Business Observer, March 29th, 2018

NEWS

Issue 84

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March 29, 2018

Distributed with Times of Malta

Maltese businesses cling to hope of better future for Libya operations

e implementation of GDPR is just around the corner – how will it change the local business landscape? see pages 5, 6 >

Marie-Claire Grima Several Maltese companies with operations in Libya have been doing their utmost for the past seven years to maintain their relationships with Malta's troubled southern neighbour and business partner, hoping for the dust to finally settle following the collapse of Muammar Gaddafi's regime in 2011, and to be able to rebuild on existing foundations.

A number of leading businesspeople spoke to this newspaper about their experiences in Libya, their prospects for the future, and why they chose to stay.

Duncan Barbaro Sant, Director of Alberta, said that when discussing the company’s relationship with Libya, “we like to use the same terms used for marriage – for better or for worse.” Alberta has been in Libya for nearly two decades, serving both the private and public sectors, focusing on core operations such as fire-fighting, security, and counter-terrorism measures, largely in the field of oil and gas. Just before 2011, the company opened up a Libyan branch of the International Safety Training College. “That was a million-plus investment that went down the drain,” Mr Barbaro Sant commented, wryly. The school shut down soon after, and Alberta’s operations in Libya were reduced to skeleton staff.

“All business development came to a grinding halt but we kept on maintaining our clients as best as we possibly could. The problems we faced in terms of security were challenging, and the threats were very real. However, in the interim, we capitalised on

ANALYSIS Malta’s ship registry has maintained its position as Europe’s leading register and the sixth largest worldwide, but could it become a victim of its own success? see pages 9, 13

NEWS iGaming Capital, an ambitious new publication focusing on the iGaming industry, will be launched in June. see page 21

“It’s like being in the ocean with a great white shark swimming around you – you never know if it will bite, but if it does, it’ll be bad.” – Duncan Barbaro Sant, Director, Alberta some non-core projects – in fact, one of the largest projects we ever accomplished at Alberta was carried out during this time, where we were asked to demobilise two power generation camps from two

locations to port and ultimately ship them to Dubai and the US. We moved around €600 million worth of equipment over a sevenmonth period. That’s part of what kept us going – identifying non-

core opportunities and continuing to serve our clients.”

Having worked there for close to 20 years, Mr Barbaro Sant is evidently genuinely fond of Libya and its citizens. “Libyans are good people. Malta and Libya are very culturally similar. All that has happened there could just as easily happen here, or anywhere else, if you take away the police, the military, and the law, and put weapons into everyone’s hands. It wouldn’t take long to descend into chaos. Many cities set up their own security boundaries and tried Continued on page 3

STOCK MARKET REVIEW Few investors know what yield curves typically stand for, and how they can assess the case for investing in the bond market. see pages 23, 24

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NEWS

“e big boys will flood Libya when it opens its doors” Continued from page 1 to fight daily issues that arose on their own. It’s the sort of set-up keeping Libya in control at the moment. Unfortunately, there are too many factions, and everyone reports to different authorities.

Tripoli seems to be safe at the moment – the security strategy is a bit more aligned – but it’s still very volatile. It’s like being in the ocean with a great white shark swimming around you – you never know if it will bite, but if it does, it’ll be bad.”

As of 2018, Alberta is working on a key project in Libya which Mr Barbaro Sant hopes will help the company. “Other than that, it’s all about maintaining our clients.

We’ve started to touch on business development again, increasing our presence in terms of rotation and duration with other Maltese team members who are willing to travel. In 2018, there’s this general feeling that if it has to happen, it will be now, and that it will be the stepping stone for the better years to come.” Mr Barbaro Sant believes that sticking it out is the only way for Maltese companies to ensure any kind of future with Libya.

“If the Maltese don’t get in there before the foreigners do, once Libya opens its doors, the big boys will flood the market. They simply have bigger and better resources than we do. That’s another reason why we’ve never left Libya – we’re making our position felt and making sure they don’t forget us.”

The terror in Libya had an effect on all businesses, no matter what sector they were operating in. In an infamous example, Corinthia Group’s luxurious Tripoli hotel – as far removed from the the height of the chaos as it was possible to be – was attacked by ISIL-affiliated

“While the current unpredictable state of affairs in the country directly affects economic and business activity, recent developments lead to cautious optimism.”

– Corinthia Group spokesman terrorists in the early hours of 27th January 2015. A car bomb was detonated in the parking garage of the hotel, and around five gunmen stormed past the local guard and entered the hotel, killing 10 people. Although the commercial centre remained open, the hotel was forced to close down for the rest of the year until early 2016 in order to upgrade and carry out restoration work. But despite the traumatic event, the mood at the Corinthia Hotel Tripoli appears to be a tenaciously positive one, with focus fully centred on getting the hotel back to its peak level of activity.

“For us, it is back to business as usual; the hotel is fully refurbished and bookings are open,” a spokesman from the Corinthia Group told this newspaper. “We have a full complement of staff and our restaurants and banqueting events are in operation. Naturally, the volume of business is significantly down, but our commercial centre, where we lease some 10,000 square metres of offices to oil companies, is fully operational and let. In fact, we have just signed a long-term lease with an oil company for the last remaining vacant space.”

“Corinthia has had an excellent business relationship with Libya going back 40 years, and there is no reason why this should not

prevail for the next 40 years,” the spokesman added. “Malta and Libya are neighbours and natural business partners. Libya has huge potential which could have a tremendous effect on the Maltese economy. While the current unpredictable state of affairs in the country directly affects economic and business activity, recent developments lead to cautious optimism.” The spokesman also confirmed that due to the proximity of Corinthia Tunisia, the company was actively looking at opportunities in all other North African countries, including Morocco and Algeria.

However, opening up a business in a new country and trying to replicate the powerful MaltaLibya relationship is no mean feat. “Setting up afresh in a new country is hugely challenging, though it must also be acknowledged that the experience gained from working in Libya should provide valuable experience for companies trying to establish themselves in other North African or West African regions,” said Jean Claude Muscat, Director of Overseas Healthcare Ltd (OHL), which was set up in 2003 to manage Saint James Hospital’s overseas operations. The company opened its first Tripoli clinic in 2005, and since then has significantly expanded its facilities.

“Following the events in 2011, our company continued to register stable progress in most of its activities throughout 2012 and 2013.

However at the end of 2013, the situation in Libya started to become unstable. The airport was closed down following fierce fighting which resulted in damage caused to the facility, the prices of essential items increased, long power cuts across the country became the norm, banks stopped providing most of their core services, and foreign payments were unable to be made. Most foreign companies had to make the difficult decision to leave the country as the situation was unsustainable, and as a result of all this, our business took a significant downward plunge.”

In 2014, the company approved investment in a brand new 50-bed hospital, intended to be the most advanced private hospital in Libya in terms of technology, operating systems, patient flows and quality processes.

However due to the unrest, the project had to be put on hold mid-way through the development. “Due to the deteriorating security situation in the country, our senior administration team was unable to travel to Libya throughout all of 2016. This eventually took its toll and resulted in huge challenges to maintain em-

ployee motivation, quality standards, property upkeep, managing the relationship with doctors, maintenance of equipment and so on. We also lost many of our core foreign visiting consultants.

As a consequence, 2016 and 2017 represented our worst years ever and the company had to take a decision whether to close altogether or to re-invest and try to rebuild the business. The board was strongly divided on this decision, although finally we decided to move forward and commit our best efforts to try and rebuild the business.”

The hospital has since been completed, with most of the supplies and equipment purchased.

“We are working hard with our partners and stakeholders to be able to resume the works on this facility, which will represent a breakthrough in the healthcare service in Libya,” Mr Muscat said. “But we don’t know what the future holds for Libyan-Maltese relations. If we knew the answer to this, we would be able to take a firm decision, one way or the other. The truth is that the vast majority of the local Libyan people we speak with are hopeful that the situation should stabilise politically towards the end of 2018, and there also seems to be a significant improvement in terms of the safety and security situation. Others remain of the opinion that it will take a longer time to settle down. We’ve invested a significant amount of time and energy in developing and supporting our operations in Libya, and we remain committed to giving it our very best efforts and commitment. But this doesn’t mean that we are not struggling, or that we can sustain this position for much longer.”

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Local businesses see positive effects of tough new GDPR legislation Rebecca Anastasi Businesses in Malta are generally positive about the ramifications of the General Data Protection Regulation (GDPR), which comes into effect on 25th May 2018, replacing and overriding the old Data Protection Directive (DPD).

The new framework, which has been touted as precipitating the most far-reaching changes in decades, will give some bite to the European data protection guidelines, with businesses and the public sector forced to apply stringent rules to protect personal data. The new regulation aims to strengthen and unify data protection, tipping the balance of power from companies to the individual, thus requiring a change of mindset – and of strategy – towards data collection and retention.

Among the many regulations, companies will have to determine systems and processes to manage personal data and ensure there is no risk through overcollection, establish who has access to this information, as well as set up a procedure if an individual decides they do not want their data being used. Furthermore, the rules are extra-territorial which means that companies outside the EU – including cloud-based or external contractors – must also comply if they are doing business with European entities.

Non-compliance will result in crippling fines: organisations that breach the regulations could be slapped with a bill of up to €20 million, or 4 per cent of the annual global turnover – whichever of the two is higher. Indeed, as can be expected, the sweeping reforms are being taken seriously by many local businesses, some of which

“Like oil, data should be processed and developed in a coherent and orderly manner through its entire life cycle, from collection to deletion.” – Inger Cini, Deloitte Malta have spoken to this newspaper in the run-up to the framework’s implementation.

In the auditing and assurance sector, Deloitte Malta, which handles both sensitive and nonsensitive personal data, undertook a privacy impact assessment of their business in preparation for the changes. The assessment identified action points, ranging from infrastructural and operational changes required to the necessity of updating any policies, privacy notices and consent processes. Moreover, contractual clauses which needed to be reviewed have been delineated, agreements have been put into place, and new processes have been implemented to be in line with the new framework.

Deloitte Malta has also invested in human resources through a Data Protection Officer and training staff. Such an

overhaul has also taken place at technology companies, such as Computime and Avantech, with the former employing external consultancy firms to assist with the compliance process, while the latter has looked at the processes and procedures the company had in place and any permissions it might need to utilise the data required.

Despite these exhaustive measures – and the considerable expense it has taken to implement them – these businesses were positive about the ramifications the GDPR will bring with it. Dr Inger Cini, in-house legal counsel at Deloitte Malta, emphasised that despite the short-term cost required to effect the changes, “measures providing transparency and traceability are in our long-term interests,” stressing that “the trust of our stakeholders is intrinsically important.”

She highlighted the increased level of accountability which will result from the GDPR, in the handling of personal data, and noted this has become of vital importance in the digital age. “In this sphere, the expression, ‘data is the new oil’ is apt. Like oil, data should be processed and developed in a coherent and orderly manner through its entire life cycle, from collection to deletion,” she stated.

Moreover, while some experts quoted in the European media have warned that the new framework may conflict with more specific regulations which provide the tools utilised in the fight against money-laundering or online scammers, Dr Cini noted that the GDPR – as a piece of general legislation – can be overridden by specific laws. Indeed, she stated, the framework itself “recognises this principle” and, therefore “allows for such exceptions.”

Echoing Dr Cini’s belief in the ability of industries to reconcile elements of the GDPR with increased transparency, Steve Casaletto, Technology Director at Avantech, emphasised that “we can still have transparency, traceability and accountability without exposing people’s personal data, which is all that GDPR is trying to protect.” He noted that if businesses look at data protection policies, ensuring that they securely store the minimum amount of data for the minimum amount of time, as well as fully advising individuals, “then we should have no problems meeting both the needs of transparency and the needs of GDPR.” Indeed, though acknowledging that the new framework might be deemed a nuisance to businesses, Mr Casaletto stressed that the positives of the new framework outweigh any negatives, especially if businesses use it as a way to imContinued on page 6

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NEWS

GDPR will force businesses to upgrade their systems to a more secure environment Continued from page 5 prove their processes. As a case in point, he stated that, despite initial misgivings, Avantech found that by putting the correct procedures in place, automating them and by fully digitising the documents throughout the lifecycle, “we actually ended up being more efficient as a business.”

And the world of technology is well-positioned to take advantage of the opportunities afforded by the GDPR, according to Mr Casaletto.

He asserted that there are opportunities for all technology companies, since the new regulations will force people “to upgrade their systems to a more modern, secure and auditable environment”. He stressed that this was especially true for companies in the document management and handling business, such as Avantech, since “this is, without a doubt, one of the biggest areas affected by GDPR.” Reiterating these thoughts, and the positive ramifications on the technology sector, John

“e positives of the new framework outweigh any negatives, especially if businesses use it as a way to improve their processes.”

– Steve Casaletto, Avantech Wood, Chief Executive Officer at Computime Software, stated that “this can be seen as a business opportunity for IT providers to assist their clients with compliance requirements.” He

stressed the necessity of a change in perspective and a shift in thinking, “from saying GDPR will have a negative impact” to looking at it as “a question of process alignment.”

To this end, he emphasised the need for a balance between regulation and practicality to ensure that the new regulations “do not stifle efficiency.” As an example, he said that different meas-

ures would need to be taken for different categories of data, stressing that “if this balance is kept, we believe that the new regulation will leave a positive impact overall.”

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ANALYSIS

Maritime industry cannot risk getting too comfortable, says Transport Minister Martina Said Malta’s achievements and record figures in the maritime sector are there for all to see, and Government is committed to developing the country into a maritime and yachting hub in the Mediterranean, but Malta should not get too comfortable with its own success, said Minister for Transport, Infrastructure and Capital Projects, Ian Borg.

Speaking to this newspaper, Dr Borg asserted that Malta has done well in building good fiscal, legal, corporate and registration services, and while it’s imperative to continue developing these, it is also time to shift the focus to other offerings which offer more “value added” and have greater strategic importance. “This industry took off on the basis of location, low cost, duty-free fuel and fiscal incentives, but has to continue evolving. We must be a stronger alternative, based on capabilities, improved infrastructure, competence, level of service, reputation and strong relationships. We simply cannot risk becoming comfortable,” said Dr Borg.

Malta’s ship registry has maintained its position as Europe’s leading register and the sixth largest worldwide – over 75 million gross tonnes were registered under the Maltese flag by the end of 2017, an increase of 7.7 per cent over 2016, with ships ranging from LNG carriers, cruise ships and bulk carriers to RORO ships, oil tankers and superyachts (yachts of over 24 metres in length). The number of superyacht registrations in 2017 also shot up to 687, an increase of over 19.5 per cent over 2016.

In view of this astonishing growth, however, Malta’s yacht-

ing sector came under the lens earlier this month when the European Commission issued a formal notice to Malta, as well as Cyprus and Greece, for not levying the correct amount of VAT on the provision of yachts. AccordContinued on page 13

“e benefits of an increased market share and of being one of the largest flag administrations in the world offer Malta visibility and confidence to venture into new territory.” – Ian Borg, Minister for Transport, Infrastructure and Capital Projects

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

Editorial Coordinator Marie-Claire Grima

EDITORIAL

Leaning into GDPR Data privacy and protection have been EU policy priorities for the past two decades, and the General Data Protection Regulation (GDPR) will take this further than any other piece of legislation before it. Through the GDPR, from 25th May onwards, the existing privacy rights of EU residents will be expanded, making it easier for individuals or entities who feel that their privacy has not been adequately respected and safeguarded to lodge complaints, through an organisation or active body that can represent them and receive compensation on their behalf.

Furthermore, a broad range of additional compliance obligations will be placed upon businesses operating both in and outside the EU. Both data controllers – those who determine when, how and why personal data is to be processed – and data processors – those who process data on behalf of data controllers – have new obligations and requirements to adhere to. Failure to comply will subject them to potentially severe fines, with maximum penalties that can reach as much as 4 per cent of annual worldwide turnover.

The risks of taking the GDPR too lightly are real. The vastness of its remit can seem both overwhelming and remote, and one may believe that it’s better to bury one’s head in the sand and ignore it. But that’s a big mistake.

GDPR will affect every single business and public body that processes the personal data of EU residents, and given that it includes every single employer in the EU, and every single business that offers goods or services to individuals in the EU, the odds are that it includes you too. There is a lot of literature on how to prepare for GDPR, including our story on pages 5 and 6, and with

less than two months to go, the finish line should be well in sight. The question is, while the GDPR will undoubtedly help you as a consumer, will the exhaustive and labour-intensive process of becoming GDPR-compliant offer your business any tangible benefits?

Even though it may not seem immediately obvious at first glance, preparing for the introduction of GDPR is a good first step to take to start future-proofing your business. First of all, up to this point, individuals’ private data has been protected by laws that vary widely from one country to another, and which often were not taken that seriously. The introduction of GDPR will consolidate and strengthen all these existing regulations, so that one set of rules applies to all, without exception. For those who want to play by the rules, the elimination of grey areas is always beneficial.

Second, GDPR is shifting the market and the way businesses operate into a much more datadriven model. A data-centric approach based on a robust framework will be able to identify where all the sensitive data is located within an organisation, even if it comes from multiple sources.

While big data is critical to the ability to develop

“Responsible brands should not fear GDPR, but learn to unlock it and work with it.”

Publishers Allied Newspapers Ltd. Content House Group Ltd.

and execute customer-centric programmes, the fact that this data is often so widely dispersed across information storage systems can make it difficult to really achieve customer-centricity.

Having a system that can process any shape of data to create a more holistic picture will be a game-changer. Relationships can be established between the data sets, annotated with metadata and made instantly searchable, at less cost, and used to establish patterns, trends, and predict the future, enabling the company to innovate and launch new products and services that the clients really want and need.

Finally, a review of the entire data environment to assess whether customer and prospect databases are compliant is one of the keystones of the GDPR. Moving to a permissionbased marketing approach requires significant changes within the business and the technology linked to it. However, it will also provide opportunities for businesses to build trust and loyalty, in order to retain existing customers and inspire new opt-ins. The future will belong to those companies who can harness their resources in order to engage better, faster and more frequently with their customers and gain richer insights. While the requirements and complexity of GDPR can be quite daunting, underneath it all lies an unmissable opportunity to make business and marketing activity compatible with our digital future. Responsible brands should not fear GDPR, but learn to unlock it and work with it. Once you lean into GDPR, you’ll realise that the difference it makes to your marketing activity and to your business overall will have made all the effort worth your while.

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BUSINESS OPINION

GDPR – an irresistible regulation?

Dominic Fisher Picture the two-year General Data Protection Regulation (GDPR) transition period, which began in May 2016 and closes this May, as a 100 metre racetrack. We’re at the point where athletes start to dip for the line.

In reality, some GDPR participants are only now heading for the starting blocks. Even those whose race has begun do not necessarily feel any closer to the finish line than when they started. A privacy professional at a multi-national company with significant operations in Malta recently told me that “the more we learn about GDPR, the more non-compliant we realise we are.” For others, simply being conscious of their incompetence would be a big step forward.

It’s true that the GDPR will extend the rights of data subjects and increase the obligations on organisations in numerous ways, but on paper, the changes are more evolutionary than revolutionary. So why the pain? To begin with, very few organisations are fully compliant with existing data laws. Many have to start from scratch on issues as basic as policies and privacy awareness, never mind more technical matters covered by the GDPR such as data inventories, consent management systems, and technical security measures, like pseudonymisation.

While individual GDPR requirements are often challenging, the overall task of compliance can be daunting or Herculean in the time remaining before the deadline.

Many organisations have already resigned themselves to not being fully ready on time and are trying

to decide which bits of the law they can tackle later.

You may well ask why organisations are worrying so much about this law if they cheerfully ignored the old one. This gets to the crux of the matter. The most notable feature of the GDPR is the potential cost of non-compliance. This regulation has teeth and is intended to bite.

FINE TIMES Under the current Maltese regime, the largest fine which has ever been levied on an organisation by the Information and Data Protection Commissioner is €10,000. This can not be described as dissuasive.

On the other hand, the maximum fines under the GDPR are eye-watering, being the greater of 4 per cent of group turnover, or €20 million. Not only can a breach result in

financial penalties from the competent authorities, but Article 82 of the regulation provides the possibility for data subjects to obtain compensation where an organisation’s breach has damaged them.

To understand what this could mean in practice, it may be instructive to read up on the successful class action in North America against Standard Innovation – an adult toy manufacturer. The establishment of the European Data Protection Board is likely to prevent national regulators from employing light touch sanctions. What is clear is that the potential direct financial costs are making a difference to how seriously many companies are taking this law.

THE DOMINO EFFECT Even organisations that have thus far taken the ostrich approach to

“e establishment of the European Data Protection Board is likely to prevent national regulators from employing light touch sanctions.”

the regulation may start to feel the pressure indirectly. As they are obliged to do, corporate customers are demanding that suppliers processing personal data on their behalf guarantee GDPR compliance. Consequently, in certain sectors, business is already flowing away from organisations which are unprepared for GDPR. In the future we may well see the development of seals and certifications to denote GDPR compliance, further demarcating corporate circles of trust.

The excitement surrounding GDPR also means that the general public is becoming more aware of their rights. This heightened awareness may be something telemarketers and other front office staff are already noticing. Once the GDPR applies, organisations retaining chaotic data arrangements may experience a wasteful diversion of internal resources to respond to data subject requests and may also incur damaged reputations and regulatory sanction.

You may well think that the hoopla around GDPR is hype, and you may see the current efforts as panic, but there’s little doubt that this is a transformative law. Can you afford to resist?

Dominic Fisher is a senior manager in Deloitte Malta’s Risk Advisory team

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ANALYSIS

Guaranteeing quality shipping under the Malta flag Continued from page 9 ing to the Commission’s notice, current EU VAT rules allow member states to not tax the supply of a service where the use and enjoyment of the product is outside the EU. However, they do not allow for a general flat-rate reduction without proof of the place of actual use, and the three countries, including Malta, have established guidelines which stipulate that the larger the boat, the more likely it is to travel beyond EU waters, which greatly reduces the applicable VAT rate.

Ann Fenech, Managing Partner at Fenech & Fenech Advocates, said she hoped that the Commission’s formal notice will be withdrawn since there is no legal justification for it, adding that Malta’s greatest problem in this sector is in fact its own success.

“The Maltese yacht leasing structure is a perfectly EU-compatible structure which has assisted greatly in encouraging yacht owners to pay VAT in Europe rather than remain outside Europe and not pay any VAT at all. What is also rather difficult to comprehend is why the Commission saw it fit to present a notice to Malta while no notices were served to Italy and France, whose structures are based on the exact same principles. This is most disappointing, apart from being discriminatory,” said Dr Fenech. “Furthermore, when yachts pay VAT in Malta, very often they also fly the Malta flag – a European flag, so the approach taken by the Commission here is also rather contradictory to its own Maritime Policy which seeks to encourage and build on Europe’s maritime service industry. Needless to say, we will be

“e Maltese yacht leasing structure is a perfectly EU-compatible structure which has assisted greatly in encouraging yacht owners to pay VAT in Europe rather than remain outside Europe and not pay any VAT at all.” – Ann Fenech, Managing Partner, Fenech & Fenech Advocates fighting this to the hilt.”

“In my view, all the people at the Merchant Shipping Directorate at Transport Malta, from the Registrar of Ships downwards, do their very best, which is frequently over and above their call of duty. However, the demands are such that more human resources are required to assist in the Directorate to maintain the level of service which our clients are now expecting,” Dr Fenech told this newspaper. The level of service offered is in fact echoed by the diverse tonnage on Malta’s register – from the largest container carriers in the world, fishing boats, tugs and the latest cruise liners, to bulk carriers, VLCCs (Very Large Crude Carriers), oil rigs and super yachts.

“Owners are registering their entire fleets including new builds, and the reason is the same for all – Malta is a signatory to the international maritime conventions and a flag which is highly respected at the International Maritime Organisation,” said Dr Fenech. “The fact that English is an official language is fundamental because, as a result, the bureaucracy associated with the translation of key documents for registration purposes is eliminated. Above all, there is the ‘can do’ approach which international trade seeks.”

In spite of an increasing num-

ber of high-end vessels registering under the Maltese flag, Dr Borg highlighted that quality is prioritised over quantity, which is partly the reason why younger ships often benefit from reduced registration fees.

“The Malta flag administration’s policy is clear: to guarantee quality shipping and ensure that ships with a poor detention or safety and marine pollution record do not operate under the Malta flag.

As the Malta registry continues to grow, the average age of its vessels continues decreasing,” the Transport Minister said. “The incentives offered to use younger vessels and the seriousness with which the flag administration is carrying out Flag State Inspections have contributed to Malta’s steady presence on the Paris MOU and Tokyo MOU White Lists, which subsequently attracts blue chip shipping companies to the island. In fact, as a rule, trading ships of 25 years of age and over are not normally registered. Ships between 15 and 25 years of age must pass an inspection by a flag state inspector prior to being provisionally registered.”

However, in order to maintain its status in the industry and remain competitive, Malta’s maritime infrastructure needs continual in-

vestment. “Infrastructure at large is one of the pillars that supports the economy of any country. In the maritime sector, the Ministry is committed to making the necessary investment that is needed to upgrade and develop marine facilities and infrastructure.” These include the construction of the Malta Freeport, Malta Oil Tanking, Malta Super Yacht Services facilities, various yacht marinas, the upgrading of the Malta Dry Docks, and the development of a luxury cruise liner terminal, together with the overall regeneration of the port areas. The industry’s infrastructure and other key topics will be at the heart of discussions at the second edition of the Malta Maritime Summit this October, including a day dedicated to the yachting and maritime tourism industry, which is a key theme for Malta’s economy.

“The benefits of an increased market share and of being one of the largest flag administrations in the world offer Malta visibility and confidence to venture into new territory. Hence, the next challenge is to support the growth of maritime clusters, providing technical services and ensuring that Malta becomes the obvious choice for superyacht owners and managers for their wintering, maintenance and repairs. The in-

crease in promoting Malta as a pick-up and end destination for charters, and close the gaps in crew training and qualification services is also a challenge that needs to be addressed. There is no way we can ever hope to keep up with the perpetual changes the market is bringing if we do not have a constant flow of emerging students who are well-prepared to take up opportunities.”

Developments in Malta’s maritime sector are constantly ongoing, and last year, under the patronage of the Maltese Presidency of the Council of the EU, the Council of Transport Ministers of EU member states met in order to adopt the Valletta Declaration. Dr Borg explained that it outlines a common vision to achieve goals for the EU maritime transport policy until 2020 and beyond.

“The need for such a declaration arose due to the never-ending challenges affecting the whole maritime cluster. The inclusiveness and comprehensiveness of the Declaration is seen as a step forward for a future Maritime Policy, as it accentuates the need for a higher degree of connectivity in the industry, also in respect of islands such as Malta,” said Dr Borg. “The policy focuses primarily on competitiveness, digitalisation, and decarbonisation and reduction of air emissions, and provides pointers on what can be done in all three sectors to move forward in the area of maritime transport. Adopting a legal framework at international level that prioritises the support of long-term global competitiveness is an essential tool for the European maritime cluster.”

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CASE STUDY

Malta Marittima seeks to promote science-based ‘blue economy’ Jo Caruana Malta Marittima is a Government agency primarily instituted to promote and develop the Integrated Maritime Policy and a sciencebased ‘blue economy’. The Integrated Maritime Policy seeks to provide a more coherent approach to maritime issues, with increased coordination between different policy areas. It focuses on issues that do not fall under a single sector-based policy, such as ‘blue growth’ (economic growth based on different maritime sectors). The agency is committed to pushing forward the Blue Growth Agenda, which consists of the sustainable use of ocean resources for economic growth, improved livelihoods and jobs, while preserving the health of marine and coastal ecosystems.

Agency head Franco Schembri stated that the need for a new enabling framework for further development of blue growth is increasingly important. The good news is that EU funds are available for maritime stakeholders to strive. It is worth highlighting that in order to drive blue growth, innovation and research are a prerequisite. To this effect, considerable EU funding programmes are available. The EU Funding Programme Horizon 2020 is primarily based on research, whereas the EASME (Executive Agency for SMEs) calls for proposals that are more based on action, focusing on the Integrated Maritime Policy and partly on the Common Fisheries Policy (CFP). Furthermore, the European Maritime and Fisheries Fund (EMFF) is one of five European Structural and Invest-

“Over 40 marine and maritime stakeholders from public and private sectors are already partners and form part of the clusters within Malta Marittima.” ment Funds (ESIF) and seeks economic blue growth.

Since its establishment, Malta Marittima has been a catalyst between the public and private sectors in an effort to enhance the potential of Malta’s marine and maritime industry. The scope of the agency, set up in 2016, is to enhance cooperation between the maritime industry and government stakeholders, while putting the island’s maritime sector firmly in the spotlight and promoting it as a hub on local, European and international levels.

“Among our objectives at Malta Marittima, we want to create and promote maritime sectoral clusters and to strengthen competitiveness,” explained Mr Schembri.

“We want to build bonds and relationships for the benefit of the economy. In fact, part of Government’s plan for this agency was to create and foster effective relationships with the private sector, and to facilitate communication.”

The maritime sectoral clusters are each comprised of businesses,

FRANCO SCHEMBRI, HEAD, MALTA MARITTIMA AGENCY. PHOTO BY JAN ZAMMIT

industry associations, government departments, and academic and research institutions. “Research and experience unequivocally demonstrate that maritime clusters are key to economic development and competitiveness,” Mr Schembri explained. “Clusters underpin an increase in productivity and operational efficiency, and they stimulate and enable innovation – which is such an important element for the future.”

The agency is witnessing progress as a result of the maritime clusters that have already been set up under the four economic pillars of the national integrated maritime policy, namely food, energy, logistics and services. “Over 40

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CASE STUDY

marine and maritime stakeholders from public and private sectors are already partners and form part of the national sectoral clusters within Malta Marittima,” Mr Schembri stated.

One of the key clusters the agency is in the process of launching is the Blue Bio-Technology Cluster working group. Marine biodiversity has registered important advancement in a significant number of industries such as the pharmaceutical industry and the aquaculture sector. “Bio-technology is the study and use of renewable and biological resources and organisms and their corresponding conversion into vital products and bio-energy,” Mr Schembri continued. “It is a fast-growing economic sector, both on a European and global level, due to the increased demand for renewable and naturally-sourced resources.”

Mr Schembri explained that Malta Marittima developed a scheme to encourage innovative science-based business ideas. The scheme, titled the Maritime Proof of Concept Fund, and better known by its brand name MarSa, was launched in 2017, and was designed to facilitate innovation and the creation of business ideas in the marine field through research at the University of Malta, aiming for commercialisation. The idea be-

hind this fund is to encourage academics and students, who have creative and innovative ideas, to get the financial support needed to enable them to develop their ideas into ‘business concepts’. The purpose of this measure is to help academics and students to drive forward ideas for marketing and ultimately, the creation of new businesses in Malta. The fund is intended to reduce the gap between initial laboratory and market development, and provide support for researchers and entrepreneurs.

Meanwhile, another key area for the agency is the development of the WestMed Initiative, which was launched in November 2017. As the

name suggests, it is an initiative specifically focused on the sustainable development of the blue economy in the western Mediterranean.

The primary objective here is to set common, collective actions for a safer, cleaner and more productive sea across all the countries in the region, namely France, Italy, Libya, Algeria, Mauritania, Morocco, Tunisia, Portugal, Spain and, of course, Malta.

“A smart and resilient blue economy can only be attained through the adoption of a constant culture of innovation and knowledge sharing which ascertains sustainable competitiveness and economic activities. The re-

gion is particularly renowned for its flourishing maritime tourism sector, which needs to be sustained through innovative diversification strategies,” Mr Schembri said.

“The seas and oceans can certainly be a source of jobs and prosperity – but only if they are healthy, safe and sustainably managed. To drive forward key maritime sectors like renewable energy, aquaculture, tourism and blue biotech, we need to improve ocean knowledge, planning and

security; provide adequate support with EU funds; and improve cooperation between countries, regions and businesses. That is the rationale behind the EU’s Blue Growth strategy, which brings together economic growth and sustainable ecosystems in one coherent policy. That is what we will strive to do in collaboration with our partners. At Malta Marittima, we are committed to striving to build bridges and partnerships with both public entities and private stakeholders.”

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Regulating estate agents would add more credibility to the industry – Frank Salt director GODFREY SWAIN, DIRECTOR, FRANK SALT REAL ESTATE

Rebecca Anastasi The proposal to increase the regulation of real estate agents in Malta would add more credibility to the industry, according to Frank Salt Real Estate Director Godfrey Swain.

“It would give people more trust and remove – dare I say it – the ‘stigma’ that is sometimes associated with what is otherwise a great and valuable industry,” he explained.

Speaking to this newspaper, Mr Swain highlighted the pivotal role played by Frank Salt’s professional, ethical and competent sales and letting consultants in Malta. “We are a serious real estate company with a strong and enviable reputation, and we make sure we recruit the best available talent,” Mr Swain said. “We pride ourselves on providing comprehensive training to our teams and impress the importance of ethics and integrity, so that customers are assured that the company and all its consultants representing Frank Salt Real Estate always act according to the highest level of professional conduct.”

There are some misconceptions about the work of real estate agencies, he stated. “It’s not a case of simply getting the commission. There are many aspects to running a serious real estate agency, all of which involve a lot of time and effort. There are issues that need to be addressed

including proper anti-money-laundering procedures, compliance, and monitoring the source of funds.

These are things which all reputable real estate agencies take very seriously. We have to make sure we do our part to protect Malta’s standing, and in a company like Frank Salt Real Estate, we take all aspects of the business very seriously,” Mr Swain emphasised.

The decision by the former banker, who joined the company’s board of directors in November 2017, to join Frank Salt Real Estate was based on several factors. Having just returned to Malta after a long stint working in senior executive positions in large, well-known banks in Asia, he stated that he wanted to join a new industry and do something different to challenge himself. “I also wanted to put to good use the experience and skills gained from 25 years in the banking, insurance and financial services sectors in Malta, Asia, and Australia. Like many Maltese, I always took a keen interest in the real estate sector, and from my own personal experience, I recognised the added value that professional real estate agencies can bring to an individual or young couple buying their first dream home, upgrading to the next property, or indeed to all people involved in buying, selling and letting. I also recognised the strong growth of the sector and

“What a serious real estate consultant and agency like to see is balance – a situation where the increase in property prices is reflected with a corresponding increase in people’s salaries, their prosperity and living conditions.”

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its contribution to GDP and the country’s prosperity.”

Professional real estate consultants, Mr Swain re-emphasised, have a critical part to play in the whole property and construction sector in Malta. Speaking from his own personal experience as a client, he discussed the importance of the role of a professional estate agent, liaising with both vendor and buyer, helping to make sure that both parties accomplish their goals from each transaction.

Mr Swain specified that the market’s present buoyancy has increased the need for adequate checks and balances to ensure all stakeholders’ needs are satisfied, and emphasised the need for the whole real estate industry to adhere to an ethical code of conduct and a high standard of professional service, especially in light of the sector’s strong year-on-year growth. He stressed that this was paramount to retaining the current upswing, adding that a strong reputation and professional conduct, not just in real estate but in any industry, will ensure that “people come back to you time and time again.”

“Coming from a long background in local and international global banking, the need for ethics and integrity is constantly emphasised in all employees in that sector. Integrity is in the DNA of every real

banker,” he stated, adding that this should be no different in the principles of real estate.

Mr Swain drew a parallel to describe the four basic tenets at the heart of Frank Salt Real Estate’s operations. “Frank Salt Real Estate sees itself as a local and experienced company but also a very personal organisation and one that, in keeping with its founder’s namesake and manner of doing business, is always frank. The company and all its representatives are frank with customers, frank with both vendors and sellers, and the company has always tried to do the right thing. There’s always been a strong ethos in this respect, focused on hard work, knowing and understanding the market and the needs of customers as well as the willingness and drive to excel.” He strongly believes that “if you invest in people, people invest back in you.” This extends to the company’s shareholders and staff, and more importantly, he stresses, its clients. “Frank Salt Real Estate has a very loyal customer base and clients keep coming back because they trust the organisation.”

Mr Swain talked about his affection for the island he calls home.

After being away for so long, he has garnered a deeper affection and appreciation for Malta. “I’ve lived in many countries – some beautiful

places with unique cultures – but I always keep coming back here. It’s home. I love the country and some of its unique architecture, but also worry about some eyesores and lack of respect and regard for the environment that do not reflect the culture of the country or the aspirations of the public. The property market in Malta is exciting and we have some wonderful properties here, ranging from centuries-old farmhouses and houses of character to newer apartments and penthouses. I love seeing good architecture and we have a number of exciting new projects coming up which I hope will inject this muchneeded dose of good architecture to enhance our built environment.”

This affection for Malta seems to be motivating him to play a role in ensuring that the island, and its real estate market, continue to excel by mitigating the risks which may come with success. He explained that there was a necessity to protect the reputation of the sector and the island’s economy at large – “to make sure we protect the future of our country.” He also stressed the need for official statistics on the state of the sector, which “can really allow operators or strategic planners in the industry to work out what is happening, and can be relied on to understand what is making the market

“We are seen sometimes as a company at the high end of the market but that’s probably a misperception. Frank Salt Real Estate is strong in every segment of the market, and we have ongoing plans to keep growing stronger in each and every market segment.” tick.” According to Mr Swain, this would enable stakeholders to really understand what is happening in terms of future demand in the next 10 or 20 years and plan accordingly.

Conversation inevitably turns to the steep increase in rental and property sale prices over the past few years and its long-term viability. “Growth is great as long as it is sustainable,” Mr Swain insisted, adding that the common perception that real estate agents “love seeing these high prices” because they make more commission is completely incorrect. “It’s not like that at all,” he stated. “What a serious real estate consultant and agency like to see is balance – a situation where the increase in property prices is reflected with a

corresponding increase in people’s salaries, their prosperity and living conditions,” he explained. “Our interest is in seeing properties placed on the market at the correct value.

This way they are saleable and both the buyer and the vendor benefit.”

Indeed, according to Mr Swain, it is that concern for people which is at the very heart of what Frank Salt Real Estate does and the source of the success of the organisation. “We are seen sometimes as a company at the high end of the market but that’s probably a misperception. Frank Salt Real Estate is strong in every segment of the market, and we have ongoing plans to keep growing stronger in each and every market segment, with the main goal remaining that of satisfying customer needs.”

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FIMBank announces USD7.7 million profit for 2017

The FIMBank Group’s consolidated audited financial statements show that for the year ended 31st December 2017, the Group registered a profit of USD7.7 million, compared to a restated profit of USD5.4 million in 2016.

At 31st December 2017, total consolidated assets stood at USD1.64 billion, a decrease of 6 per cent on the USD1.74 billion reported at end 2016. The drop in assets is attributed to a reduction in business assets aimed at achieving better capital requirements, partly offset by increases in treasury balances as a result of

higher liquidity requirements. In fact, trading assets decreased by USD127 million, whilst loans and advances to customers increased

by USD 140 million.

The FIMBank Group’s sustained run of profitability is the outcome of a successful consolidation and operational strategy, coupled with a solid business performance.

At the end of the period under review, total consolidated liabilities stood at USD1.47 billion, down by 6 per cent from USD1.57 billion in 2016. Operating income before net impairment for 2017 stood at USD51.7 million, an in-

crease of 12 per cent over the USD46.1 million registered in 2016. During 2017, net interest income rose by USD3.0 million as a result of overall improved interest yields and increased efficiency in cost of funds and funding volumes. This rise was also mirrored in an increase of USD3.7 million in net fee income, to USD18.5 million, on improved fees on documentary credits and forfaiting.

During 2017, the Group changed its accountancy policy and started measuring owned properties at their fair value. This resulted in a fair value gain of

“FIMBank’s financial results for 2017 are a clear indicator of the sound strategic path adopted over the past years, and highlight our commitment and resolve in ensuring a strong and sustainable growth trajectory for FIMBank.” – John C. Grech, Chairman, FIMBank Group

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“For 2018, we expect to continue building on the business verticals we have transformed and strengthened over the past years. 2018 will be characterised by a capital injection allowing the business to grow and achieve improved economies.” – Murali Subramanian, CEO, FIMBank Group USD3.4 million in 2017. Meanwhile, net impairments for the year improved, from a loss of USD2.2 million in 2016, to a net recovery position of USD2.2 million in 2017, a result of significant recoveries made by the bank and its subsidiaries, which also assisted with increases in coverage on other impaired legacy credits.

This is considered another major milestone for FIMBank, as legacy misadventures of prior years have been dealt with firmly.

In the year under review, operating expenses rose by USD3.7 million, to USD42.3 million, largely as a result of an increase in mandatory regulatory costs. Rising regulatory costs are a growing

phenomenon across the industry, with further increases expected in the coming years.

Commenting on FIMBank’s financial results for 2017, the Group’s Chairman, Dr John C. Grech, stated that these “are a clear indicator of the sound strategic path adopted over the past years, and highlight our commitment and resolve in ensuring a strong and sustainable growth trajectory for FIMBank.”

Discussing the outlook for the Group, FIMBank Group CEO Murali Subramanian said that, “For 2018, we expect to continue building on the business verticals we have transformed and strengthened over the past years. 2018 will

MURALI SUBRAMANIAN, CEO, FIMBANK GROUP

be characterised by a capital injection allowing the business to grow and achieve improved economies.”

“The spirit of entrepreneurship and pursuit of excellence across businesses, products and markets will remain at the heart of the Group’s strategy,” Mr Subramanian added. “This will be achieved

DR JOHN C. GRECH, CHAIRMAN, FIMBANK GROUP

through superior client service, best in class and tested risk management, and governance stability, as well as efficiency in funding and cost structures. The scaling up of the business, supported by an expert management team and staff in key trade hubs across different regions, will enable the Group to maintain a flexible busi-

ness model. Our results during the past years demonstrate our ability to adapt to changing circumstances whilst driving sustained profitability and growing shareholder value.”

For further information about FIMBank plc please visit www.fimbank.com

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NEWS

iGaming Capital to launch in June iGaming Capital, an ambitious, brandnew, high-profile publication focusing on the iGaming industry will be launched in June.

The iGaming Capital brand consists of a bi-annual publication, as well as a regular digital newsletter, aimed at professionals at all levels working in iGaming, as well as the industries that service them, including finance, legal, and real estate.

The publication, published by Content House Group, which will be distributed to all iGaming companies in Malta, and to a large number of businesses and professionals who work closely with the iGaming industry, as well as select operators in the UK, will serve as a voice for the sector as well as the considerable expat community that works in iGaming. Featuring an exciting and innovative mix of in-depth features and interviews about hot-button topics in the industry and profiles of key industry players, the publication will be looking at regulatory issues from a local and pan-European perspective.

“The iGaming industry in Malta has totally re-shaped the local business landscape,” said Marie-Claire Grima, Editor of iGaming Capital. “Not only has it become an essential part of Malta’s economy, but it has upended the status quo and forced companies in Malta to re-think everything, from best business practices at an

“We’ve been told on repeated occasions that there is a need for a strong, high-profile media brand that serves as the voice of the growing iGaming industry.” – Matthew Spiteri, Head of Print and Digital Ad Sales, Content House Group executive level, to what employees expect from their company’s culture. Yet, up until now, there has never been a publication that caters to the specific interests and needs of this fascinating and constantly-changing sector. As the industry in Malta stabilises and matures, the time has come for this to change.”

“With iGaming Capital, we aim to mirror the growth that the industry has gone through. We want to create an informative and well-researched source of information for the iGaming industry, from both local and global perspectives. However, we also want it to be a pleasure to peruse on a purely personal level too – a guide to the Maltese islands for the considerable number of foreign employees in the sector who have now made Malta

their home, and whose presence is making a true impact on the culture at all levels. We’re investing heavily in the brand, to make sure that it befits the industry that it aims to speak to.”

Matthew Spiteri, Head of the Print and Digital Ad Sales Department at Content House Group, said that the driving force behind the new brand has been the gaming industry as well as the industry servicing the iGaming industry itself: “As an organisation we are very strong in the business-to-business and corporate segment, and we deal with a large number of key business operators in Malta on a daily basis. We’ve been told on repeated occasions that there is a need for a strong, high-profile media brand that serves as the voice of the growing iGaming industry

and that fulfils the country’s ambition to become a capital city for this successful industry. This is how this brand was conceived and the feedback we’ve been receiving – from the industry itself as well as from the equally important industry that services the iGaming community at large – has been superlative. We are determined to invest and grow the iGaming Capital brand. This is just the beginning!”

One of the key features in the publication will be a column by Marion Gamel, an Executive Business Coach whose valuable international exposure and coaching techniques can empower CEOs, Chief Marketing Officers, Chief Commercial Officers, founders and entrepreneurs to effectively face today’s business challenges in a fastmoving and globalised environment.

Combined with lighter lifestyle pieces about living in Malta and the expat experience which is often under-represented in Maltese media, the iGaming Capital brand aims to become the number one source for all things gaming. iGaming Capital is a brand owned and operated by Content House Group, one of Malta’s leading media organisations in both print and digital media.

For more information visit www.contenthouse.com.mt or send an email to info@contenthouse.com.mt

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STOCK MARKET REVIEW

Explaining the yield curve Josef Cutajar Last month, global equity markets skidded when new inflationary data in the US sparked fears that an accelerated rate of increase in wages in the world’s largest economy, coupled with the introduction of expansionary fiscal measures, could push the Federal Reserve to accelerate the pace of its monetary policy normalisation, bringing the era of cheap money closer to an end.

In reaction, bond yields across the world rose to their highest levels in several months whilst bond prices slumped. In particular, the benchmark 10-year German Bund yield jumped to 0.81 per cent – the highest level since early September 2015 – and the 10-year US Treasury yield climbed to a four-year high of 2.96 per cent. Moreover, several economists and analysts warned about the negative macroeconomic implications generally associated with the flattening of bond yield curves.

Although local income-oriented investors tend to be fairly familiar with certain terminology used in finance related to fixed-income securities – such as “coupon”, “yield-to-maturity”, and “complex” or “plain vanilla” bonds – few understand what “yield curves” typically stand for, and how they can be used to assess the case for investing in the bond market.

A yield curve is a graphical representation typically showing the yields of bonds issued by the same issuer across various maturities.

By way of example, the red line in the chart shows the yield curve for Malta Government Stocks (MGS) based on the opening indicative bid prices of the Central Bank of Malta. It has an upward-sloping, or “normal”, shape which in turn reflects the fact that yields on MGS increase as the term to maturity lengthens, in view of the added risks associated with holding on to longer-dated securities.

In this respect, however, it is also worth highlighting the lower gradient at the shorter and longer end of the MGS yield curve when compared to the much higher slope between the fifth and the fifteenth year of the MGS maturity

scale. In this particular example, the yield curve is clearly showing that the marginal returns that an investor is getting for the added risks when investing in the longest-dated MGS in issue – i.e. the 2.40 per cent MGS 2041 which currently has a yield of 1.97 per cent – are relatively minimal when compared to the yield of 1.89 per cent on an MGS that matures six years earlier. In contrast, the MGS yield curve also shows that the current average returns of 0.62 per cent for investing in an MGS that matures in six years’ time (2024) are more than three-and-a-half times the average returns of 0.17 per cent when investing in an MGS that matures in 2022.

Yield curves are also used when comparing the relative attractiveness of bonds of various issuers

with different credit profiles, ratings, and risks. Moreover, a yield curve may also include bonds having different features or characteristics. In this respect, the chart shows how the MGS yield curve compares with the corresponding yields of bonds issued by the central governments of Germany and Spain. Within the single currency area, German Bunds are regarded as the ‘riskfree’ benchmark and the yields of all other euro area sovereign bonds are measured against this benchmark. The additional yield between one sovereign bond and the German benchmark is referred to as the ‘premium’ or ‘spread’ – in other words, an additional compensation in the form of a higher yield. In the chart, this is seen by the higher yields of both

MGS and Spanish government bonds when compared to German Bunds.

In contrast, it is interesting to note that despite the fact that the international credit rating agencies Moody’s and Fitch assign a better credit rating to Malta than Spain, deeming Malta to be less risky, the yields on MGS are generally higher than those of Spanish government bonds. This is mostly evident at the shorter end of the yield curve. As such, based on the credit risk assessments of both Moody’s and Fitch, the MGS yield curve ought to be below the Spanish government yield curve to reflect the lower credit rating of Spain when compared to that of Malta.

On the other hand, however, the credit rating of Spain by Standard & Poor’s has very recently been lifted to “A-“ (the highest since 2012) which is at par with Malta’s credit rating by the same agency. Essentially, according to the world’s foremost credit rating agency, investing in bonds issued by the governments of Malta and Spain now carries the same level of credit risk. As a result, the MGS and the Spanish government bond yield curves should, in theory, be lying precisely over each other which, then again, is not the case in reality.

One of the reasons for market anomalies is the determination of MGS prices and yields by the Central Bank of Malta which is a unique method compared to other Eurozone countries. The Central Bank publishes indicative bid prices across the MGS market since it is committed to purchasing securities that will be placed on offer by retail as well as institutional investors. The Central Bank has never published the criteria used for determining the yields and prices on MGS. However, it is evident that movements in MGS are largely influenced by move-

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STOCK MARKET REVIEW

Reflecting expected changes in monetary policy and economic conditions ments in the benchmark German Bund yield curve as well as movements in yields of other countries with similar credit ratings to Malta.

From a broader perspective, yield curves are also regarded as a reflection of expected changes in monetary policy and economic conditions, namely inflation and growth. For example, an ‘inverted’ yield curve reflects a situation where short-term yields (or interest rates) are higher than those at the longer end of the yield curve. This situation is mostly interpreted as a sign of an upcoming economic recession and, in fact, was one of the main concerns underpinning the global equity market sell-off last month. Although a yield curve inversion is indeed a rare occurrence, data shows that the US Treasury yield curve did actually invert ahead of each of the past seven economic recessions.

Conversely, a ‘flattening’ yield curve is normally associated with

“Yield curves are also regarded as a reflection of expected changes in monetary policy and economic conditions, namely inflation and growth.” an economy in transition, either from economic expansion (upward-sloping yield curve) to contraction (inverted yield curve), or vice versa. In the case where economic growth and/or inflation are expected to slow in the future, yields at the shorter and the longer end of the yield curve tend to move in opposite directions as investors seek to take increased exposure to longer-dated bonds at the expense of shorter-dated ones. On the contrary, when an economy is transitioning from a recessionary period to an expansion cycle, coupled with a brighter inflationary outlook, the

case for investing in long-term bonds in general becomes much less attractive.

In the wake of the 2008/09 international financial crisis, the world’s most influential central banks took coordinated emergency actions aimed at restoring global financial and economic order. Today, notwithstanding the many threats stemming from the introduction of disruptive trade barriers in the US, the world economy is riding on what the International Monetary Fund recently described as the “broadest synchronised global growth upsurge since 2010.” Central banks

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. © 2017 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved

are now reversing some of the extraordinary measures put into place some years ago in order to restore monetary policy normalisation. As such, as volatility in bond yields is expected to remain high in the months and years ahead, local investors must seek

financial advice to ensure that their portfolios reflect the upcoming economic and monetary developments.

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

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BUSINESS UPDATES

Make good money better with MeDirect MeDirect is waiving entrance fees on investment orders in mutual funds placed on the bank’s eWealth platform or at any of its branches, throughout March and April 2018. Over 50,000 customers trust MeDirect with their savings and investments, with over €1 billion assets held on their behalf. MeDirect offers model portfolios that are tailored to clients’ desired level of risk and the investment profile, starting from as low as €5,000, and expert advice from MeDirect’s professional team that can help clients put their money to work. Investors can monitor the performance of their funds 24/7 and are able to sell them at any time through the bank’s eWealth platform.

Investment diversification enables clients to spread their risk over several countries, industries and asset classes. MeDirect’s investments are powered by Morningstar – an international leader in independent investment research. The bank chooses not to offer in-house funds, but instead offers a global selection of thirdparty funds.

For more information visit one of the MeDirect branches or its website www.medirect.com.mt. Alternatively, call on 2557 4400 or email info@medirect.com.mt MeDirect Bank (Malta) plc is regulated by the Malta Financial Services Authority. The value of investments can fall as well as rise and the repayment of the investment is not guaranteed. Past performance is not a guarantee of future results. Terms and conditions apply.

“Investors can monitor the performance of their funds 24/7 and are able to sell them at any time through the bank’s eWealth platform.”

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BUSINESS UPDATES

Why the distribution industry is better off with Acumatica Cloud ERP As a sole collection point for all an organisation’s data from multiple sources, Enterprise Resource Planning (ERP) solutions act as a “single source of truth” – eliminating data duplication, enhancing data integrity, and enabling users to drive growth, manage costs, and be more productive. Without re-examining and improving existing processes, business owners can become very dependent upon employees, and increasingly at risk of serious mistakes happening when personnel changes occur.

Empowering distribution companies The distribution industry is a complicated one, and the technology chosen to run systems and processes can make or break a company’s bottom line. If you can’t deliver your orders on time and at the best price, another distributor will be more than happy to do so.

Acumatica Cloud ERP can modernise and scale many processes to meet customers’ demands. It helps

manage the unpredictability of the distribution market by empowering distributors to streamline processes from quote to cash, optimise the supply side of distribution operations, and make better financial decisions.

Quote to cash Distributors who want to serve their customers from “quote to cash” (and every step in between) are turning to Cloud ERP in growing numbers. Knowing the customer makes them feel valued, and to know them, businesses need access to critical information at every stage of the process. Acumatica Cloud ERP makes this possible without needing to upgrade existing IT systems.

Optimised supply chain In today’s marketplace, it is becoming more and more necessary to connect the supply chain from beginning to end. Inaccurate inventory information hurts efficiency – therefore an exact understanding of

your stores, stock, and orders throughout the supply chain is needed for effective decision making.

True supply chain automation with Acumatica Cloud ERP enables you to keep a detailed eye on the entire supply chain – as well as taking care of ordering and inventory tracking. This provides full, consistent visibility of critical information to all users, and eliminates headaches for supply chain managers. It also cuts down on unnecessary and often inaccurate data entry, resulting in a faster and more reliable supply chain process.

Make better financial decisions Powerful business intelligence and analytics tools collect eye-watering amounts of raw data that can be used to inform a business’s decisions and direction, but the problem lies in how all this data is transformed into something of value – data is only as useful as the information it delivers, otherwise it’s just noise.

Acumatica Cloud ERP monitors key metrics for each functional business unit. Users can drill down into summary and detailed information, including access to supplemental information. Executive management has immediate access to performance measurement

dashboards for fast, accurate decision-making.

Start making the shift to Acumatica Cloud ERP today. For more information visit www. computimesoftware.com/acumatica-erp; E: info@computimesoftware.com; T: 2149 0700.

Showcase your green business initiatives Every business produces waste and how that waste is managed is significant and critical. By encouraging reduction, reuse, recycling, and resource recovery in your business, one can easily boost the green credentials of the company.

Some businesses already implement good waste management practices and circular economy initiatives, which lead to efficient use of resources. The Don’t Waste Waste team is asking local businesses to submit descriptions of such innovative actions which lead to better waste management within their organisation. Selected initiatives will then be promoted and highlighted as examples of good practices via the Don’t Waste Waste platform, with the aim of keeping the public informed and encouraging other busi-

nesses to adopt similar sustainable and green innovative practices. Some examples of good practices include; • Reuse concepts and manufacturing processes; • Sustainable material sourcing and replacement of single-use items; • Repair, upgrade and upcycling; Best practices should be submitted to info.dontwastewaste@gov.mt and should not exceed a one paragraph description. Kindly include the name of the company and contact details, together with a high-resolution image which can accompany the description of the good practice. For further information, as well as terms and conditions, please visit dontwastewaste.gov.mt.

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BUSINESS UPDATES

GDPR – are you ready?

Steve Casaletto The General Data Protection Regulation (GDPR) will become enforceable on the 25th May 2018, and is directly binding and applicable.

The biggest concern for most organisations is that it comes with the potential for huge fines for noncompliance. The GDPR doesn’t only apply to digital or new data created after the 25th May 2018, but to all your existing data in all its forms.

Your existing physical documents are of greatest concern. All this information needs to be categorised and analysed if you are to be able to abide by the GDPR. Digitising this existing information, categorising it, and storing it in an accessible way is possibly going to be the biggest challenge.

Data in focus Retaining an individual’s data is now a privilege and not a right.

We need to ensure that we protect an individual’s data for as long as it is in our possession. Automated procedures to remove data which is no longer relevant need to be in place, as well as restrictions on who can see information, and whether they can copy, print or email it! The GDPR gives individuals very specific rights about their personal information. Having systems in place which allow you to deliver on these rights will probably be a major challenge for most companies.

How can we help: • Scanning, OCR and categorisation of all documents using ScanStation; • Secure storage of digital documents, email and more in the Therefore™ Document Management System (DMS); • Categorising data in the DMS to ensure limited usage rights on data and automation of defined retention policies;

• Print and photocopy restrictions on sensitive data using uniFLOW; • Secure print and copy devices from Canon;

• Tight integration with Office365 to allow for security throughout the data lifecycle; • Secure storage of physical documents off-site – with same-

day delivery of any required originals.

Avantech Malta, Avantech Building, St Julian’s Road, San Gwann.

T: 2148 8800; www.avantech.com.mt

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e Malta Business OBSERVER

| March 29, 2018

BUSINESS UPDATES

Air Malta launches 13 new routes around Europe and the Mediterranean

Air Malta has launched its summer flight schedule that includes 13 new routes. These include a range of seven new destinations enjoying direct flights to and from Malta, namely Venice, St Petersburg, Cagliari, Malaga, Lisbon, Tel Aviv and Casablanca.

The other six routes include flights introduced between Catania and Vienna, Cagliari and London Southend, and also Catania and London Southend.

The introduction of these routes is a milestone in the Air Malta strategy to connect tourists and business travellers alike from Mediterranean regions to the rest of Europe.

These advances mean that Malta now has direct flight services to countries which were tricky to get to directly until now. The range of routes arriving at London Southend, on the other hand, offers flight services to a previously untapped market coming from the broader catchment area of London.

As explained by Air Malta’s Chief Commercial Officer, Paul Sies, during the launch of the London Southend routes, “London’s Southend is the third London airport we serve. Southend is unique and offers the easiest access to London with its direct train connection which brings you in 40 minutes

to the city. The biggest advantage is the airport itself which allows a 20-minute checkin. In just 10 minutes after arrival, you will be on your way to London.”

“We are delighted to welcome Air Malta to London Southend – the UK capital’s best and fastest growing airport,” Glyn Jones, CEO of Stobart Aviation, owners of London Southend Airport added. “With our multiaward-winning facilities, fast and frequent train services to London and market-leading record for punctuality, we look forward to providing great service to passengers from Malta, Sicily and Sardinia alike.”

“This announcement is another step forward in the strategy to connect Mediterranean regions with the rest of Europe,” said Air Malta Chairman Charles Mangion. “To operate this ambitious schedule we are leasing in our 10th aircraft for this coming summer season. Indeed these are interesting times for Air Malta.”

Customers will be able to book flights to the new destinations through any travel agent, by visiting www.airmalta.com, or by calling Air Malta’s Call Centre on 2166 2211 from Malta, 0207 660 0543 from the UK, and 199 259 103 from Italy. Call charges may apply.