The Business Observer Newspaper 20th October 2016

Issue 62

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October 20, 2016

Distributed with Times of Malta

Ryanair forecasting 40% market share Vanessa Macdonald Ryanair anticipates carrying two million passengers to and from Malta in 2016 – meaning it would have 40 per cent of the market share at Malta International Airport if the latter meets its 2016 target of 4.97 million arrivals.

The only country in which Ryanair has a larger share of the overall passengers is Ireland (49 per cent of market share), with the next largest markets being Belgium (28 per cent), Italy (26 per cent) and Spain (18 per cent), according to Chiara Ravara, Ryanair’s sales and marketing manager for the region which includes Malta.

Until last year, Air Malta carried the absolute majority of passengers to Malta but while its passenger numbers fell 8.1 per cent in the first half of this year due to a slowdown in Germany and Russia, Ryanair registered a 37 per cent increase in passenger movements (equivalent to 202,691 passengers).

And the dominance over Air Malta will be reinforced further by year end as a result of Ryanair’s focus on winter routes. Ms Ravara said: “We are aligned with Malta Tourism Authority’s strategy to turn Malta into a year-round destination as our growth in winter 2016 shows, with 38 routes to 14 countries in total – 17 of them new – representing a +50 per cent growth year-on-year.”

This is a dramatic growth from the two flights Ryanair operated when it started operations to Malta in October 2006, adding six more destinations the following year.

The current summer schedule flies 36 routes, of which nine are new.

With 34 per cent of market share in the first half of the year – compared with Air Malta’s 32 per cent – The Business Observer asked Ryanair whether it still receives marketing assistance – something originally justified years ago when the airline opened Malta to new destinations. However, Ms Ravara said: “Ryanair does not comment on its commercial agreements.”

Air Malta is resigned to the fact that Ryanair has overtaken it as the dominant airline. A spokesman said: “The record number of tourists and the increase in popularity of Malta as a destination has not gone unnoticed by other European carriers. Since 2009, when low-cost carriers started operating to Malta, the number of airlines flying to Malta has grown steadily and today some 50 other international airlines are servicing the Malta route.

“As a consequence, Air Malta is competing with larger airlines that can offer cheaper ticket

“Air Malta is resigned to the fact that Ryanair has overtaken it as the dominant airline”

INTERVIEW Internationally-renowned travel writer Doug Lansky did an audit on Malta for the Tourism Authority – and warned that the island might need to limit access to popular sites. see pages 10 and 11 >

NEWS

PHOTO: ANTON GVOZDIKOV/ SHUTTERSTOCK.COM

prices as they enjoy better economies of scale and also have the advantage of being able to fly to Malta in the peak of summer when demand is high and pull out when the demand decreases in winter. On the other hand, Air Malta, as the national carrier, shoulders the responsibility of providing a reliable year-round service to an array of destinations, even in the loss-making months,” he said, turning a blind eye to the fact that Ryanair is actually increasing its winter routes and not decreasing them.

The ‘economies of scale’ that Air Malta refers to would certainly not be helped by the plan outlined in the Budget update documents issued recently in which it says that the it would reduce its fleet to just seven aircraft if the deal with Alitalia falls through. Until last year, it had a fleet of 11 leased aircraft.

Air Malta’s spokesman was doggedly optimistic: “Over the past years, Air Malta has focused successfully on reducing its losses and is now looking at how to start growing again and reverse the trend of its diminishing market share.

“The government, as main shareholder of Air Malta, believes that this can be achieved by entering into a strategic partnership with a bigger airline. This will allow Air Malta to reduce costs thanks to the better purchasing power that the partnership brings and increase revenues thanks to better sales systems and network advantages.”

In the meantime, Ryanair is planning even further growth, with a fleet of 520 aircraft by 2024, by when it hopes to carry 180 million customers.

We hear time and again that a business is all about its people.

Which is why we should take the EY Attractiveness Survey findings on human resources very, very seriously. see page 3 >

NEWS German companies are seeing Malta’s potential as a stepping stone into Libya, and after a successful round of meetings with the GermanAfrican Business Association, the British are now also on the way here. see pages 5 and 6 >

OPINION We may be desperate to ease the traffic situation in Malta but that does not mean that we should rush into glitzy-sounding solutions. Professor Maria Attard takes a more scientific view of mass transit systems. see page 15 >

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HR emerges as key concern The need to find the right personnel has emerged as a key factor in Malta’s future, with the EY Attractiveness Survey for 2016 showing this as the main concern.

In all, 79 per cent of foreign direct investors ranked this as the main focus area if Malta is to remain globally competitive, 16 percentage points higher than the 2015 survey. This was eight points higher than the second ranked focus: support for high tech industries and innovation.

The report found that demand for skilled labour outstrips supply in a number of sectors. Less than half (45 per cent) of companies said they were able to find the required specialised skills – although this is balanced out by the fact that there is a high level (87 per cent) of retention of specialised personnel.

Of course, the frustration of finding the right personnel is only one aspect of a tight labour market: it also puts pressure on wages.

Although two-thirds of the respondents still find wage levels to be attractive, they are increasing.

The gap between demand and supply could have an impact on Malta’s growth: 51 per cent of forms said that their expansion plans depended on filling the gap – while 30 per cent said that this did not affect them.

EY country managing partner Ronald Attard highlighted the problem in his foreword, noting that for the current dynamic economic sectors to thrive “the right level of stability, a competitive legislative regime and the right human resources have to remain the top priorities of public and private sector decision-makers.

“But do current investors believe this is happening? Less than half the respondents said they found the specialised skills they required on the local market and only just over half of them believe Malta’s legislation environment offers a competitive edge. This is down from three out of every five the previous year,” he wrote.

“Are we becoming victims of our own success? Could this be an

opportunity in itself?” he added when addressing the packed room at the Westin.

The importance of education was also taken up by the president of the Malta Chamber of Commerce, Enterprise and Industry Anton Borg who said in his speech: “The future is now, yet recent findings by the National Commission for Further and Higher Education have revealed that the country’s educational system dwells in yesterday’s past. It is not supplying the labour market with the skills in highest demand while producing among the highest early school leaver rates in Europe and worrying pass rates in core subjects. The modern Maltese forward-looking economy is in urgent need of significant investment in the education sector coupled with an overhaul of

“e EY survey found that Malta’s most attractive FDI parameters are its corporate taxation – 91 per cent”

archaic practices and teaching methods as well as outdated and ill-informed career advice.”

The survey also looked at what could be done to solve the problem and, by a huge margin, the suggested policy action was to introduce skill sets for the new economy, such as coding and robotics, followed by the development of national frameworks to encourage international internships or work

placements for Maltese nationals, and wider opportunities for relevant work placements as part of higher education syllabi. The fourth suggestion was to introduce a skills gap monitoring board.

The survey found that Malta’s most attractive FDI parameters are its corporate taxation (91 per cent), the stability of its social climate (88 per cent) and the stability and transparency of its

political, legal and regulatory environment (70 per cent).

Since the last survey, EY spearheaded policy proposals in five sectors – FinTech, commodity trading, Malta as a gateway for Asian eCommerce, logistics and reskilling regular immigrants.

In the near future, it will be launching a think tank with the exclusive task of delving into what action should be taken in order to enhance further Malta’s economic future.

“We would like to delve into what the education of the future, and for the future, would look like.

You will soon see that the challenge of finding the right human resources is paramount to investors. We will, therefore, endeavour to see what the best paths from the classroom to the boardroom are,” Mr Attard said.

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Preparing for the new Libya... from Malta Malta is being increasingly seen as a base for foreign companies waiting to pick up contracts in Libya, catching the attention of the Germans and the British.

Scores of German companies attended a seminar in Berlin last July – organised by the Libyan Maltese Chamber of Commerce, the Malta Chamber of Commerce, Enterprise and Industry and the German-African Business Association, around a dozen of whom then attended a recent reciprocal seminar in Malta. And the LMCC chairman Tonio Casapinta said they were already getting signals from other countries, and a similar event was being held in

November with the Libyan British Business Council.

The main objective of the German-African Business Association is to stimulate trade between Germany and the African states. Until 2010, Libya was one of Germany’s most important trade partners with about €4 billion in trade and 40 companies present in Libya.

Association CEO Christoph Kannengiesser said that although no one could forecast when stability would return to Libya, it was important to start preparing for that day, using this time to build up new contacts.

“We do not know how the political situation will develop over the

“ere is hope that political stabilisation is underway”

HOUSES AND BUILDINGS DESTROYED DURING A BATTLE IN SIRTE, LIBYA. PHOTO: ISMAIL ZITOUNY/REUTERS

months to come but there is hope that political stabilisation is underway and that by the end of the year, things will be much better than now.

“We believe it makes sense to be the first there. And we thought it was a very good idea to do that with our European partner Malta, a country which is very close to Libya with a very good knowledge

of the market. There are also many Libyans living in Malta and many Maltese active in Libya,” he told The Business Observer, noting that German companies could use Malta as a safe and easilyaccessible base.

He noted that there were already funds available through the international community which could be used by German

companies when the inevitable reconstruction of Libya started.

“Business always takes place, even in countries in crisis. In the African continent, where we are active, business activities takes place without governmental structures,” he shrugged. “A lot of companies are used to working under Continued on page 6

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NEWS

Malta has much to offer to Germans, Libyans Continued from page 5 these difficult scenarios. In Libya, the problem is that the security is not yet guaranteed all over the country which makes a physical presence difficult. No German company would send its staff there as no insurance would cover it and no compliance officer would accept it – although medium-sized companies are much less risk-averse.

Former German Ambassador to Malta Klaus Peter Brandes noted that the flexibility and the long standing relations of Malta with Libya – historically, politically and economically – combined with the German potential, made a compelling argument.

“There are numerous companies interested in the reconstruction of Libya. This has to be done for humanitarian reasons because we are not going to have political

stability unless there is also economic progress. You cannot have one without the other. Think of the movements from south of the Sahara to Europe,” Mr Brandes said.

Mr Casapinta said Malta had much to offer both the Germans and the Libyans. “We can offer our location and a safe background – they can base their families here and transit to Libya. Also we have connections with Maltese companies which understand the Libyan

mentality and which are prepared to wait for an order to come – as once it does, it is large enough to be worth the wait!”

Mr Casapinta also praised the role of the chamber, which had set up a task force and had meetings with government and Malta Enterprise to lobby for assistance for the 200-250 companies affected by the crisis.

“All the employees brought back from Libya have found jobs

in Malta... no one was left unemployed because of the crisis.

Thank heavens we were in a position economically to do so!

“There will be so much reconstruction work in Libya: there are places which are completely devastated. So there will be a lot of work in security and construction, education, health, utilities and of course more oil. We are planning for a hopeful future, whenever it is,” he concluded.

Standing up to the Chinese dragon European governments need to tackle the Chinese government over its trade policy in Africa, as Chinese companies are not playing by international rules, Christoph Kannengiesser, the CEO of the German-African Business Association, has warned.

Africa is the second-fastest growing region in the world and Germany has a considerable stake there. Almost 200,000 people are employed by German companies in Africa, with trade reaching €44.9 billion in 2013.

However, there are many fears that Chinese investment is crowding out other investors. China’s President Xi Jinping last year pledged $60 billion to African states – a considerable sum when you consider that UNCTAD reported that total FDI to Africa was $54 billion in 2015 (even though most of the $60 billion will take the form of loans and export credits).

“is is an international trade policy issue which should be addressed by European governments” This signals a significant change over a very short time: UNCTAD’s World Investment Report said Chinese FDI to Africa during 2013-2014 was only 4.4 per cent of the total to the continent, with EU countries, led by France and the UK, the overwhelmingly largest investors in Africa. However, the association is nevertheless concerned – primarily because Chinese engagement on the African continent is state-driven.

“Medium-sized south Chinese companies find good conditions for financing and they are sometimes sub-

sidised by the Chinese government in a way which is not allowed in the OECD framework,” Dr Kannengiesser said.

“Competition on the African continent is no longer OECD countries competing among themselves for emerging markets but OECD countries competing with the BRIC countries, and they are playing by completely different internal rules without international rules… And this makes competition complicated.

“This is an international trade policy issue which should be addressed by European governments when they talk to the Chinese,” he said. His association colleague Klaus-Peter Brandes – a former ambassador to Malta but also to various African states – believes, however, that African states are realising that cheaper is not necessarily better.

“Governments there have become more and more critical of the seemingly cheap offer from the Chinese side as it is not economical in the long term.

That is why German industry stands a good chance.”

Dr Kannengiesser believes that Germany and other European countries have no choice but to take part in this competition. “It is not about China bashing but about doing our homework. Often African governments tell us that they have no choice except the Chinese because no Europeans bid against them. There should also be a political debate among the governments on how to deal with business opportunities in Africa but also how to promote the economic development of the continent.”

There are, unfortunately, institutional bottlenecks relating to financing with some banks reluctant to deal with entire countries and even export credit agencies

imposing numerous conditions to be fulfilled by a country in order to be eligible for an export guarantee.

“In Germany, we have homework to do to make it easier for German companies to be competitive in the African context,” Dr Kannengiesser said.

“This is a political problem and on the international scene it is important that more people are aware that at the end of the day, we are all sitting in the same boat when it comes to Africa. The continent has a population growth of two billion by 2050 and these young people will demand jobs and will have life expectations.

“I do not think we are doing enough to promote private capital from all over the world to speed up the integration of Africa in the global economy – and it has to happen over the next 10-20 years if we are to avoid huge problems.”

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INDUSTRY FOCUS

PHOTO: DARRIN ZAMMIT LUPI

Budget 2017: the good and the not so good KPMG - Malta

Mark Bamber Advisory Services Was this a good or a poor Budget – and why?

This Budget needs to be viewed in the context of the US economic recovery, low global oil prices, developments in the EU, Brexit uncertainty and sharp devaluation of sterling, and past trends in the Maltese economy. Malta’s economic policy in recent years has focused on growth, with this Budget emphasising themes of social justice and investment. In the context of European growth rates, Malta’s economic growth in the first six months of 2016 is a very welcome result. So too is the reduction in the public deficit and the strong net new job creation, largely in the private sector. We also welcome the package of measures aimed at raising the quality of product Malta.

Perhaps one question is whether the Budget, in balancing an investment objective with a deficit reduction strategy, is going far enough to drive strong measures to address our immediate problems like infrastructure and connectivity?

Will it help Malta to retain its competitiveness?

The setting up of the Malta Development Bank is a welcome

addition to the economic infrastructure of the country, as is the setting up of the Malta Export Credit Agency and of an international accelerator for start-ups, the commencement of activity by the National Economic and Social Development Fund, and measures to reduce the bureaucratic burden faced by entrepreneurs. When implemented, they will collectively support our competitiveness. Of concern, however, is the immediate aftermath of Brexit, and how the devaluation of sterling will affect our trade in goods and services with the UK. Equally important will be the short-term decisions and initiatives to be taken over the coming year with regard to the cost of energy and fuel. Thirdly, the thinness and saturation of our labour market are potentially points of tension in our international competitiveness, and resolving resourcing shortages through the attraction of talent and manpower, and their attendant infrastructure requirements.

Will it improve our ability to attract FDI? The minister’s expression of support for the financial services sector and the integrity of Malta’s tax system, as well as govern-

ment’s commitment to the dynamic, innovative development of the legislative framework to ensure Malta remains competitive, yet compliant within the rapidly evolving international landscape, are important signals to strengthen our defence of incoming FDI momentum. Strong economic dynamics, a multinational and multicultural talent pool, and an exciting vision of Malta on the fast lane to further development, with the implied opportunities that this entails, should be a key driver for additional FDI.

Good Earth Distributors Matthew de Giorgio Director

The government has put a tax on non-alcoholic soft drinks but insisted that it was not a sugar tax.

Are you disappointed? Is the government doing enough to encourage a more healthy lifestyle?

Though we are still awaiting clarity from the government on what this tax consists of, I believe the government may not be seeing the bigger picture in its decision to tax non-alcoholic drinks.

We at Good Earth are trying to encourage a healthier and more natural lifestyle and we do our best to ensure that our products help

promote this. We offer an extensive range of high-quality bulk commodities, conventional, organic, fair trade and ethicallysourced goods. We believe that products should be taxed based on their nutritional value. Don’t wrap all drinks in the same blanket. We should be trying to encourage people to make healthier choices. Some drinks are ladled with unrefined sugar but other drinks contain more natural sweeteners like our birch water which contains naturally-occurring xylitol found naturally in the birch tree. The government needs to look at the whole picture.

Healthier people have fewer health issues and are less of a drain on healthcare. Malta is known the world over for its high rates of obesity and its rising level of type 2 diabetes. Let’s nip the problem in the bud and help people make the right choice.

Engel & Völkers Sara Grech Malta Benjamin Grech Managing director

The government has reduced the stamp duty for Gozo. Why did it feel that it had to do so and will it distort the market?

Gozo is unique; it has retained an abundance of culture and a heritage

which can still be felt in its quiet streets. I believe that the scheme of reduced stamp duty has been introduced with the intention to bring this beautiful historic island back to life. Many Maltese have invested in “holiday homes” all over Europe, in locations which do not even begin to compare to Gozo which is just a 20-minute ferry ride across the channel. I am sure that in the coming months we shall see a heavy increase in interest for investment in Gozo as a second home market. In turn, we cannot forget the importance of commercial property, cafés, shops, restaurants, etc. Their success depends on having more people frequent the island.

Baker Tilly Sant

Donald Sant Managing partner The government has given postsecondary graduates who start up a company with a turnover of less than €80,000 the option to do without an audit. The GRTU wanted many more SMEs to be exempted. What do you think of the measure?

Unfortunately, many people and businesses still do not fully understand the value of an audit and see it only as a “regulatory burden” and not as a measure

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for growing businesses to establish good management practices as they become economically significant.

International Standards on Auditing require close examination of an entity and its environment, including the entity’s control environment and internal controls.

Auditors are required to assess how management identifies and mitigates risk as part of the audit risk assessment. The annual audit for a small- or medium- sized business provides opportunity for an owner-manager to receive an external “health check” on the reliability of the financial information they use for decision-making purposes, including the way transactions are captured, measured, recorded and evaluated, by comparison to recognised reporting frameworks. As smaller businesses rarely employ internal experts, the external audit is often a cost-effective trigger for identifying where expert advice might be needed. Consequently, the external audit has an important role as a business grows and responds to the increasing level of interest from external stakeholders in an entity’s financial position.

A regulatory approach which promotes external audit not only reduces the risk of business failure but also equips smaller businesses

with an understanding of how to develop management practices that enable them to grasp opportunities while mitigating risk.

These skills are essential for continued growth and prosperity in a vibrant SME market like Malta.

Focus Software Solutions Ltd Anthony Lupi Managing director

Has the government done enough to stimulate innovation and to encourage investment in IT? In the Digital Malta/National Digital Strategy, the Prime Minister had described this as the commitment to actions to turn us into a digital society. But the focus is no longer on providing IT resources and skills at a cheaper cost, as was the case a decade or so ago. There are now other countries which can provide such skills at a cheaper cost. But, yes, the effort is there. The government does see that skills and expertise in IT will improve the country’s competitiveness.

In recent years, we have been hit by the increase in i-gaming companies which can offer higher salaries and attractive employment terms to our employees, luring them away or raising their salary expectancies to levels

which few local companies can afford. There are now insufficient skills to address the demand and IT training is a must. Mcast has helped and is today producing recruits of a good quality, but the numbers do not add up. They are still not sufficient and this has resulted in the importation of employees from other countries, which is fine, except that this introduces new problems.

Arrow Express Ltd Nikki Zammit Managing director

The Privatisation Unit has already issued the RFP for the logistics hub.

What are the implications for you?

This project is indeed a welcome step in the right direction, however, investment in the hub alone is not sufficient. All stakeholders such as ports, transportation companies etc, should start preparing for this in advance by making the necessary investment to be able to handle the increase in business that would be expected once the ILH is operational. Even though there is already a fair amount of trade being transshipped or hubbed through Malta, associated expenses for this type of trade are still too high locally,

compared to other countries, possibly making Malta seem unattractive as a hub to international traders.

For such a project to be successful, it is important to look at countries like Singapore, the United Arab Emirates and the Netherlands, who, by the creation of these logistics hubs, have created value by reducing the costs associated with the transportation, storage and distribution of goods from producer to consumer, thereby improving competitiveness. These countries have shown how logistics hubs have provided the catalyst to economic growth, particularly the Netherlands, whose logistics sector alone accounts for eight per cent of total employment.

Creek Developments

Etienne Bonello DuPuis Managing director The government is finally going to go ahead with the Marsamxett breakwater. What impact is that going to have on the marinas in the creek?

Generally, any significant government investment in the Maltese yachting industry infrastructure should be viewed in a positive light.

At present, the only marina in Marsamxett harbour which is completely sheltered from the dangerous northeasterly swell is the Msida and Ta’ Xbiex Marina, operated by Creek Developments plc. The addition of a breakwater at the entrance to Marsamxett Harbour would be of benefit to all the marinas in Marsamxett, increasing the availability of safe all-weather berthing spaces and improving the overall quality of the Maltese yachting offering.

However, it should also be considered that a breakwater affects water movement and may therefore significantly impact the seawater quality in the enclosed body of water.

The Marsamxett area differs from the other Maltese ports sheltered by breakwaters due to the relatively narrow entry and the very high population density surrounding the port. Hence it is essential that proper studies are carried out prior to commencing construction, to ensure that other stakeholders in the area surrounding Marsamxett, such as residents, hoteliers and other water users are not negatively affected while marinas benefit.

One assumes that such studies are planned and we look forward to the consultation process.

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INTERVIEW

Find your ‘wow’ factor – Lanksy Considerable emphasis is placed on tourists’ comments when they leave a holiday destination, but travel writer Doug Lansky is not quite convinced that this is what should preoccupy tourism authorities.

“If you ask departing tourists what they thought about Stockholm, they gush that it was a very clean city.

“But I think we can be pretty sure that when they were sitting at home trying to decide where to go on holiday, they didn’t say ‘Oh, let’s go somewhere clean this year’…” he told The Business Observer.

Mr Lansky was in Malta to speak at a recent conference for tourism stakeholders organised by Impact Consulting, but when the Malta Tourism Authority found out about his visit, they took the opportunity to ask for his assessment of Malta as a tourism destination – the results of which were not made public.

Apart from being a travel writer, Mr Lansky is also a tourism development advisor, specialising in destination audits.

The owners of high end properties often put pressure on tourism authorities to attract more high end visitors. But raising rates and occupancy depends on three things, not all of which are in the hotel’s control. The first is clearly to improve the hotel itself – but paradoxically, the second is to stop building hotels, he warned.

“When there is a scarcity of product, the rate goes up,” he explained.

However, the third and more effective way to attract high end visitors is to improve

SAN FRANCISCO’S LOMBARD STREET IS GOING TO CHARGE VISITORS AS A WAY TO REDUCE NUMBERS AND KEEP THE EXPERIENCE POSITIVE.

DOUG LANSKY

the rest of the environment – and he felt that the sea around Malta was crucial to protect.

“Even if it has a lovely pool and spa, the sea around the hotel is what matters,” he said. “It also helps to have better architectural standards, nice shaded areas and good restaurants and so on. But you cannot just go for the path of least resistance and let hotels invest in better rooms. It is not as easy to fix the environment outside and that is why it is being neglected in so many destinations. But on average, 80 per cent of a tourist’s spend is outside the hotel. So that is the place to be focussing your attention.”

“ It helps to have better architecture standards, nice shaded areas and good restaurants”

Mr Lansky has been to over 120 countries but had never been to Malta before, admitting that as a downhill skier and kite-surfer the island was not an obvious choice for him. But he also confessed that it lacked what he called “that epic thing” which caught a potential tourist’s imagination at the time they were deciding where to go.

“There are so many destinations and the cost of long-haul flights is no longer the deterrent that it was,” he added.

“This is why so many destination managers are now also looking at marketing, who will use their influence to make things change. I guess that when I stand in a bar and tell someone where I have been, I want to them to have a ‘wow’ moment, when they put down their glass and ask what it was like…

“You have to think if you have one iconic photo to put up which would catch the attention of all these hundreds of thousands

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INTERVIEW

of potential visitors, what would it be? You want to see someone doing something in that photo that you can either imagine yourself doing or imagine your child doing.

You have to want to put it on your Facebook feed as a ‘brag’ photo,” he said, admitting that he had not had that sort of visceral reaction from anything he had seen in Malta.

“Your water quality is amazing and you have to protect it as much as you can – which includes sitting on the beach, which you can also mess up as so many other places have, like Surfers’ Paradise, by building high rises which cast shadows over the beach.”

He is also a great believer in sustainability and said that limiting supply could be very beneficial – although he declined to give examples in Malta.

“In Iceland, for example, they know that 80 per cent of visitors want to experience the thermal hot springs, and that 2,500 a day can visit. So you can match that against how many tourists there are in the country and the frustrations of people who turn up and cannot get in. So why is the Icelandic airline trying to increase the number of seats available if the main attractions are already full? There is going to be somewhere in every destination where there are too many people. It drives the locals bananas and it is not good for the visitor experience either.

“At some point, you need to decide whether you want it to be an awful visitor experience or if you want to cap it in a smart way. What is your bottleneck here? Is it the Hypogeum or Comino or Mdina or Valletta’s cathedral?

“Mr Lansky is a great believer in removing even minor irritations from the surroundings and using common sense to make things work better”

“Dubrovnik is limiting the number of visitors and San Francisco’s Lombard Street is charging visitors. Venetians recently swam out and formed a human blockade to stop cruise ships… ” he said, referring to a protest which has become virtually an annual event.

“And cruise ships are not bringing in the money that people think they are. Most of the numbers are given by the cruise companies which have an agenda to make it sound positive, according to academics who have done studies on this… And they use the figures to negotiate a better deal on port fees, all based on faulty data. That needs to be looked at – everywhere! It is always worth doing a critical study yourself.”

MORE THAN 600 BIG SHIPS PASS THROUGH THE GIUDECCA CANAL EACH YEAR, FERRYING MILLIONS OF PASSENGERS TO VENICE. PHOTO: MEUNIERD/SHUTTERSTOCK.COM

Mr Lansky is a great believer in removing even minor irritations from the surroundings, and using common sense to make things work better, something he has learned over his decades of travel writing.

Simple examples? Why would you have a 90-minute parking limitation in a tourist site which could sustain two-hour visits?

“Why would you want to limit the time that they could otherwise use in restaurants, coffee shops, souvenir outlets, attractions or museums?” he said, shaking his head.

“This is just one very small example of where infrastructure can have an impact on tourist spend.”

His audit took into account 25 factors, ones which affect different people to different extents – but he was very careful to point out that what motivates a tourist to book a destination is very different to what actually affects them when they are there.

“Modern tourism has only been around for about 60 years and we are not really hard-wired to stand around and look at stuff. Hundreds of thousands of years have trained us to be hunter-gatherers,” he explained.

“Which is why we now shop and dine!

That is why these two activities are so comfortable to us when we are travelling…”

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CASE STUDY

A vision to connect the world In business you have to have a vision. And if you are going to have a vision, it might as well be a big one. David Borg Hedley certainly has that. Fexserv has spent over three years working on its mobile payment solution, wanting something that went well beyond anything on the market – and also something that would be wellplaced to compete with the ePOS systems that so many merchants only grudgingly use.

The general manager explains that the new system, Myney, is aimed at consumers but that it really comes into its own for merchants, offering a very competitive fee structure that will give them alternatives to the set-up, negotiable fees and ongoing commissions associated with ePOS. It was developed in conjunction with NTT Data Italia, a subsidiary of NTT Data of Japan, one of the world’s largest IT services companies and has functions which Mr Borg Hedley said take it to a whole new level – making it a serious contender for international take-up.

“What we have put together is also new to Europe and the world.

There is nothing like it in terms of functionality,” he said.

In fact, Myney was promoted at recent financial services mega-conference – SIBOS in Geneva –from the NTT stand, attracting considerable interest and media coverage.

“We also spoke to Innotribe, a division of Swift, and the high ranking official set up a Myney account there and then as we were speaking. He loved the system!”

Local take-up has been better than expected – encouraging for a totally new product – mostly due to the hands-on approach of his sales team. But these early adopters will, undoubtedly, encourage others to use Myney, resulting in exponential growth. He said that 86 businesses and professionals are already accepting mobile payments, with well over

DAVID BORG HEDLEY. PHOTOS: DARRIN ZAMMIT LUPI

another hundred interested and at various stages of adopting it.

The focus has been on making it accessible with a business model based on volume and not revenue.

“From the point of view of an individual, we wanted it to be free and only charge a pittance if over 100 purchase transactions are made during a particular month.

“For merchants, a €35 annual fee for an account is charged, and every month100 transactions are free with €2 for an additional 100,” he said. “And if the money stays within the Myney system, rather than being transferred out immediately to a traditional bank account, there are pretty much no

“Very soon we will have some 600 shops accepting Myney payments. Because it is so straightforward, many people use it for even small transactions” extra charges for merchants. They can use the funds to pay their suppliers, their employees’ salaries and so on. If they, however, transfer money to a bank account, then we would charge one per cent – which is still competitive to what is charged for ePOS.”

The purchase process offers merchants three ways for accepting payments: either by directly letting the consumer scan the QR code generated by the merchant’s smartphone; a beacon which transmits the data from the merchant’s smartphone to the con-

sumer’s smartphone for approval; or an integration of the Myney software in the cash-register system of the large entities like supermarkets or retailers which would link with the press of a button to the customer’s smartphone. Q Supermarket in Paceville is using the latter, and the Convenience Shops are installing it across all their 40 outlets across the coming weeks.

In the near future, it will also be possible to use it to pay utility bills.

“Very soon, we will have some 600 shops accepting Myney payments. Because it is so straightforward, many people use it for even small transactions – and we encourage shops not to impose a

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CASE STUDY

minimum spend. I have even bought milk with it!” he said, noting that there was no minimum upper limit.

“It is faster than paying with cash (not to mention safer than carrying cash around) and much faster than using a card.”

In its simplest form, a trader requiring payment would merely enter the amount owed by the customer’s and a QR code will be displayed which the customer’s phone can read, or the beacon can be used. All the customer needs to do is accept and the payment is made there and then – already an improvement over the two days it would normally take for the payment to get into the trader’s account.

A huge advantage is that the system only needs Wi-Fi or a 3G connection, meaning that traders on the move can also use it, from flower vendors to doctors making house calls.

Setting up an account has also been made as easy as possible, with everything being done over the smartphone – including taking photos of identity documents and automatically reading and registering the information – and even verifying them against a selfie of the applicant. Money can be transferred to the account in numerous ways, all linked to the unique Iban

“Once people make the first purchase, they will be completely hooked.

It’s so easy and free” number generated on registration which takes just a few minutes.

It is a bit different for business: after all this is a financial product, authorised by the Malta Financial Services Authority, and Fexserv has six compliance officers, a ‘know your customer’ procedure and due diligence to ensure that the system is not abused. Neverthless, Mr Borg Hedley said a business account could be concluded within a few days.

There are also conditions imposed with regards to younger clients in terms of functionality available and the maximum value of transactions.

The system was designed with security in mind. The money is held in the customer’s account – not on the phone itself – with the customer able to opt for the

minimum value before a PIN is required, if at all.

Now that it has been launched in Malta, the world beckons and the company is ready to grow as required, having already added 40 to its headcount of 24 – every department having grown.

“Having an EU member state’s licence means that we can use passporting to offer it across the EU, but we can also partner with other institutions in other jurisdictions. It is capable of handling international currencies too, so we are able to offer an eco-system for each country,” he said, adding that this was a natural thing given Fexserv’s roots in this sector. A prepaid card is also available and the system also comes with a digital version of Fexserv’s popular One4All gift vouchers branded as Myney Gift.

“The system was designed to be customised to different scenarios.

For example, it can be linked to a public transport card. We are also looking at communities – say networks of a few thousand people – to get them on our system. Where will we be in five years’ time? We had a plan before we even started.

There is no reason at all why anyone who has a smartphone would not have the app and once they make the first purchase, they will be completely hooked. It’s so easy and free.”

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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

Publishers Allied Newspapers Ltd. Content House Group Ltd.

Writing on the wall It is hard to know which of the two political leaders was more aggravating at the recent EY conference: Opposition leader Simon Busuttil for trying to teach his erudite audience how to suck eggs, or Prime Minister Joseph Muscat for giving a soapbox speech just minutes after hearing that investors were increasingly concerned about Malta’s stability.

The stability and transparency of Malta’s political, legal and regulatory environment fell by a shocking 15 percentage points, from 85 per cent to 70 per cent, in just one year.

Perhaps what is even more shocking is that there were so many scandals which could have affected this vote of less confidence, from the Panama Papers to Gaffarena’s property deal.

EY’s country managing partner Ronald Attard could not have spelled it out any more clearly in his speech at the conference: “On the negative side, the stability of our political and legal environment has taken a knock. While in comparison with other countries Malta still scores highly on these benchmarks, this dip cannot be ignored. For an island with no natural resources and whose future depends only on its people, its geographic location and EU membership, this cannot be ignored.”

Dr Muscat gave an uplifting speech, ticking off a list of undeniable achievements since taking power, from the doubling of the economic growth rate to a 10 per cent increase in economic sentiment. He said that prior to the election, unemployment and government debt were rising, while investment was falling – all trends that had been reversed with record levels of jobs being created, falling deficits and three times as many applications to Malta Enterprise as in the previous three years. He pointed out that whereas at the rate under the Nationalist

government, it would have taken 40 years for Malta to catch up with the EU average, but that it would now only take 10.

However, his only nod to the other realities in the island was to admit that there was “an infrastructural deficit”. A mass meeting speech somehow does not work as well when addressed to well over 500 of the movers and shakers on the island, who know full well what the real cost to Malta will be of allowing its reputation to slide into the Panama Canal.

On the other hand, Dr Busuttil made a tepid speech better suited to a Sunday morning party club, delivered in a mind-numbing monotone, word by word as though his audience might not otherwise understand the big words he was using. He managed to complain about a number of things which were clearly a legacy from the PN government, like the public debt and poor infrastructure (decisions like building a breakwater bridge to nowhere instead of a new junction somewhere or other). He called for cheaper electricity tariffs, when it was the PL government that has already lowered them, and for Air Malta to be protected, when it was the PN government which allowed it to become bankrupt in the first place.

His final point redeemed a speech that would otherwise have been utterly forgettable: he called for the government to acknowledge the fact that reputational risk damages the country’s future. His parting shot?

“Sort this out before going into the EU presidency” reminding us all that we cannot bury our heads in the sand, hoping that it will all go away.

If Joseph Muscat is Malta’s Trump – believing that enough bluster can hoodwink his listeners – then Simon Busuttil is our Hillary Clinton, with all the right credentials and an inexplicable inability to resonate with voters on the other side.

Advertising Enquiries Tel: 21 320713 Email: info@contenthouse.com.mt Advertising Sales: Matthew Spiteri Head of Sales Kurt Cauchi Brand Sales Manager Rose Caruana Advertising Sales Executive Lindsey Napier Marvic Cutajar Advertising Sales Coordinators Printer Progress Press Ltd.

BUSINESS OPINION

Mass transport… and other measures

Maria Attard Travel is closely related to lifestyles and land use and as standards of living improve people increase their activities and seek more and distant opportunities. This causes increased travel followed by an increase in infrastructure supply.

Careful land use and transport planning ensures that activities and their locations match and satisfy lifestyle needs. Over the years Malta’s increased car ownership quickly translated into car dependence as income increased, activities became more demanding and the reliance on the car over any other mode of transport increased.

This was all fine until we realised that all this mobility comes at a cost. For many countries this realisation came in the 1990s when cities experienced gridlock and pollution levels threatened public health. A new paradigm for transport was therefore proposed, one which moved away from the car and focused on greener and more efficient modes.

One after another, cities started to focus their efforts on restraining car use and building infrastructure able to carry large numbers of people efficiently. City centres were pedestrianised and cycle lanes expanded. Slowly, the space for cars was replaced with spaces where people can access public transport (unhindered by congestion) and can walk and cycle.

These cities are called progressive and future looking.

Malta followed the same initial path by increasing infrastructure for cars through the building of an extensive road network and uncontrolled parking, so much so that cars, whether moving or parked take up much of the public road – the same one which used to serve communities walking to school, to shops and to engage in other activities in our villages.

Congestion, accidents, climate change adaptation, noise and air pollution cost the economy a whopping €274 million in 2012.

The WHO estimated the economic costs of premature deaths in Malta from air pollution at €540 million in 2010.

Much more needs to be studied about the wider impacts on public health, equity and social exclusion for the transport disadvantaged.

But it is the congestion and gridlock situations that hit people hard, with much written on the local media about the need for a solution.

I here refer to drivers, bus users and pedestrians, since despite the latter not contributing to congestion and pollution, they suffer just the same.

“With little investment in car restraint only a bus-based mass transit system is feasible” Much of the discourse has focused on a solution in the form of a mass transport system. This slight change from “building more roads” might suggest that we are approaching an understanding that we cannot build ourselves out of congestion. In terms of actions, sadly we are still pretty much building more roads and more infrastructure for the car.

So is the mass transport system going to solve the problem?

The answer is that if planned and designed separately from a wider strategy that looks at integrating land use planning, restricting car use, managing parking and giving streets back to the people,

then no! More important, for a mass transport system to work, it requires priority – priority in terms of dedicated road space, consistent political and financial investment, and a long-term plan that ensures successful implementation and sustainability.

Mass transport systems are a wide variety of systems that range from segregated bus systems, trams and light rail, trains and underground systems.

Considering the islands’ geography a quick review of these systems suggests that with little investment in car restraint only a bus-based mass transit system is feasible.

If given the right priority, this has the highest chance of success due to its low cost and short-term implementation. Bus rapid transit systems have recorded high levels of success in many cities and they could well turn out to be a very good first step.

However, with a stronger commitment towards prioritising public transport and disincentives towards car use, more ambitious segregated tram systems might be feasible in the long-term if proper demand studies are carried out and the system is phased in such a manner which complements car restraint and parking management, integrated land use planning, regeneration of town centres and complementary bus and active transport is encouraged.

Sounds impossible? No. Malta has a track record of also taking difficult decisions in transport.

The decisions to pedestrianise streets and squares, the investment in park-and-ride systems, the introduction of the CVA system in Valletta, are all very good examples.

All had documented positive impacts on people and place. But the success of introducing these measures and other more difficult ones is dependent on a number of factors including timing, purpose and goals and most important, a political champion.

Maria Attard is head of geography and director of the Institute for Climate Change and Sustainable Development at the University of Malta. www.um.edu.mt/iccsd

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NEWS

Global trade could save economy Ross Finley and Rahul Karunakar The world economy needs international trade to pick up, according to Reuters polls of hundreds of economists who see no end yet to the aggressive monetary stimulus through which central banks have tried to prop up inflation.

In recent months, central banks from India to Britain to Brazil have become more accommodative with policy, leaving the US Federal Reserve, which is widely expected to raise rates in December, looking like an outlier.

Financial markets are already showing unease, with sovereign bond yields up from record lows, many stock markets looking shaky and investors warily eyeing the price of oil, which appears to have awoken from a long slumber. “[A] pick-up in international trade volumes is needed for stable global economic growth,” noted Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities in Tokyo.

The US economy is not expected to grow much faster than two per cent throughout 2017, with a steady slowdown in hiring and a dearth of optimism that business investment is set to finally rebound.

Europe appears headed for another extended period of lacklustre performance and very low inflation, exacerbated by the uncertainty that now follows Britain’s vote on June 23 to leave the EU. While 2017 is still forecast to be better than this year for global growth, economists and forecasters like the International Monetary Fund have cut predictions as the year has progressed.

Median forecasts from the poll of over 500 economists taken over the past week showed global growth at 2.9 per cent this year and 3.2 per cent next, barely changed from the July poll. The main difference this time is that economists have chopped their inflation outlooks for most countries, with lower highs and lower lows.

About three-quarters of the economists in the poll said that reviving international trade was more important now for the world economy than boosting inflation.

This follows an extended period of slowing trade growth.

The World Trade Organisation cut its trade forecast for this year by more than a third last month and growth in international commerce is now forecast to lag the world economy for the first time in 15 years. The WTO anticipates 2017 trade will rise 1.8-3.1 per cent rather

“Europe appears headed for another extended period of lacklustre performance”

than the 3.6 per cent it had estimated in April.

The IMF noted in its latest economic outlook that the volume of world trade in goods and services is less than half the average rate of

expansion during the previous three decades.

A trade agreement negotiated over more than half a decade between the EU and Canada has also recently run into very shaky

ground. Aside from Britain’s vote to leave the EU, the political climate elsewhere in Europe and in the US is much more hostile to further globalisation and expansion of free trade than a few years ago.

The economists said US Democrat candidate Hillary Clinton, generally perceived as more open to global trade agreements, would be better for the economy in the long run. (Reuters)

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STOCK MARKET REVIEW

Is the ‘natural yield’ sufficient?

Edward Rizzo The natural yield of a person’s portfolio (comprising financial

investments as well as other assets) represents the annual income received in the form of dividends on shares, interest on deposits at banks, interest on bonds, as well as rental income from investment properties.

Historically, many investors followed the ‘natural yield’ theory of investing whereby investors generated a sufficient income from the assets within one’s portfolio to sustain their standard of living and maintain the capital value of their portfolio.

However, in today’s unprecedented environment, yields on many investments have declined

substantially. Idle cash in a current or savings account generates little or no interest whatsoever. Yields on bonds have also dropped substantially and likewise dividend yields have also declined as many share prices have rallied in recent years precisely as a result of the decline in interest rates.

The natural yield of a portfolio has subsequently declined markedly when compared to the years before the 2008 international financial crisis when yields were far superior to today’s levels. As an example, a 10-year Malta Government Stock used to produce a yield

“In today’s unprecedented environment, yields on many investments have declined substantially”

of 4.7 per cent in October 2008.

This declined to four per cent in 2012 and it is now at just above 0.9 per cent.

The strategy of relying on the natural yield is therefore under threat for people trying to maintain their standard of living only through the natural yield on an investment portfolio. The problem is amplified as a result of an increase in life expectancy.

Meanwhile, although investors who built up their portfolio several years ago are still producing a relatively attractive natural yield, such investors are also experiencing

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STOCK MARKET REVIEW

these challenging conditions when bonds (whether Malta Government Stocks or corporate bonds) are maturing (at times also earlier than the final redemption date) and new bonds are being issued at much lower yields.

Various bonds (both corporate and Malta Government Stocks) redeem throughout a year and, as such, many investors have had to deal with this reality for the past few years. Unfortunately, it is becoming even more challenging as a result of the continued decline in yields as evidenced again with the new Malta Government Stock issue at a yield of below two per cent for a 23-year bond!

In the circumstances, a change in investment strategy is required whereby a portfolio needs to shift away from the traditional ‘buy and hold’ strategy and be more actively managed to capitalise on gains and other investment opportunities on an ongoing basis.

A clear example of this is found in certain shorter-dated Malta Government Stocks. The prices of these bonds have increased so much in value that an investor can dispose of the bonds now and take all future interest payments five years, six years or seven years in advance.

The capital can then be reinvested – even if this would mean at much lower rates of interest. In such a way, investors are also protecting the capital value of their portfolio.

A few years ago, I had published an article about ‘lifestyling’ an investment portfolio. Basically, conventional theory dictates that as an investor approaches retirement age, an increased allocation to bonds is normally recommended as many retired persons become more dependent on the income generation of their investment portfolio. The general rule is that the bond allocation in an investment portfolio should equal one’s age. Therefore, a 30-year-old starting off an investment portfolio should only retain a maximum 30 per cent allocation to bonds with the balance of 70 per cent in equities and other asset classes. On the other hand, a 65-year-old should have a bond allocation of at least 65 per cent with the balance of 35 per cent in equities and other assets.

However, this conventional theory is also under threat and such a portfolio allocation may also not

necessarily produce the desired results nowadays due to a decline in the natural yield. Investors may therefore need to change strategy and take on more risk to generate adequate returns (both income and capital gains) from their portfolio.

This change seems to have already started taking place as was evident in the rally in some share prices over the past two years. Many share prices of companies producing sustainable dividends surged on the back of a significant increase in demand for income-generating equities. The equities of companies such as Plaza Centres plc and Tigné Mall plc more than doubled in value while the share price of Malita Investments plc is up around 56 per cent over the level of mid-2014.

Additionally, investors have also become more active participants even in certain investments normally regarded as ‘buy to hold’. In fact, as a result of the low-yield environment, investors are piling into bonds at times purely for speculative purposes with the intention of crystallising an early capital gain – and not with the aim of earning interest over the duration of the bond.

In last week’s article, I mentioned the high level of trading activity in the 2.4 per cent MGS 2041 (I) which commenced trading on August 23, 2016. Since the start of trading, a total of €60.4 million nominal of the 2.4 per cent MGS 2041 (I) changed hands on the secondary market, representing 39 per cent of the total amount in issue in this stock.

“ere is a need for new investment opportunities, both from a bond perspective and also from an equity perspective”

This clearly indicates that a large number of investors have since sold their allotment following the quick appreciation in the price of this 25-year bond. This strategy, however, entails a significant amount of interest rate or price risk. Investors must not overlook the fact that at some point in time, as yields begin to climb again (this is already taking place in other parts of the world such as the US and UK), quick price gains may not materialise and investors may suffer losses by following such shortterm investment strategies.

Once the interest rate cycle reverses, it will also naturally affect those investors holding a sizeable allocation to medium and longterm MGS as prices will decline across all securities. However, last week’s credit rating upgrade for Malta bodes well for continued appreciation of prices of mediumand long-term Malta Government Stocks as an adjustment is necessary to bring yields in Malta closer to yields seen across other countries with a credit rating of ‘A-’.

In view of the requirement for more attractive and stable sources of income, there is a continuing need for other corporate bonds to be offered to investors together with equities producing sustainable dividends. While it is true that there is a much larger element of credit risk when investing in corporate bonds as opposed to Malta Government Stocks, the difference in coupon may somewhat offset the shortfall in the natural yield. This can also alleviate the widespread demand for income-generating securities which is leading to speculative price movements in the first few days of trading following the listing of a new bond.

Clearly, with banks no longer providing savers with an adequate rate of return on their savings, there is a need for new investment opportunities, both from a bond perspective and also from an equity perspective.

Hopefully, the important incentives announced earlier this week in

Rizzo, Farrugia & Co. (Stockbrokers) Ltd (RFC) 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.

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. © 2016 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved

the 2017 Budget Speech by the Minister of Finance will encourage many well-known and mature local companies to offer shares to the growing investment community.

The reintroduction of the tax exemption on capital gains upon the sale of shares to the public through a listing on the Malta Stock Exchange should instigate many local companies to conduct an Initial Public Offering of shares.

Furthermore, the measures being introduced enabling shareholders to claim a refund of the tax at source on dividend income from listed equities with respect to distributions made out of profits derived on or after January 1, 2017, is another interesting initiative that should lead to an increased demand for local equities.

Edward Rizzo is a director at Rizzo, Farrugia & Co. (Stockbrokers) Ltd.

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BUSINESS UPDATES

GNV – back in Malta with a new freight service

Changing the rules of engagement: an agents’ platform Sara Grech Ltd has a heritage of 60 years within the local real estate industry and knows that the professionalism of an estate agency rests in the hands of its agents.

As the real estate environment becomes more demanding, talented and focused, agents seek stability and consistency. But working as an agent with income stability has never been possible – until today.

All new agents recruited to represent Engel & Völkers Sara Grech will have a fixed income with the benefits of performance-oriented bonuses.

Changing an agent’s rules of engagement not only attracts those individuals who are seeking a more exciting sales role but attracts those sales-oriented company personalities who have

great passion for sales and lots of corporate ambition, allowing them to earn an even higher income compared to a solely commissionbased role.

E&V Sara Grech’s groundbreaking and revamped market centre in Mrieħel helps the agents work within a large team environment. It increases performance, allowing them to expand even faster in important areas and sustainably increase its share of the market. Some of its top sales agents are now already achieving the highest turnover of an entire branch on their own.

By becoming a part of the E&V Sara Grech world, one would benefit from the unique advantages of the platform. E&V Sara Grech, easy to remember, hard to forget.

GNV has opened a new route from Palermo to Marsaxlokk’s ro-ro terminal.

The new freight service strengthens the network of routes that GNV offers to its customers and will connect Malta with the ports of Genoa, Civitavecchia, Naples and Palermo on a weekly basis.

GNV registered a very positive response from the market, with 1,000 linear metres of trailers and other commercial vehicles on the first call.

The company is already planning to double the numbers of connections throughout the year, starting from December.

“Our priority was the reactivation of service in favour of the freight mar-

ket and the satisfaction expressed by customers is very encouraging,” said Pierfrancesco Vago, a member of the Aponte family which owns GNV and chairman of the GNV Executive Committee. “We would like to extend our service also to the passenger segment as soon as possible. Thanks to the comfort of the ships and the highest quality of services on board, we believe that a medium- and long-haul passenger service providing direct connections with major ports in mainland Italy can be of strong interest for Malta, which is currently engaged in a sustained campaign to promote incoming tourism.”

GNV are represented locally by the Gollcher Group.

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BUSINESS UPDATES

Virtu invests €75 million in cutting-edge, high-speed wave-piercing catamaran Valletta 1566 – Melita Renascens: exploring different aspects from different eras This year marks the 450th anniversary since the laying of the first stone of Valletta.

To commemorate this occasion, Heritage Malta, with the collaboration of Malta Libraries, is presenting an exhibition entitled Valletta 1566 – Melita Renascens.

The exhibition is another hallmark in the series of high standard exhibitions organised by Heritage Malta. It explores different aspects from different eras of Valletta during the past 450 years.

Valletta 1566 – Melita Renascens relies on 11 different themes which are defensive ensemble, urban fabric, the gates, the convent, seat of government, a lived-

in city, amenities, political hub, wind of change, changing face of Valletta and cultural resources.

The exhibition will remain open until July 2017. It is split between two venues. The opening hours at Vendome Bastion, former War Museum, are from 9am till 5pm (last admission at 4.30pm) while, at the National Library, the exhibition is open between 8.15am till 5pm and on Saturdays from 8.15am till 1pm.

For more information about the exhibition and other events organised by Heritage Malta, visit www.heritagemalta.org, or follow the official Facebook page, HeritageMalta.

Virtu Ferries has signed a newbuild contract with Incat Tasmania Pty Ltd to build a high-speed wave-piercing passenger/vehicle catamaran for their Malta–Sicily route. Delivery is scheduled for the fourth quarter of 2018.

At 1,000 tons deadweight, the vessel will be the largest RoPax Catamaran ever built for operation in the Mediterranean, and the second largest in the world. The vessel will have a capacity of 900 passengers in four luxury lounges on two passenger decks and additional outside seating. The full span of the garage deck is designed to carry 23 heavy commercial trailers, equivalent to 490 truck lane metres or 167 cars.

At a cruising speed of 38 knots, the Malta to Sicily crossing will, as with the Jean De La Valette, take approximately 90 minutes.

Incat Tasmania are the world leaders in building large environmentally-friendly high-speed ferries with an emphasis on eco operations and fuel efficiency.

Using state-of-the-art Computational Fluid Dynamics and hydrodynamic free-running model test techniques, the well-proven Incat wave-piercing catamaran hull form has been further developed for this exposed route.

The hydrodynamic tests were undertaken by Seaspeed Marine Consulting Ltd at the Haslar

Ocean Basin and Ship Tanks in Gosport, the UK – facilities normally associated with the UK’s Ministry of Defence projects.

The catamaran hull design has been further developed to minimise fuel consumption, increase passenger comfort and sea-keeping performance, at the desired contract speed, in simulated sea conditions prevailing in the Malta channel.

This is in line with established green policies being recommended by the international maritime industry.

Virtu Ferries has been operating high-speed ferries for 28 years and, apart from the Malta-Sicily route, operates ferries between Venice and Adriatic ports in Croatia and Slovenia as well as Tarifa, Spain and Tangiers, Morocco.

The new vessel will be deployed on Virtu’s core route be-

tween Malta and Sicily alongside the Jean De La Valette. The current schedule of daily return voyages between the neighbouring islands will be further increased to better connect Malta to the mainland.

Virtu is also looking into further market-driven route expansion; a second vessel will increase flexibility and reliability. The company is undertaking a number of initiatives to increase incoming tourism and better serve the Maltese and Italian business communities.

The new ferry will be built under DNV-GL Classification Society Rules and will comply with IMO High Speed Craft HSC 2000, the Malta Flag Statutory Regulations and Italian Port State requirements.

As with all other Virtu vessels, the new ferry will fly the Malta flag.

APS Bank to operate €12m innovation facility for Maltese SMEs Over the next two years, APS Bank in collaboration with European Investment Fund (EIF) will make available a loan portfolio of €12 million to support local SMEs in developing, streamlining and innovating their operations, products, services or financing business transfers, subject to certain terms and conditions.

The InnovFin Scheme is applicable to a wide range of business sectors and falls under the Horizon 2020 EU Framework Programme for Research and Innovation. InnovFin provides for 50 per cent risk sharing by the EIF, resulting in a maximum guarantee of €1.2 million per SME, on

the financing of business loans not exceeding €2.4 million. It also offers competitive interest rates with a maximum repayment term of 10 years.

Commenting on the initiative, APS Bank CEO Marcel Cassar said that the bank “has a centennial tradition of supporting community entrepreneurs who have always been the backbone of the economic progress of our islands. We would particularly like to see innovative projects in environment, technology, science, education, culture, health and social care.”

SMEs interested in applying for the scheme are urged to contact APS Bank’s Commercial Business Unit for an

appointment by calling the APS customer support centre on 2122 6644.

For more information about InnovFin, visit the bank’s webpage at www.apsbank.com.mt/InnovFin.