance role for remote gaming?

The Lotteries and Gaming Authority would like to introduce a mandatory insurance premium for remote gaming companies, which would be used in case of problems.

Although there is a player protection scheme, LGA head Joe Cuschieri pointed out that in the past, a particular case had shown that it might not provide timely solutions.

Poker site Everleaf went bankrupt in 2012 and the police issued an international arrest warrant for the owners, so the company funds could not be released. Although the players will eventually be compensated, this will not be until the judicial process is completed.

“I am very frustrated about it.

My hands are tied to a certain extent because the police investigations are underway. They have interrogated some people but nothing concrete has yet come out of it. I cannot unilaterally pay as it would set a precedent. It would be assumed that site owners can default and leave the LGA to clear up the mess,” he said.

“We are now working on having some sort of insurance premium that the operators would pay as part of their obligation, with the LGA as the beneficiary so that if an operator defaults or runs away with the money, the players will get – if not all – then at least a substantial part of their money from us.

“These policies are very complex but they are already available from both local and foreign insurance companies,” he said.

“Today, operators must have a bank account into which enough funds are placed to safeguard punters’ money. But I don’t think it is an instrument that really guarantees punters’ interests. And we will also be carrying out an audit of all the bank accounts to make sure that there actually are sufficient funds.”

No change in postal volumes According to a survey carried out by the Malta Communications Authority, the majority of households claimed to have received and sent the same volumes of addressed letters as two years ago.

However, a significant number of households declared that they have reduced the number of addressed letters and resorted instead to other alternatives such as e-mails and e-commerce. Meanwhile, 38 per cent of these households said that they would switch to nonpostal alternatives, should the price of addressed letters be increased by 5-10 per cent.

Results from the survey show that demand for parcel post services has grown. Indeed, in contrast to 47 per cent in 2011, this time more than half of the interviewed households said they had received a parcel during the last 12 months.

One in five of the households revealed that their parcel was delivered by an operator other than Maltapost, with 41 per cent identifying DHL as the delivering operator.

e Business OBSERVER

|

July 3, 2014

21

BUSINESS UPDATES

Catering for your events, whatever the occasion Seasons Event Caterers are a highly professional and extremely dedicated event catering company, created by a team of catering and event management specialists which also forms part of Mizzi Organisation.

Seasons take a modern approach to event catering, creating distinctive food made from seasonal local ingredients to meet the individual needs of each and every client. Their reputation has grown by word-of-mouth not

only for the provision of superb outside catering and delicious food, but also for their style and the consistently high quality of service provided.

An experienced, passionate and friendly team that are dedicated to making your event the best can put forward proposals for glassware, linen, floristry, music, creative lighting and design – everything to complement the delicious food and irreproachable service.

Menus Menus are extremely adaptable, combining both contemporary and traditional food designs. Dishes have been put together to stimulate your senses with sublime combinations – classics are featured and served in a modern way with a twist.

Most of Seasons’ clients have dishes created for them to suit their likes and event... so if there is anything the client desires, all they have to do is enquire. Menus can be created to suit personal taste, individual budget or theme for the occasion.

For more information call on 2090 6850 or e-mail sales@water.mizzi.com.mt and ask for Charmaine Camilleri.

Reduction in APS Bank’s base rate as of July 2014 Following the European Central Bank’s recent cut in its main refinancing rate by 0.10 per cent, APS Bank is reducing its own base rate accordingly.

With effect from July 1, 2014, the bank’s base rate will go down from 2.35 per cent to 2.25 per cent and this will benefit all its borrowers, both commercial

and personal. This base rate reduction, together with competitive interest rates offered on its Biz Plus Products, are expected to prove of particular support to the business sector.

For the time being APS Bank will be leaving all its deposit interest rates unchanged.

22

e Business OBSERVER

| July 3, 2014

BUSINESS UPDATE

Veneta Cucine kitchens Veneta Cucine strikes the core of its market with the simplest of elements and wins the heart of its consumers through the dedication and commitment they have for building kitchen projects with care. Each design is an expression of the diverse ways of experiencing daily living. At Veneta Cucine, designers are passionate about giving form to

projects that improve everyday living by maximising functionality.

The intense research they invest in helps in understanding the actions and practices that exploit the furnished kitchen to the greatest extent possible, and also make it more personal to the consumer.

The image depicts one of the most sought-after models of Veneta Cucine, Oyster – a successful design concept known as a natural resolution that is further enhanced in form and functionality. Veneta Cucine proudly introduces the two innovative features of this model: the surface – which is made even more eye-catching with

a pleasing natural sensation; and the Shell System structure, which has now been extended vertically for better functionality of the handgrips for the doors and the base units. Visit the Fino showplace this month and benefit from the special offers on all kitchens of Veneta Cucine. Contact: info@fino.com.mt

Debono Commercials Debono Commercials is Michael Debono Ltd’s commercial vehicle and industrial equipment centre, and Malta’s only official representative for the commercial vehicle and industrial equipment division of the Toyota Group.

We can offer you the solutions and expertise to take your business further.

Our comprehensive range of products and services include the representation of Toyota commercial vehicles, Toyota forklifts, BT warehouse equipment, Hino trucks, Goupil electric utility vehicles and Fiorentini industrial floor cleaning machines.

Our after-sales service includes a Mobile Service Station whereby we will travel directly to your premises and repair your equipment on-site. You will find our extensive range of products and services to cater for your company’s warehouse equipment and fleet vehicle needs in our premises.

We are committed to conducting business in a fair and honest manner and aim to be recognised as the most respected and trusted commercial vehicles and material handling equipment partner in Malta.

The Debono Commercials division forms part of the Debono Group of Companies, for more information kindly visit our showroom situated in Mdina Road, Żebbuġ (next to the Toyota showroom), call on 2269 4000 or e-mail: info@debonocommercials.com

Highly affordable business e-mail service launched BMIT Limited, Malta’s leading provider of data centre, cloud and managed services has announced an innovative e-mail service aimed at businesses wishing to benefit from highly customisable, cost-effective and secure e-mail services, without the need to purchase any equipment or install any systems at the premises or office.

“Our new cloud-based business e-mail service is based on Microsoft’s Hosted Exchange, and offers full control and personalisation in terms of the number of users and the mailbox size for each user, complete with featurerich tools that add real value. Users and mailbox storage are purchased separately for full flexibility, and associated with the business domain name for a truly-personalised service.

This is ideal for businesses who wish to manage their IT costs better, since it would only pay for the number of users and storage size it really requires,” said Jack Mizzi, Chief Market-

ing and Business Development Officer at BMIT. “E-mail services, such as Office 365 and Google Mail, offer a standard mailbox size for every mailbox purchased, irrespective of the user requirements for such space. Our service lets the customer specify the real requirements and pay only for that. If, or when, these requirements change, the customer can upgrade easily and without incurring any upgrade fees. Prices start from just €2.35 per month, depending on specifications” BMIT’s new mail service is provided by a Malta-based ISO27001 and PCI-DSS certified data centre and cloud provider, with 24x7 expert technical support and extensive experience in this business.

BMIT’s Business Mail service has no initial fees or investment requirements usually associated with setting up an e-mail service for business.

For more information visit www.bmit.com.mt or e-mail : www.bmit.com.mt/email