The Business Observer Newspaper 22nd October Issue by Content House

INTERVIEW

Issue 37

October 22, 2015

Distributed with Times of Malta

From drones to directives, the insurance sector is under pressure. Malta Insurers’ Association president Julian Mamo explains some of the issues and what could be done about them. see pages 10 and 11 >

NEWS e issuing of building energy certificates got off to a very slow start but with the EU breathing down our neck, the Building Regulation Office stepped in and is now on track to reach its target of 7,000. see page 3 >

MCCAA criticises bank lending Vanessa Macdonald The Office for Competition within the Malta Competition and Consumer Affairs Authority has concluded that bank lending policies were detrimental to SMEs – but stopped short of declaring that there was any infringement of the Competition Act. It made eight recommendations, ranging from the creation of online lists of all the charges relating to business loans and information in Maltese, to free-of-charge quotations. It also notes that EU-funded support for SME financing should apply to facilities provided by more than one bank – saying that competitors were irked by Bank of Valletta’s Jeremie project. The authority noted that the weighted average interest rates on loans were among the highest in the EU, which partly reflects a relatively low pass-through of the European Central Bank policy rate. Only 60 per cent of rate cuts by the ECB since 2008 were reflected in local lending rates.

“Although there are several factors that may explain this divergence, such as the higher cost of funding (due to Maltese banks’ heavy reliance on deposit funding) and credit risk (due to the relatively large share of SMEs in the banks’ loan portfolio), it may also reflect difference in the profit margin,” it said, adding that profitability indicators for the core domestic banks in Malta were “persistently higher than the EU average”. There was a two percentage point reduction in the banks’ lending rates between 2008 and 2013 but the report said there may have been room for further reductions, and suggested that “banks could have lowered them earlier than they actually did” as it was clear that the reduction only came about because of pressure from institutions. In the last quarter of 2014, there was still a difference of 1.2 percentage point between Maltese and eurozone banks. The report stressed that banks provide little information to help SMEs take informed decisions – but also laid some of the

blame at the SMEs’ door, saying that they fail to “shop around” because they felt it was pointless to do so, conceding that there was also an underlying element of customer loyalty. However, it conceded that there were also lock-in effects and costs which could hinder consumer mobility, such as early repayment costs and the pressure to have an account at the lending bank. The authority has the power to take decisions with executive power and to impose fines. However, in the report, it said: “The office considers it preferable to address the above identified concerns by proposing behavioural remedies”, adding that the recommendations could be put into practice without any adverse effects on financial stability. However, in the report, no feedback from the banks was demanded and no deadline was imposed. The 91-page report, concluded in July, was only presented in Parliament along with the Budget 10 days ago, along with another one by the Malta Financial

Services Authority about various aspects of retail banking. The investigation into lending policies to SMEs was instigated following calls from both local and international institutions, including the Finance Ministry, Central Bank of Malta and the European Commission, expressing concern over “high interest rates” which could increase SME costs and “erode the country’s competitiveness”. The authority looked at the period between 2007/2008 and 2014, consulting a wide variety of stakeholders, seeking to establish whether there was a well-functioning market with relatively low barriers to entry for new banks, competition between lenders, and the ability of SMEs to make informed decisions. The authority looked at Bank of Valletta, HSBC, APS, Lombard and Banif but found that the first two dominated the market, corroborating its belief that the barriers to entry were difficult. A survey on access to finance showed that 69 per cent of SMEs in Malta prefer bank loans.

ANALYSIS ere are just some projects that seem to defy all attempts to get them oﬀ the ground. We looked at four of them that were heralded in Budget 2015 – but which still have not made it oﬀ the drawing board. see page 5 >

OPINION e Bill amending the Companies Act means SMEs have less onerous ﬁnancial reporting requirements – but that worries Josef Busuttil, the director general of the Malta Association of Credit Management. see page 15 >

e Business OBSERVER

October 22, 2015

NEWS

7,000 building energy certiﬁcates by year end The Building Regulation Office issued over 6,500 building energy certificates by October and is on track to issue its targeted 7,000 by year end, according to its head Michael Ferry. The BRO has been building up momentum over the past two years, with just 139 issued in 2013 rising to 1,420 in 2014. However, there is considerable work to be done as the intention is to cover all buildings sold since 2009. Given that well over 10,000 are sold every year, that is quite a few, even if allowances are made for those that have changed hands more than once in that period. The situation came about after the EU issued a directive in 2010 making the certificates mandatory, giving member states two years in which to transpose it. Malta tried to plead for more time on the basis that it did not have sufficient competency in Malta but in the end it had no option but to issue Legal Notice 376 of 2012 – but Mr Ferry admitted that it was a nightmare. “It was full of inaccuracies as the European Commission pointed out that very same year. But the local authorities did not do enough to rectify the situation and the EU send us a ‘yellow card’ in April 2013, warning that the next step would be a much-more-serious reasoned opinion. “When I joined BRO in June there was a skeleton staff, and there was virtually nothing I could do to head off this reasoned opinion. Sure enough, it was issued in November 2013, which means we would now have to deal with it at the European Court of Justice – and we are facing a €33 million fine,” he said unhappily shaking his head.

A month later, the Prime Minister intervened to placate the Commission and won some breathing space – as long as progress was made by July 2014. The BRO sent regular updates to show that something really was being done and in the meantime the momentum built up. He dealt with it on two fronts: making sure that the BRO itself was not a bottleneck; and keeping other stakeholders in the loop. The BRO now has 38 staff. Its website was improved and its database was digitised, making it as user-friendly and efficient as possible. “One thing I promise: the BRO will not be turned into a bureaucratic monster!” In parallel, the number of assessors was being tackled: there were only 165 who passed through the course for dwellings, and 26 for non-dwellings, clearly not enough to cope. Another course was held and by the end of the year, there

should be 160 for the latter category, with a course in 2016 for dwellings assessors. “We hope that an assessors’ association will be up and running in the near future,” he mused. All properties being sold now have to have a valid certificate, and most banks will not approve a mortgage without one. Mepa will not issue a building permit unless it is accompanied by a design rating application and the IRD actively reminds buyers about the need for one with every promise of sale. However, there is still the not-solittle matter of the backlog. The BRO is working hand in hand with the Inland Revenue Department to share data on property contracts and ascertain which ones need to be certified. At the end of the day, the BRO has the executive power to actually stop construction or sales of properties without certificates – they are valid for 10 years – but that is the

last thing that Mr Ferry wants to do. He is taking a more pragmatic approach, and is issuing letters to those who bought properties– or who had building permits issued – in the past six years, explaining to them what they need to do to comply with the law. So far, 2009 and 2010 are done. Leaflets are also going to be sent to all households. In the meantime, the 2012 legal notice needs to be radically changed by July 2016, a task described by Mr Ferry as a “mammoth” one. This will mean a new technical document, known as ‘Document F’, which will include clear information on what is required, and gradually as-yet voluntary aspects like ratings for heating and cooling systems will also be taken on board. “We also appreciate that the government should lead by example and that public buildings should have valid certificates displayed. Now all 45 are done,” he said.

Energy efficiency Buildings are responsible for 40 per cent of energy consumption and 36 per cent of carbon dioxide emissions in the EU. By improving the energy efficiency of buildings, we could reduce total EU energy consumption by five-six per cent and lower carbon dioxide emissions by about five per cent. There are two key pieces of EU legislation: the 2010 Energy Performance of Buildings directive and the 2012 Energy Efficiency directive. Energy performance certificates provide information on the energy efficiency of buildings through a colour-coded rank – as well as recommended improvements. The EU has set a target for all new buildings to be nearly zero-energy by 2020. The consultation in Malta on this closed in August.

e Business OBSERVER

October 22, 2015

ANALYSIS

One step forward, two steps back? e government has published a summary of the measures in Budget 2015, breaking down the progress made on each of them by quarter. The Business Observer singled out four which seem doomed to crop up over and over again for years to come. We are quite happy to be proved wrong on this one. market on the ground floor, catering outlets on the first and a lounge bar on the top floor. But nothing has been heard since March and the government said the process was still “being discussed in Parliament” in the third quarter. Yawn.

Indoor market in Valletta Will Malta finally get its own food market, in the fine tradition of capital cities like Madrid, Budapest and Stockholm? The government issued a request for proposals for the current dismal indoor market on Merchants Street, receiving 20 replies. Eventually Arkadia was chosen, promising to invest €7 million on the site, with a food

Marsamxett breakwater This breakwater has been on the cards for decades, whether at the mouth of the harbour or extending from Manoel Island as part of the Midi development. The idea is to protect the bay from storms, making the existing and proposed marinas safer. It will also open a whole range of options for the Strand – so it would definitely pay for itself through economic stimulus in the long term, but it was never clear who would put up the enormous initial cost. It was mentioned in the Memorandum of Understanding the island signed with China but in Budget 2015, the government decided to go ahead with the project as a public/private partnership. The government now says that the project was in its initial phases in the first quarter of 2015,

and that “internal discussions were still under way”. Batten down the hatches for the first grigalata. Fisheries project The phrase “something fishy is going on” doesn’t really apply yet because plans for a marine hatchery and a tuna spawning site are still waiting for a decision on where to put them. In 2011, AIS evaluated four proposed sites and decided that Xrobb lGħaġin was the most suitable. Thank you. Don’t call us; we’ll call you. In 2013, a call for proposals was issued for a site adjacent to Fort San Luċjan, and four proposals were received. Alas, this seems to have been put on a shelf somewhere (possibly along with the AIS study) and early this year, there was another call following the publication in 2014 of the government’s aquaculture strategy. Work then started on the valuation of the land being proposed in the second quarter. And it continued in the third quarter. But guess what? When this was established, the government decided to have an internal discussion – pause for dramatic effect – on an alternative site.

Xlendi buoy No, it’s not a misprint. The Xlendi Buoy is still on the pending list. One was installed in 2010 after years of pleas from the agents for smaller cruise ships. But it was badly designed and almost caused a disaster when it was first used in 2012. So it had to be replaced, which meant fresh studies. The first study was concluded, which led to a second study (you couldn’t make this stuff up if you tried). By the second quarter, the government knew who was going to be doing the second study. As for the buoy itself? Don’t hold your breath.

e Business OBSERVER

October 22, 2015

NEWS

Commonwealth makes business 20% easier The Commonwealth factor makes it up to 20 per cent easier to do business with other Commonwealth countries thanks to the common use of the English language and similar legal and commercial structures. “The Commonwealth countries’ shared history and commonalities of language, law and business practice acts, other things being equal, should act as a major incentive to intra-Commonwealth trade and investment,” Philo Meli, who forms part of the CHOGM Business Forum, explained. Malta’s trade with the 53 Commonwealth countries is significant – with the UK and Singapore being among the island’s major partners – reaching a total of €1.3 billion in 2014, up by €218 million from the 2013 level. Both imports and exports contributed to this increase. At €942 million, imports from all Commonwealth countries in 2014 represented 15 per cent of the total, while sales of €403.9 million worth of goods from Malta made up 11 per cent of all exports. Nevertheless, Ms Meli believes that there is a considerable untapped trade potential in the developing Commonwealth markets especially those in Africa and Asia. “Maltese entrepreneurs are realising that they have to go beyond the EU and North Africa. For example, there are 18 African Commonwealth countries to tap – many of which are attracting considerable overseas investment mainly from China and Turkey. Whether a Maltese company is looking to introduce or export its products or services to a global audience, or to meet possible partners for joint ventures, this forum will be the right opportunity,” she said. Economic growth in the Commonwealth has accelerated over the post-1973 period, in sharp contrast to the EU, where the growth rate has been falling from an average of 3.8 per cent in the 1970s to only 0.6 per cent in recent years. “Commonwealth countries are diverse, young and dynamic. Population in the Commonwealth is expected to rise by 29.4 per cent over the 2015-2050 period, while the eurozone population is expected to fall by 1.4 per cent,” she pointed out. “According to a recent study by the World Bank and the International Monetary Fund, emerging markets in Africa are enjoying unprecedented growth rates. The enthusiasm is no longer limited to South Africa. A steady flow of both private and public investment into the entire continent is gathering pace, to countries like Kenya, Tanzania, the Cameroon and Botswana.” Malta is expecting top level private sector participation from

all continents and a substantial number of Commonwealth Heads of Government are also expected to attend the Business Forum. “The forum presents a unique opportunity for Maltese companies to interact with entrepreneurs, industrialists and senior government officials not just from the 53 Commonwealth countries but beyond. In fact, for the first time, this Business Forum has also attracted a good number of participants from EU countries including Italy, Austria, Spain, Germany, the Netherlands and Finland.

“ere is a considerable untapped trade potential in the developing Commonwealth markets, especially those in Africa and Asia”

In addition, some 100 global business leaders and experts will address the forum on issues and areas such as infrastructure, financial services, technology, tourism, healthcare, maritime industry and sustainability. The forum includes various opportunities for networking and business-to-business meetings. In fact, three weeks before the event, registered and accredited participants will be able to access the names of all other participants classified both by country and sector and an online system will also allow all registered participants to request individual meetings prior to the event. The forum, being organised by a local task force in conjunction with the Commonwealth Enterprise and Investment Council, is particularly close to Maltese hearts as it was first held here in 2005, since then becoming a regular feature in all successive CHOGM events. “Although we are not able to calculate the economic impact accurately, the 2005 event definitely gave Malta a lot of exposure,” Ms Meli said. The event will be held at the Malta Hilton between November 24 and 26. The Business Forum Team may be contacted on businessforum@chogm2015.mt or by phone on 2200 2839 or 2200 2835.

e Business OBSERVER

October 22, 2015

INDUSTRY FOCUS

Budget: the good, the bad and the could-be-better Budget 2016 had dozens of measures which have been warmly welcomed by the sectors that they will help – but it is impossible to please all the people all the time. Take the Malta Chamber of Commerce, Enterprise and Industry, which was thrilled with measures aimed at SMEs. These include the promise to address the country’s ease of doing business rankings; updating bankruptcy legislation; streamlining tendering procedures reducing the performance guarantees from 10 per cent to four per cent; and the reestablishment of an export credit guarantee scheme. The chamber was also pleased by newly-announced programmes for business to be administered by Malta Enterprise and furthering of public-private partnerships, as well as the setting up of Malta Marittima, Education Malta and Property Malta, all of which it felt were conducive towards increas-

ing international business for Maltese companies in sectorspecific areas. However, president Anton Borg was still upset that the government had shot down the chamber’s call for lower energy prices for all businesses. “While being fully aware of Enemalta’s financial situation, the chamber felt the need to advocate further reductions to protect Malta’s export competitiveness position, particularly in price-sensitive sectors such as manufacturing, given that electricity typically represents around four per cent of turnover or 12 per cent of overhead costs in a manufacturing company. “In view of this, energy cost is among the primary considerations foreign direct investors take into account when choosing a location to set up their business,” he said. The chamber was also disappointed that the government failed

to invest in research technology development and innovation. “The chamber’s proposals were aimed at making available the necessary RTDI infrastructure to provide Maltese business with a better chance of building and retaining a more resilient and competitive position. From the chamber’s point of view, Malta has missed a valuable opportunity to re-invest part of its proceeds from prosperity in safeguarding a competitive future,” he said. The property sector saw a number of measures, particularly when it comes to getting vacant properties back on the market. Kevin Buttigieg, the CEO and managing director for Re/Max, was pleased that their suggestions, made alongside those of the Malta Developers’ Association, had been taken on board. “Even though there are a number of properties caught up in inheritance disputes, the reasons also extend to price disagreement among parties inheriting the property as well as the number of people inheriting the said property. “Sometimes the value is so low that the heirs are not interested to sell. Re/Max believes that with the new incentives put in place people will be more inclined to sell. Selling quickly will not only give them savings but will also help to resolve issues related to selling price that seems to be a common factor within inheritance cases. “Finally, we feel that this change in regulation will affect everyone (both locals and foreigners) since it will help cities like Valletta regain their original charm. Abandoned properties will either be restored or sold, which will result in cleaning up streets giving them the beautiful features they once had,” he said. Even taxes, such as the 50c environmental contribution, were greeted. Malcolm Grima, the sales and marketing manager at the Pergola Hotel, believes that it has come at an opportune moment.

“Energy cost is among the primary considerations foreign direct investors take into account when choosing a location to set up their business”

e Business OBSERVER

October 22, 2015

INDUSTRY FOCUS

“The influx of tourists to the islands is peaking now, due not only to marketing and accessibility but also to a number of problematic factors affecting Malta’s competitor destinations. In this context, I do not believe that 50c per person per night could leave a negative impact on tourism. “City/tourist taxes are common around Europe, and avid travellers would already have had experience of this. There could undoubtedly be niggling negatives, but if the moneys collected are well administered and cautiously invested, I believe the positives would far outweigh the negatives,” he said. The €6 million generated is going to be administered through a set-up that will include the Malta Hotels and Restaurants Association. When it came to where this money should be spent, Mr Grima clearly had a bias for the hotel’s vicinity. “Moneys should be used to embellish touristic areas and exceed tourists’ expectations. There are top touristic areas in dire need of attention or are crying out loud for improvement. An example is the front at the island’s largest sandy beach, Mellieħa Bay,” he said. The Budget also included updates on measures from the previous Budget, and the Finance Minister announced that third-pillar pension products were imminent. Stuart Fairbairn, the chief officer for business development at MSV Life, confirmed that the company had applied for official recognition of its products and that once these were approved MSV Life would be in a position to launch them on the local market. “This means that clients can apply for the tax credits on the savings they make into their personal pension plans. “Everything is now in place to enable individuals to receive a tax credit on the savings they make for their retirement. This is great news and really helps people to save for their future in a tax-efficient environment. We see this as the first important step of a journey and hope that in the future the tax incentives will increase,” he explained.

the government will get €6m from the 50c environmental contribution from touriStS. will mellieha be one of the beneficiarieS? PHOTO: MATTHEW MIRABELLI

“If the moneys collected are well administered, I believe the positives would far outweigh the negatives” “The tax credit available for 2015 is set at 15 per cent, up to a maximum contribution of €2,000, which means you can receive up to €300 from the Inland Revenue next year. Furthermore, it is possible to make savings for your spouse, so a total saving of €4,000 could be made with tax credits of €600 available. “There are no other savings schemes available where the government gives you such a financial incentive,” he said. “The contributions must be made to an approved pension and left until at least age 50. When you start to take your pension you are allowed to take up to 30 per cent of the plan as a tax-free lump sum.

Scrappage SchemeS have encouraged people to buy new carS, bringing down the average age of the car Stock.

The balance is then used to provide you with an income to supplement your state pension. The income can be guaranteed for life – through an annuity – or you can elect to keep the money invested and withdraw your income from the investments.” In some cases, the Budget did not introduce new measures, but rather repeated successful ones. A spokesman for the Association of Car Importers Malta gave as an example the scrappage scheme, saying that each one had a positive effect on new car sales. “The Maltese car stock is one of the oldest in the EU and there are therefore a lot of customers that

can benefit from the scheme. Moreover, the scheme contributes positively towards the environment by removing very old cars and replacing them with new ones with very low carbon dioxide and nitrous oxides, helping slow down climate change and improving our health,” he said. The association was disappointed by the take-up of electric cars over the years and is hoping that fiscal incentives in Budget 2016 could encourage greener modes of transportation. But it said this might not be enough on its own. “Educational campaigns are undeniably important in order to create more awareness of the

additional benefits using low-emission vehicles brings, especially for our health and that of our children. This is crucial and most necessary. “All new cars being imported into Malta are now Euro 6-compliant, which are much leaner on fuel and produce far less emissions. Older vehicles have much higher emissions and have lost most of their efficiencies. This fact has also been recognised in the Budget when announcing the compulsory VRT testing of vehicles with 160,000km or more on the clock. Other countries have had several campaigns for users to dispose of their worn-out used vehicles for several years now.” The Budget also has indirect effects that need to be well managed, Robert Delia, heads of recruitment agency Vacancy Centre, explained. “The growing Maltese economy has resulted in increased capital investment and requirement for human capital, resulting in greater labour mobility. Such mobility is creating further gaps in the labour market that will need to be filled in the very near future, particularly at a skilled level and at an operational or semi-professional level. “And the evolving economy has generated different labour requirements, particularly within the financial services industry, ‘people development’ and IT/gaming. A typical labour shortage is that of skilled front-end developers,” he said. He warned that it was important to develop the Maltese human capital, as gaps that already exist are being filled by non-Maltese. “Organisations hire talent, not ‘nationality’, and capital growth does not distinguish between nationalities but only between capabilities. We should be doing much more to develop the necessary talent that will fuel the economy’s requirements. “If the necessary capabilities exist or can be developed by third country nationals, then yes, we should be putting this labour resource to much better use. Only by having the necessary talent will the Maltese economy be able to sustain its growth in coming years,” he said.

e Business OBSERVER

October 22, 2015

INTERVIEW

Insurance: a game of numbers Vanessa Macdonald Julian Mamo is one of those people who look unflappable whenever and wherever you see them. He just doesn’t do ‘panic’mode. Which is probably just as well because the organisation he presides over, the Malta Insurance Association, is always under pressure. There are regulatory directives, accounting changes and consultation initiatives. And to top it all, the industry is constantly fighting the misperception that it will do anything to avoid paying claims. Take the latter issue: as featured in The Business Observer of October 8, the loss ratio (gross incurred claims to gross earned premium) was 66.6 per cent in 2014 for motor claims, and 65 per cent for health. “The vast majority of the premiums collected is in fact paid out in claims and operating expenses: obviously you need an operation to administer policies and claims, you need experts and you have to have compliance officers. “But to be fair, we are not there just to pay claims and make losses. There needs to be a reward – profit, if you like. We are not a charitable institution but I can assure you that we operate in a highly competitive market so we are unlikely to be excessively profitable,” he said. “Insurance is a numbers game based on the laws of probability, aimed at ensuring sustainability. But you also have to factor in the unexpected. Malta gets reinsurance support from outside its borders and it is incredible how the web of insurance and reinsurance becomes extremely connected throughout the world, to the extent that a hurricane in Florida can affect premiums in Malta.”

PHOTO: IVAN SMUK/SHUTTERSTOCK.COM

Working out the probability and impact of that hurricane is the job of an actuary – a relatively rare breed in Malta – but the regulator’s job is to ensure that insurance companies do not take on liabilities or potential liabilities beyond what they can handle, and that they have put enough away for that – literally – rainy day. Between the cost of an actuary and risk and compliance officers, the ever-increasing amount that has to be put aside as a capital buffer and those rainy day claims, insurance compa-

“What if a drone falls and injures someone at a concert or if it interferes with the ﬂight path of a plane?” nies seem to have no end of challenges. How can small companies survive? A few years ago, Mr Mamo’s predecessor had said that the number of players in Malta was not sustainable, and there has in-

deed been some consolidation – most notably the acquisition of Allcare by Mapfre Middlesea. Will we see more consolidation and mergers and acquisitions? Is there a pressing need for it? Some operators might be more inclined

than others but I would not say there is a desperate need for consolidation to take place. People seem to be taking it in their stride,” he said. Does size matter? Mr Mamo believes that we sometimes tend to see the island’s problems as being unique. “We tend to think that we are the only small jurisdiction! Of course, we have to pitch against bigger players but there are many others like us. And Europe does not only compete with European companies but also with companies around the world.

e Business OBSERVER

October 22, 2015

INTERVIEW

“This is why the industry needs to tread carefully and this is a message that should be sent back to Europe. Supervision is good and the industry should not be self-regulating – but we must be wary of over-supervision and putting too much of a burden on operators. “Having said that, I do not subscribe to the Doomsday view that the sector is not sustainable – as there is a strong European drive towards proportionality.” The most pressing regulatory issue over the past decade has been the implementation of Solvency II, which comes into force in 2016. The local industry has been assessed as being ready for it. “We have known the deadline for two years and have been approaching things as though it were in force since the beginning of 2015, so we are already living it! But really and truly it is not going to be sudden as none of the changes are quick fixes. It is about whether you have your processes and governance in order. Can you report in the right way? Can you extract the appropriate data? Do you have all the manuals and procedures in place? These things are not done overnight and people have been working on this for some years.” There are also international changes to new accounting standards – IFRS 4 – which have implications for insurance companies. As with Solvency II, the deadline remained a moving target for many years and so far, it seems to be 2018 – although it might change again. “Whatever date it is, for comparative purposes, you would need to start work a year before, so we definitely need to know our time horizon! As a public interest entity, we also need full understanding of what the impact is going to be. The accounting change could make a material impact on a company,” he said. The association appointed a consultancy firm to analyse the changes and their impact, and as soon as the report is ready, it in-

tends to make its voice heard to make sure that any negative impact is cushioned appropriately. Projects like these do not only cost huge amounts but are also a distraction for managers trying to run their business. And as if they are not enough, there are also national consultation papers on other topics – such as an MFSA one on conduct of business, aimed at tackling issues like mis-selling. Mr Mamo’s tone remained polite but the point he made could not have been clearer. “The timing of it is very unfortunate. We feel it would have been more appropriate to have let the dust settle – especially since there are no major conduct of business issues in the general and life insurance sectors. “The consultation paper is way too detailed and onerous on insurance companies. We seem to have been caught up in a reaction to issues in other financial services sectors. “We have given our feedback and we hope that the MFSA listens to the points we have raised as otherwise we are ready to come out against it in public. We need a more pragmatic approach. There is no point in changing things and turning them on their head for no real reason. It is expensive and unnecessary.” The insurance sector’s sharing of data is also being scrutinised to ensure it does not go beyond the boundaries of data protection – but with 10 per cent of all insurance claims in Europe being undetected fraud, the sector believes information is key. “Data protection has long been an intrinsic part of the way in which we operate and we are very aware of the sensitivities and the rights of people to protect their data. Where we need consent to use data in a particular way, we seek consent and even when we use data, it is used very judiciously. “But there is no doubt that fraud is a concern at both individual company level and at market level and the sharing of data to detect it is an important

JULIAN MAMO. PHOTO: CHRIS SANT FOURNIER

“Supervision is good and the industry should not be self-regulating – but we must be wary of over-supervision and putting too much of a burden on operators” aspect of how we try to manage the situation,” he said. The fraudulent claims that end up in court are just the tip of the iceberg as most just end up with the claim being refused. “It is a commercial decision for companies as to whether they take it further or not. I would say the majority of the cases never make it

to court as the amounts do not always merit further action. “However, clearly when we identify organised fraud, with people fabricating claims and staging accidents, it is quite a different matter. “We have managed to work as an association to catch many of these.

“We do detect significant amounts of fraud, which is one of the problems that we face when it comes to public perception about claims, as people perceive us to be very difficult, asking a lot of questions. If we pay fraudulent claims it has a negative impact on the premiums paid by those who are honest.” Sharing data is important as it helps operators to check trends and patterns, for example, people moving from one company to another, claiming multiple times for the same thing. “The objective of an insurance policy – with the exception of certain categories of insurance like life and personal accident – is for a person to get compensation, not to make a twofold or threefold profit out of a mishap! Imagine what an incentive that would be to try to defraud insurers! “If there is more than one policy, then insurers share the cost between them proportionately. This is known as the ‘contribution clause’. And it is up to the companies – not up to the policyholder – to decide under which policy to claim! What we want to do is pay claims efficiently and in a timely mannet but we need to be able to weed out those who try to abuse the system.” Challenges do not only come from Brussels or from regulators: technology also keeps the sector on its toes. One of these is cyberinsurance and the dependence of organisations on IT and the web – which actuaries are constantly trying to assess. And who would be responsible if one of the driverless cars of the non-too-distant future were to crash? “And drones!” he said, with a shake of his head. “What if a drone falls and injures someone at a concert or if it interferes with the flight path of a plane? And what about abuse of privacy? “How do you calculate the risk, the worst case scenario and, ultimately, the premium? And without that, how can they get insurance cover?”

e Business OBSERVER

October 22, 2015

CASE STUDY

Seeking a partner for progress Anita Aloisio, Nexia BT’s partner for advisory services, could hardly control her grin for the cameras as she posed with the trophy showing that the firm had won the title of International Advisory Firm of the Year in the single firm category awarded by the International Accountancy Bulletin. It was to be expected. It was, after all, a prestigious award, but it is also quite a personal triumph as she only set up the section five years ago, virtually single-handed. She spent the first year or two laying the groundwork and when last interviewed by the Times of Malta 18 months ago she was already proud to have eight members on her team. She now has 25. When asked about this rapid rise, she summarises it with one word: vision. She could see that there was a gap in the market for someone who could bring together not only academic and technical qualifications but also hands-on experience. “Entrepreneurs know where they want to get but it is knowing how to get there that is the challenge,” she said. After getting a degree in accounting, Ms Aloisio started off her career with an audit firm but when still in her 20s, decided that she wanted to put her technical background to practical use. In spite of the fact that she had a young child, she barely hesitated before taking the plunge – really into the deep end. She joined a company in the medical sector which was in financial distress and was undergoing a major restructuring before being put on the market. As it that were not enough to make the situation intense, her predecessor had been fired because of fraud. “I was just 29 and I really had to win to management’s trust but I went in there with a plan already

ANITA ALOISIO. PHOTO: DARRIN ZAMMIT LUPI

“Entrepreneurs know where they want to get but it is knowing how to get there that is the challenge”

formulated in my head on how to tackle the situation systematically, looking at the cash flow, creditors and debtors. “I managed to hold my own against the much older executive team and over the following 18 months, under the guidance of my superior, we successfully completed the restructuring and the sale did go through in the end.” Once the project was completed, her previous employer encouraged her to come back by

sponsoring her MBA, which she talked about in awed tones. “It opened my horizons – literally and metaphorically. I stopped being an accountant and became something completely different. It gave me all sorts of insight, even into the restructuring we had just done,” she said with pride. She eventually joined a Big Four advisory firm but in spite of the exposure this gave her to different economic sectors and services, she soon became frustrated at being

e Business OBSERVER

October 22, 2015

CASE STUDY

‘typecast’ in the financial aspect of the job, yearning to get involved with processes and models. She moved to the Malta Communications Authority for a few years and had a second child. But she was still restless. She came across a vacancy at the University of Malta – which was at the time going through a major overhaul – as a senior consultant on a three-year contract. It was too tempting to resist. “Unlike most people, I love change. My husband never understood why I took on a role at university as my hours were longer than ever! But I wanted to be at the forefront of the massive change that was under way,” she grinned. It was definitely a massive change – and one that was burdened by the limitations of the public sector. Processes like procurement and recruitment that might take months in the private sector could take a year. And even with the full backing of the Rector, turning around a loss-making entity with a budget of €55 million was never going to be easy. She rolled up her sleeves and drew up a very detailed budget and accounting model – using a humble spreadsheet. “I took it upon myself to start instilling pride in internal control structures and having very detailed budgeting processes and planning schedules. “I really wanted to understand the operations of the university so I built a budget plugging in the salaries and benefits of its 3,000 staff by faculty and department. I literally built templates for each department and faculty and institute so they could get a feel for what their operational costs were. “I insisted that there should be a good audit trail which could stand the test of time. We were also handling very large projects – including EU funded ones – and started grouping together all the purchase orders and invoices and payments, rather than having to open six or seven files to be able to trace a story from beginning to end. “It may sound very simple but at the time I had lots of resistance. I had to get examples to show them that this was already standard industry best practice. But once we got it going, then it was quickly adopted across the board.” The next step was to transfer the spreadsheet to a more formal set– up and one which did not require repeated manual inpu. She also boosted the team, relying more on full-timers than on outsourced workers who were far more expensive. “For a very junior role I was being asked for €35 an hour. I preferred to employ a full-time employee. The university was going through a growth phase and I was convinced that it would be better to have someone growing with us than coming in from the outside who would move on.” She spent three-and-a-half years there, in the meantime having been promoted to director of finance after a public call. But already the seeds of restlessness were sprouting. “I was happy with what I had achieved. I had a team of 40 just for the finance side and six fully qualified accountants – there was just

Setback for Setanta

“To make a business flourish, you have to have a project and a vision but you have to look at the figures objectively and constructively. Only then can you assess whether the return is sufficient”

one when I joined. I had also set up systems that were not peopledependent but process driven. “But I was approaching 40 and I felt that with my experience, I could do more to help others.” Nexia BT was the door that opened, allowing her to set up an advisory service which would allow her to use not only all the technical knowledge that she had built up but that crucial hands-on experience too. She already has numerous success stories of working clients – very often on aspects that were not even the main reason they came to Nexia BT. For example, there was one client that wanted financial restructuring but she found that there was not even a database of either its clients or what it was due. “We pulled up our sleeves and got it all done before we actually got on with the project they originally came to us for. It was very time consuming and the client would almost certainly never got round to it because of the pressure of day-to-day operations. “I did what I had done at the university. I got a template together – again on a spreadsheet! – using my experience to design it so it would cover all the information the client might require. And the client soon started collecting debts which were not even being chased at the time. “And when they come to install a proper IT system, it was easy for them to put the whole thing online using the template.” Her approach is always a listening one, as she believes this is the way to understand what the client really wants – which may not be what they came to her for. One retail client came to her for a valua-

tion but she persuaded them to wait as she could see that there was still considerable scope for growth. “Valuation is usually part of a process to sell a company or to bring on a new partner. Why not maximise the value first?” she said. Another client asked her to build up a business model but she felt that they were approaching the project from the wrong end. “You have to start with the market, what prices you could charge and what capital expenditure you can afford… And only then find the model to suit it, not the other way round. “These are the two common scenarios I see in advisory. Some people try to make the figures work so that they can get bank financing. I think this is suicidal. To make a business flourish, you have to have a project and a vision but you have to look at the figures objectively and constructively. Only then can you assess whether the return is sufficient.” “At the end of the day, it is all about people skills, being able to get under the skin of the clients and gaining enough of their trust to be able to nudge them into a direction they may not have considered. “We meet people who are close to retirement and have no successors. But you also get 40year-olds who think they want a change – but who are just frustrated because they get bogged down by the day-to-day business and don’t have enough time to think strategically or to follow their dreams.” Now 45, she feels that all her past has come together to enable her to help people reach out for those dreams. And if it means starting another spreadsheet, so be it.

There has been yet another setback for the hundreds of Setanta policyholders who have motor insurance claims after the Motor Insurance Bureau of Ireland appealed a High Court judgment saying it was responsible for the payments. It is estimated there are around 1,800 claimants who hold policies issued by Malta-based Setanta Insurance, which could climb to a total of €100 million. The company collapsed in 2014 when it became clear that it was not able to cover all claims because of a “material shortfall in its reserves”, according to the Malta Financial Services Authority. Paul Mercieca was appointed liquidator but his quest to settle claims was held up until it could be determined who could pay as he estimates that the company’s assets would probably only cover some 30 per cent of the claims. At first it appeared that the Insurance Compensation Fund in Ireland would be responsible for any shortfall to customers once the company’s assets were used up. This was not welcome news for the policyholders as it can only pay out 65 per cent of eligible claims, while the MIBI would settle claims in full. But joy over the High Court ruling last month that the MIBI was responsible was shortlived. Mr Mercieca is clearly frustrated by more delays until the appeal is heard and will be travelling to Dublin next month to discuss his options. “Apart from delaying the settlement of claims, the legal costs are mounting,” he said. Irish newspaper The Journal said that there were over 1,000 cases of personal injury outstanding, along with 711 involving damage to property. At the time it was shut down, Setanta Insurance had around 75,000 policyholders.

e Business OBSERVER

October 22, 2015

e Business Observer is Malta’s leading business newspaper distributed with Times of Malta every fortnight. Editorial Vanessa Macdonald, Assistant editor, Times of Malta.

EDITORIAL

Directives will drive down bank charges The reports laid in Parliament abut banks, drawn up by the Malta Financial Services Authority and the Malta Competition and Consumer Affairs Authority, will come as no surprise. What is a surprise is that neither of them took off their gloves, in spite of their findings. This ‘gently, gently’ approach seems to have become entrenched in recent years. The Governor of the Central Bank of Malta, Josef Bonnici, used what he calls ‘moral suasion’ to persuade banks to narrow their interest rate margin. What else could he do? Stamping and shouting is hardly the way to confront a sector that underpins the Maltese economy. It worked, albeit with limited success, as we found out from the MCCAA report. The percentage may have narrowed – but not enough. And there are numerous organisations that fear this may still be having a detrimental effect on our SMEs and our competitiveness. The MCCAA stopped short of invoking the powers it has and seems to be hoping that ‘moral suasion’ will also work in its case. The MFSA report is also damning. It went through a similar exercise in 2007 and a number of its recommendations were taken on board. (The MFSA has no power to order banks around. It regulates them but they operate in a free market.) Unfortunately, these were more or less the ones relating to consumer information – like having all fees and charges on a bank’s website and having interest rate information on statements. Just to be sure that consumers had information at their fingertips, it also created the “My Money Box” section on its own website. The real 12 very specific recommendations were game-changers which would have touched charges – in other words, the banks’

pro-fits – but they were, in the words of the MFSA report, “postponed sine die”. Which means “politely ignored”. The MFSA lamented that the arrival of new banks did little to stimulate competition, and little has changed over the decade. The arrival of the euro and the more recent Single Euro Payments Area, the introduction of internet banking and mobile banking… all these changes have washed over the banking system without trace. The MFSA makes serious claims. “When SEPA came into being, local banks quite literally copied each other’s tariff sheet in regard to both incoming and outgoing payments in euro,” it said, pointing out that SEPA was actually an initiative of the banking sector itself. It acknowledges that none of the banks might want to start a “price war”, but makes it clear that banks are being shortsighted, as they are merely discouraging credit transfers at the very time that they are trying to dissuade people from using cheques, which cost the bank a fortune to administer. The second area of major concern is ATMs and EPOS, where the MFSA wants more collaboration between banks – especially to make it easier for smaller banks which do not have a wide branch network themselves – and for merchants, again as a way to dissuade cheque use, but mostly because merchants complain bitterly and justifiably. There is a sting in the MFSA report, however. Whether they like it or not, the banks in Malta may have to take up the MFSA’s 2007 recommendations to comply with EU directives coming into force over the next two years. Consumers may get the last laugh after all.

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BUSINESS OPINION

Financial transparency from full disclosure

Josef Busuttil Trade credit does not come for free. It costs money and also carries an element of risk. To ensure that customers requesting credit are trustworthy and can reasonably honour their commitments and pay their dues on time as agreed with their suppliers, the latter should analyse and evaluate the risks associated with the specific customers prior to granting them credit. To analyse the credit worthiness of prospective customers, suppliers require reliable, complete, accurate and timely information. For this purpose, there exist a number of credit information sources available to the trade creditors and financial statements and audited reports of companies are one commended source. Financial statements and audited reports give a snapshot of what happened to a business in the past. Although they may not be considered as timely, having at least three consecutive annual statements should assist a trade supplier to determine the financial trend of a ‘prospective’ customer requesting credit. But this

can only happen if the supplier is lucky enough to obtain such financial information! Besides the element of timing, which already makes financial statements outdated by the time they are published and made available to the public, there are other limitations with financial statements and the recently published Bill, which introduces amendments to the Companies Act and implements the Directive 2013/34/EU, only makes it worse to the local business community selling on credit. The Bill defines small companies which on their balance sheet do not

exceed the limits of two of the three following criteria: balance sheet total – €4 million; turnover – €8 million; average number of employees during the accounting period – 50. This definition is in line with the Directive 2013/34/EU but in Malta, it is estimated that 95 per cent of the local registered companies are not only small but micro entities by definition. This means that the local trade suppliers will not find the necessary information which was once filed by all the registered companies and made available to the public by law. Exemptions suggested by the Bill may have negative consequences

for the local business community in the future, for various reasons. The successful business should know at all times its financial state, and that would entail the maintenance of detailed accounts. Experience in the local credit industry asserts that “inadequate”, “poor”, or just plain “bad” management represent the major cause of business failure. MACM believes that the maintenance of detailed accounts is a business discipline which must be a fundamental requirement of any company. The whole concept of abridged accounts and exemptions to file financial statements sends out to the business sector

“e bill may have negative consequences for the local business community in the future”

entirely the wrong signals – “you need not do this” – and actually encourages poor management. MACM also argues that corporate financial transparency makes it easier to business owners and directors to determine where they stand in relation to their peers in the market. Benchmarking the financial performance would help to identify weaknesses and thus finding ways to improve; this would result in a more profitable business community which would have a positive effect on our economy at large. Additionally, full and audited financial disclosure and transparency are also crucial to mitigate and prevent corporate scandals. Audited financial statements should, therefore, be more reliable and thus more credible to attract more investment and enhance economic growth. Anyone who is in business knows full well that unsecured trade credit is the lifeblood of business. When such legislation make it increasingly more difficult for suppliers to make sensible risk decisions they are in effect both cutting off the lifeblood and in a bizarre way actually encouraging irresponsible lending. Limited liability, as far as corporate bodies are concerned, has always been a privilege, the privilege being that the entrepreneur can operate without the fear of losing his home or his personal assets. Privilege has to come at a price, and that happens to be full disclosure. Josef Busuttil is the director general of the Malta Association of Credit Management. jbusuttil@macm.org.mt

e Business OBSERVER

October 22, 2015

NEWS/APPOINTMENTS

IIP fuelling property market – PwC The Individual Investor Programme launched in 2014 has had a noticeable impact on the real estate market and fuelled both sale and rental prices of property, according to the latest PwC market barometer. The prices were boosted to the minimum thresholds set in the programme regulations, it said. All operators in the market reported an increase in sale and rental prices over the last year for apartments, houses of character and townhouses. The Sliema and St Julian’s areas are the most soughtafter and registered the highest increase in prices. Areas in central Malta and the north rank second and third respectively. Real estate agents expect property in Valletta to experience increased demand. There were noticeable differences between smaller and larger agencies. Those who have less than five per cent of the market consider that Mepa is their major business concern, with the second being the excess supply of property. Other top concerns are the availability of finance for prospective buyers and the general country’s infrastructure,

SOURCE: PWC MARKET BAROMETER

Maria Micallef will be the new managing partner at RSM Malta succeeding founder Deo Scerri. Ms Micallef is also one of the founding partners and is currently the partner in charge of advisory and risk management services. She has extensive experience in servicing local and international clients across a wide range of industry sectors, including remote gaming, energy, hospitality, communications and manufacturing. She is a fellow and past President of the Malta Institute of Accountants and remains a council member

Operators who claim to have more than 5% of the market which in instances is not considered to be conducive to the development of business. In stark contrast, the larger operators point towards a possible shortage of property in the market. But issues connected to Mepa, availability of finance and the state of the country’s infrastructure still emerge as top business concerns. This barometer also looked at whether the recent overhaul in the taxation regime governing the transfers of immovable property helped the supply of properties. Just

RSM change

under two-thirds of the smaller operators consider that the changes had any impact, compared with 20 per cent of the larger ones. The barometer captures widespread sentiment across the industry that it is keen to professionalise the operators. A significant 86 per cent are in favour of real estate agencies being warranted through certification. The market barometer attracted the response of over 60 real estate agents and reflects the situation in the first half of September.

MARIA MICALLEF

there. The coming months will signal the start of a new chapter in the life of RSM Malta as the firm rebrands to ‘RSM’ following the global announcement by its international network, RSM International, that it is adopting a single global brand.

New Computime chairman Two distinct business divisions, Computime Technology and Computime Software, were established as part of the larger Computime Group, the former to focus on the strongest IT security and the latest infrastructure and hybrid managed cloud services, and the latter to specialise in development of business software and integration solutions. Computime has now appointed former banker Tony Mahoney as group chairman, taking over from Mario Mizzi, who will remain a non-executive director. Mr Ma-

TONY MAHONEY

honey brings with him a new perspective which will add to the board’s resources and competences, besides strengthening good governance.

e Business OBSERVER

October 22, 2015

STOCK MARKET REVIEW

A roadmap for the Malta Stock Exchange

Edward Rizzo During last week’s Budget speech Finance Minister Edward Scicluna announced that the Malta Stock Exchange (MSE) and the Ministry of Finance had established a committee with the aim of strengthening and further developing the local capital market. The minister revealed that this panel of experts had already initiated discussions on a roadmap which is being drawn up with particular reference to the upcoming EU regulations and directives as well as the creation of a new Capital Market Union by the European Commission. The formulation of a strategic plan for the MSE is a welcome development. It comes at a very delicate stage for the local capital market. As I have documented in recent weeks, following the delistings of both Crimsonwing and very shortly Island Hotels Group Holdings, only 20 companies now have their shares on the Official List of the MSE. Given recent announcements by various companies, unfortunately others may suffer the same fate, which would lead to a further downsizing of the equity market. Given the foregoing and the fact that listing fees represent the major source of revenue for the MSE, a plan to increase the number of equity listings should be among the priorities in this roadmap. The last public offering on the equity market was that of Tigné Mall in 2013 and, before that, Malita Investments in 2012. The addition of only two companies in over three years is far too little progress. The lack of new equity issuance may also be due to some regulations which may be too rigid for the structure of certain local companies, and these ought to be revisited to instigate more companies to go public. In the 2016 Budget speech the Minister of Finance also mentioned that over the past two years the MSE has been working on the setting up of a new regulated platform, whereby small and medium-sized enterprises (SMEs) can have more efficient access to finance when tapping the local market. This initiative, branded ‘Prospects’, is also aimed at assist-

ing in the necessary succession planning of such companies. However, no target date was mentioned by the Finance Minister on the planned launch of this junior market. In my view, its success is questionable if no tax incentives are offered in connection with listings on such a market. Another important revenue source for the MSE is the fee earned on the value of trades that take place across the equity market, the corporate bond market as well as that in dealings across the various Malta Government Stocks. This is naturally directly linked to the number of listings across the various asset classes. Although equity market trading activity increased considerably during the first nine months of 2015 and the best-ever Q3 was witnessed since 2006, this volume

“To ensure a higher degree of success in growing the local capital market, the privatisation of the MSE is fundamental.” may not be sustainable if the number of companies listed on the MSE decrease. Meanwhile, there was a higher degree of success in growing the corporate bond market, although given the huge liquidity across the local financial system, many more companies can easily utilise this alternative source of funding. In my view, in order to ensure a higher degree of success in growing

the local capital market, the privatisation of the MSE, through the introduction of a strategic partner and the participation of market participants (MSE members), is fundamental. This should feature high on the ‘to-do list’ of the panel of experts devising the roadmap. Privatising the MSE was first mentioned almost 10 years ago when the then-chairman of the MSE, Joseph Zammit Tabona,

explained that the corporate restructuring exercise taking place in 2006 was also necessary to enable the privatisation of the MSE through the possible involvement of a strategic partner. In November 2008 the Finance Minister of the time announced that the government was seeking a strategic partner for the MSE. A few months later it was reported that the MSE had commissioned Ernst & Young and a study was concluded “aimed at seeking new ways of attracting more companies to listing, as well as to outline what options are available for closer relations with strategic partners”. Unfortunately, the global financial crisis disrupted the plans, but once markets started to recover and merger and acquisition (M&A) activity was rife among global bourses in 2011, the

e Business OBSERVER

October 22, 2015

STOCK MARKET REVIEW

government of the time seemingly failed to reactivate this intitiative. It is becoming increasingly accepted that nowadays governments should concentrate on formulating policy and regulation, relinquishing day-to-day operational activities in key entities across most sectors. It has been very evident, both locally and internationally, that the private sector is much more efficient than the public sector at managing companies and achieving financial and strategic objectives. This should be no different for the MSE. The present government introduced a strategic partner for Enemalta and is now acknowledging that the future of AirMalta is also dependent on a strong strategic partner to compete more effectively and ensure long-term financial stability. Likewise, an international strategic partner of repute should be viewed as the long-term solution for the Malta Stock Exchange. One way of increasing the number of equity and bond listings for the benefit of savers and investors is by attracting small international companies to consider the use of the local capital market since their size may be a deterrent for a listing on a larger international bourse. While this was briefly mentioned in the past by the MSE itself, no

Rizzo, Farrugia & Co. (Stockbrokers) Ltd (RFC) is a member of the Malta Stock Exchange and licensed by the MFSA. This report has been prepared in accordance with legal requirements. 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. RFC, its directors, the author of this report, other employees or RFC 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 RFC 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. © 2015 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved.

“A strategic partner could spearhead the introduction of initiatives such as ‘market-making’ and ‘short-selling’

tangible results have been achieved to date. The introduction of an international strategic partner can be instrumental in attracting foreign companies to the local bourse. Moreover, the experience of a renowned player can also be vital

in proposing measures to the local authorities to help many of the older-established Maltese companies to consider an equity listing as a means of resolving delicate succession planning. A strategic partner could also spearhead the introduction of other initiatives

also mentioned in the past by the MSE, such as ‘market-making’ and ‘short-selling’ which have yet to come to fruition. Hopefully, the committee entrusted with the drawing up of the roadmap will consider these ideas alongside others

coming from an appropriate consultation period with market participants. This would ensure that all stakeholders become involved in the important matters that need to be implemented for a more successful local capital market.

e Business OBSERVER

October 22, 2015

BUSINESS UPDATES

VacancyCentre at FHRD annual conference

HSBC COMMERCIAL BANKING HAS BEEN FUELLING THE DEBATE AROUND THE IMPORTANT SECTOR OF TRANSPORT AND LOGISTICS AND SUPPORTING THE TRANSLOG EVENTS.

HSBC helps industry navigate in transport and logistics In 2004, only 11 export corridors of magnitude greater than $75 billion existed in the world. By 2013, the number of such substantial trade corridors increased to 22, intensifying trade routes – intra-EU and North America – but also along new routes. The swelling of numbers is due to the rise of China in global trade, according to a recent report published by HSBC. Malta is perched on one of the largest of the four trade corridors between China and the EU valued at $300 billion. The country can benefit greatly by streamlining its warehousing capabilities which, in turn, could become the backbone of growth in the fast-rising sector of transport and logistics. Experts from the sector exchanged ideas on the way forward for the sector during a breakout session ‘Logistics: The next step’ during the recent EY’s Malta attractiveness survey conference. This breakout session was supported by HSBC Bank Malta plc which has been pro-

moting the potential growth of the transport and logistics sector. Michel Cordina, head of HSBC Malta commercial banking, said: “In 2014, HSBC Commercial Banking became the main supporter of the inaugural TransLog Awards, Malta’s first-ever transport and logistics awards, and continues to support the associated TransLog forums. In June 2015, HSBC commercial banking launched a new €75 million Malta Trade for Growth (MTFG) Fund to help Maltese companies take their business across the globe. The new MTFG Fund followed the success of the first €50 million trade fund launched in December 2013.” Also speaking from HSBC at the EY conference was senior HSBC trade economist Douglas Lippoldt, who shared with the audience the changing pivots of global trade flows and their connection with macroeconomics and structural issues.

Over 350 human resources managers and employers met for one day to discuss employee engagement and ways to achieve it effectively. Employee expectations have changed considerably over the past 10 years, and thus one must be aware of such expectations. This year’s annual HR conference organised by the Foundation for Human Resources Development (FHRD) was titled Employee Engagement – The Road to Excellence. VacancyCentre once again exhibited at this very well-attended event, having been present at this event for a number of consecutive years. This year saw a diverse selection of exhibitors, among them recruitment agencies, training and development specialist organisations and IT solutions for HR management.

ROBERT DELIA, SARAH MICELI, JOHN PARIS

The overall theme was related to employee engagement, which has become a top business priority for senior executives. In this rapidcycle economy, leaders know that a high-performing workforce is essential for growth. They recognise that a highly-engaged workforce increases innovation, productivity, and bottom-line performance while reducing costs related to hiring and

retention in highly-competitive talent markets. Senior recruitment officer Sarah Miceli said that the agenda was a very interesting one indeed and that this was a very fruitful event where like-minded professionals got a chance to meet under one roof. An interesting line-up of speakers focused on the importance of engaging employees in today’s changing competitive environments. Alistair Schofield, founder of MyBrain International, looked at the implications of recent discoveries in neuroscience on the world of work – from employee engagement to the effectiveness of teams. Gallup’s MD Peter Flade said that despite employee engagement racing up the priority list of CEOs, research reveals a sorry state of affairs. recruitment@vacancycentre.com

Over €9,200 donated by Mepa to Caritas and Malta Community Chest Fund The Malta Environment and Planning Authority (MEPA) has raised and donated over €9,200 to two separate Maltese charitable institutions – Caritas and the Malta Community Chest Fund (MCCF). The money raised for the MCCF was collected from the entrance fee of two educational initiatives the authority held earlier this year. These two initiatives included the monthly educational Sunday biodiversity and heritage planning tours and the Mepa evening lectures. The donation of €3,000 was presented to the deputy chairperson of MCCF, Edgar Preca, by Mepa chairman Vincent Cassar. Mepa also donated over €6,200 to Caritas Malta through a separate initiative. The funds were raised through the Mepa annual summer BBQ which was held for its employees.

On this occasion, the donation was presented to the director of Caritas Malta Leonid McKay by Mepa CEO Johann Buttigieg. Through these initiatives, Mepa instils a sense of duty towards the public, while supporting charitable entities whose work goes towards the benefit of the more vulnerable members of our society.

e Business OBSERVER

October 22, 2015

BUSINESS UPDATES

Malta’s current property market Malta is currently experiencing a property boom and it could easily be said that demand outweighs supply. There are so many people out there who are eager to buy, yet they are finding it hard to find their dream home or ideal investment. Reasons could be various – either because properties are overpriced, badly planned or because they are inheritance properties so are proving hard to sell. In the case of the latter, recent budgetary measures have reviewed the disposal period in which the property can be transferred from 10 to three years. Another measure to reduce vacant property was to reduce stamp duty on properties which form part of the Urban Conservation Area (UCA). The further extension of the firsttime buyers’ exemption on stamp duty is another budgetary measure which is set to keep this area of the market booming. These buyers often look for something which they will want to resell after a few years, thus enabling them to move up the property ladder and possibly become second-time buyers. Although this segment of the market is also going strong, it can be difficult to find the right property for this type of buyer. Most families are asking for outdoor space and it is

Living with Migration public discussion The European Parliament is hosting a public discussion with MEPs titled Living with Migration on October 30 at 1pm at The Fortress Builders, Fortification Interpretation Centre, St Mark Street, Valletta. This event proposes to bring to the fore the local realities of migration and its different facets in an exchange with MEPs, preceded by a fact-based background of experiences on the ground, as the EP gears up for

negotiations on legislative proposals and political positioning including through its strategic initiative report. The MEPs addressing the discussion are Roberta Metsola (EPP, Nationalist Party) and Marlene Mizzi (S&D, Labour Party) on the European Parliament’s Strategic Initiative Report on the Situation in the Mediterranean and need for a holistic EU approach to migration; Miriam Dalli (S&D, Labour Party) on the

Permanent Relocation Mechanism Regulation; and Therese Comodini Cachia (EPP, Nationalist Party) on human trafficking as modern-day slavery. The public discussion will be moderated by senior journalist Mark Micallef. Other speakers include Brad Blitz from Middlesex University, Nathalie Grima from the University of Malta, and Jean Pierre Gauci for the People for Change Foundation.

DConsulta launches new website becoming increasingly hard to find such properties. More mid-range houses in good areas with some outdoor space are needed. Looking to the future, effective planning needs to be central to our property efforts. Developers should be encouraged to really consider the needs of their target markets before starting construction and appeal to the government to embellish unappealing areas so as to make them more desirable, as has been achieved in locations such as the Three Cities. For more information contact Frank Salt Real Estate on 2379 4794 or fs@franksalt.com.mt. www.franksalt. com.mt

Accounting and consultancy firm DConsulta has recently launched its freshly revamped mobile- and device-friendly website, www.dconsulta.eu. The website’s new look reflects the current structure and attitude of the firm as well as the company’s indisputable reputation in the EU funding field. DConsulta’s website outlines its service offering in the fields of accountancy, finance and tax, company service provision, EU funding and business growth services, and also offers the possibility of interacting with clients, suppliers and people at large. The firm’s CEO, Michael Debono, is proud of the introduction of the ‘d Update’, its aptly named blog, which will be the focal point of interaction with clients and potential clients. The launch of the new DConsulta website happened during the same week that Budget 2016 was announced, and this was no coincidence. Find out how you can benefit from the grants, incentives and fiscal advantages that arose from Budget 2016 by contacting the DConsulta team.

Therefore if you would like to embark on a growth path for your commercial enterprise or would like to find a suitable accountancy firm for your needs, contact D Consulta for a meeting followed up by a free quote.