Business Observer 25th October 2018

NEWS

Issue 91

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Distributed with Times of Malta

October 25, 2018

Public holidays will gradually all be returned to workers – Scicluna

e European Commission is finalising an extensive report on schemes granting EU citizenship to investors, and will be publishing the report in full by the end of 2018. see page 7 >

Marie-Claire Grima Finance Minister Edward Scicluna has confirmed that the Government plans to continue restoring public holidays which fall on a weekend back to workers as additional leave days, year by year.

Speaking to this newspaper after the announcement of Budget 2019 on 22nd October, Prof Scicluna said that this was how workers benefitted from the profits of business, and that Government would not be introducing compensatory measures to the private sector. “That’s the last thing Government should be doing,” Prof Scicluna said. “Businesses need time to adjust, not help or benefits. This measure has been in the electoral programme from the very beginning, and it’s going to be spread throughout the legislature – one more day of leave per year. As an economist, I know that businesses don’t want surprises, but this is not a surprise anymore.

They know it’s coming, they have time to adjust their costs, and when they come to the collective agreement, they will take it into consideration as well.”

Prof Scicluna said that labour shortages were another issue, and that much had already been done to tackle them. “Malta cannot get bigger. We can only increase the labour force participation rate. I still remember when we were talking about 2020 targets, which were in the low 60s. Now, the participation rate stands at 71 per cent. We have raised the bar higher and higher, thanks to measures such as free childcare.

NEWS Health and safety issues on construction sites remain a concern, but there’s more awareness of the risks involved, and the measures that should be taken to prevent them. see pages 9, 13 >

CASE STUDY

We’re now closer, not to the EU average, but to the labour force participation rate of some of the most advanced countries in the EU. That’s when you reach the saturation point. Then, there’s the question of skills, which we are working closely with tertiary education institutions to address.”

The economy in Malta is currently so active that it may seem to be on the verge of overheating, but Prof Scicluna believes that Malta is simply catching up to the major economies within the EU. “Overheating happens when demand is allowed to overtake supply across all sectors. The most obvious example of this is wage

How FXDD is helping women thrive in the competitive but flexible world of finance. see pages 14, 15 >

“I think every worker in Malta would like to have the kind of salary they would have in France or Germany, which they currently don’t. But hopefully one day, they will.” inflation. There will always be some element of this present, and there are signals which, if not addressed, can lead to overheating, but it doesn’t mean that the whole economy is overheating.”

Rather, he says, Malta’s target is convergence with the rest of Europe. “You cannot get convergence by growing at 1 or 2 per Continued on page 3

STOCK MARKET REVIEW Analysing the various factors influencing the price of oil, and its negative correlation with the US Dollar. see pages 23, 24 >

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INTERVIEW

“You cannot reach convergence by growing at 1 or 2 per cent” Continued from page 1 cent, because that’s what the advanced countries are doing. You need to have a higher rate,” he said. “I think every worker in Malta would like to have the kind of salary they would have in France or Germany, which they currently don’t. But hopefully one day, they will. The way to do it is to grow at a higher rate than the other economies which are already there – at 4 or 5 per cent.

And that level of growth needs labour force.”

The Finance Minister continued by saying that foreign workers were coming to Malta because there are vacancies, not the other way around. “Since the economy is expanding fast, there are job opportunities here which they don’t have in their own countries. If there weren’t these opportunities, they wouldn’t come.” On the other hand, he said that while there were no plans to ‘put the brakes’ on the economy, it would not be ‘fanned needlessly’ either.

“When the economy is down, you need to pump it up, but when it is up, you don’t need to fan it needlessly, you just have to keep it ticking. You need to keep it going at cruising speed, maintaining altitude, and that’s enough.” Indeed, he said that ahead of the Budget, the Finance Ministry had been subjected to all sorts of pressures from different entities trying to push measures which would ‘fan’ the economy, but many of these were rejected. “It’s the act of managing the economy. You have to ensure that you keep it on an even keel. It’s a daily chore.”

That’s not to say that Government did not pay any attention to the needs of the business community in the Budget. Indeed, one of

the most business-friendly measures was the launch of the Malta Development Bank’s (MDB) financial instrument in collaboration with a commercial bank and the Family Business Office, with the aim of facilitating the transfer of family businesses to ensure sustainability in this sector.

“In Malta, most companies are small-to-medium enterprises (SMEs) which are family-owned.

When you transfer your business to your children, you’re hit with a 5 per cent duty. But we decided to give businesses the chance to do it at a reduced rate of 1.5 per cent, and that has been successful so far – so much so that it has been extended for another year. However, apart from that, what’s keeping some businesses from making use

of this benefit is that the children who will inherit this business need money. The MDB can provide the guarantee that the inheritors need on the transaction, or the loan, and the commercial bank will provide it.”

The controversial Malta Individual Investor Programme (IIP) and the Residence and Visa Programme naturally played an important role in the 2019 Budget, as they have done for the past three years. These lucrative schemes are contributing significantly to Malta’s year-on-year surplus, and the Budget speech included the pronouncement that they would be strengthened and extended for another year. But while Prof Scicluna doesn’t see any reason to stop them, he doesn’t believe that

Malta is overly-reliant on the profits of these schemes either.

“There’s no reason to believe that while other countries – at least half of the EU – have such schemes in place, we should stop them.

However, we have voluntarily put to rest any concern about Malta relying too much on the IIP and Visa Programme. After we presented our accounts, and found that there was a surplus, we removed all the revenue that came from the IIP. Was there still a surplus? The answer is yes. This shows that the Government can live within its means and contain its expenditure. We’re not saying the IIP will disappear, but if it were to happen, we are prepared for it.”

The same IIP and Visa Programme landed Malta on the

OECD’s blacklist last week, but Prof Scicluna reiterated that this was simply a ‘misunderstanding’, and affirmed that an official retraction from the Paris-based organisation was expected. “The OECD’s concern lies not with the IIP or the visa scheme per se, but whether they are used to evade – or avoid – taxation. They thought that our scheme automatically qualifies those who participate in it for tax residence, and it definitely does not. Even Maltese people who were born here have to prove that they are tax resident – if they spend fewer days in Malta than they do abroad, they will be declared as tax residents wherever they spend most time. If they’re not tax resident in Malta, the bank is obliged to transfer their information to the tax authorities of where they come from, and this is something that all participants of the IIP and visa scheme are made aware of when they enter that agreement. But misunderstandings do occur.”

A measure which made its way back into the 2019 Budget was the ‘income tax refund’ or as Prof Scicluna described it, ‘negative income tax’; the €40 or €50 cheque in the mail. Although understandably popular, it has also received criticism for being frivolous – after all, it is costing Government €11 million, money which many believe could be better spent elsewhere on more long-term projects. But to the Ministry, this does form part of one of its long-term objectives; that of reducing the income tax burden.

“Reducing the income tax burden encourages work. Reducing it from 35 to 25 per cent over a three-year period had a big impact, so this refund continues to support our obContinued on page 4

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e Malta Business OBSERVER |

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INTERVIEW

“Government can live within its means and contain its expenditure” Continued from page 3 jective of reducing tax on work. The principle of negative income tax is that you give more to the lower end and less to the upper end. There are similar schemes in many countries; Italy’s citizen salary, for instance, but we’re doing it more sensibly, in a modest way. It’s what we can afford, it won’t break the bank, but it’s quite appreciated.”

The 2019 Budget also announced the establishment of a competitiveness board within the ambit of MCESD, with a specific financial allocation aimed towards further economic development. Is Malta at risk of becoming uncompetitive? “Malta is doing very well,” Prof Scicluna said firmly. “I believe we are very competitive, especially when it comes to prices, inflation, and productivity; however, I

“If we slip, we can easily lose our competitiveness in tourism, iGaming, or manufacturing, so we’re not going to sit and say ah, this is forever.”

would not rely on the present situation. You have to be careful with the economy, guard it, monitor it, supervise it all the time. If we slip, we can easily lose our competitiveness in tourism, iGaming, or manufacturing, so we’re not going to sit and say ah, this is forever. Nothing is guaranteed. I’m very proud of the fact that we are setting up this unit to ensure this. While we have had informal boards of this kind in the past, this will be a more permanent institution within the MCESD, connected to a network all across Europe.”

Prof Scicluna concluded the interview by giving a succinct summary of what he believes to be the outlook for Malta’s economy in 2019. “If your investment today is satisfactory, and if there is a lot in the pipeline – which there is – the outlook is bright. And I believe it is.”

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EC report on cash-for-passport schemes to be out by end of year Marie-Claire Grima The European Commission (EC) is finalising an extensive report on schemes granting EU citizenship to investors, and will be publishing the report in full by the end of 2018, a spokesperson for the EC has confirmed.

Speaking to this newspaper, an EC spokesperson said that the EC had committed to producing a report on national schemes granting EU citizenship to investors, “describing current national law and practices, appropriate Commission actions in this area and guidance for member states, including on the necessary background checks for applicants.”

“The Commission’s Report will be largely based on an in-depth fact-finding study, which will look in detail at legislation and practice in all member states concerned.

Work on this study is currently being finalised,” the spokesperson told The Malta Business Observer.

“The Commission envisages therefore publishing its report on schemes granting EU citizenship to investors by the end of the year.”

In previous correspondence with this newspaper, the spokesperson had confirmed that the report will, “among other matters, consider the transparency of information on applications for citizenship for such schemes.”

Since 2014, Malta has sold citizenship to more than 700 people, most of them extremely wealthy individuals from Russia, ex-member states of the former Soviet Union, China and the Middle East. While the list of people who acquire Maltese citizenship is regularly published in the Government Gazette, a distinction is never made between who bought

citizenship and those who became Maltese citizens through other means, such as naturalisation. This has led to concerns about the transparency of these programmes.

Last week, both of the programmes which such individuals can use to acquire citizenship – Malta’s Individual Investors Programme (IIP), and the Malta Residence and Visa Programme (the Malta Programmes) – came under fire, after Malta was added to the Organisation for Economic Cooperation and Development’s (OECD) blacklist.

Malta’s schemes were identified as potentially high-risk citizenship and residence by investment (CBI/RBI) schemes, which give

The report will, “among other matters, consider the transparency of information on applications for citizenship for such schemes.”

“access to a low personal income tax rate on offshore financial assets and do not require an individual to spend a significant amount of time in the location offering the scheme.” Indeed, Malta was listed among other countries whose ‘golden passport’ schemes are considered to be threats to the global fight against tax evasion, allowing holders to hide their assets offshore by escaping reporting under the OECD/G20 Common Reporting Standard (CRS).

The other countries on the list included fellow EU member state Cyprus, the European city-state of Monaco, as well as Bahrain, Colombia, Malaysia, Mauritius, Montserrat, Panama, Qatar, Sey-

chelles, Turks and Caicos Islands, United Arab Emirates and Vanuatu.

However, the island’s inclusion in the blacklist has also been met with protests and rebuttals. The Finance Ministry issued a statement, stating that the only reason Malta is currently blacklisted for selling citizenship is due to a ‘misunderstanding.’

“In response to the OECD letter sent on the 23rd of March 2018 concerning the Malta Programmes, the Minister underlined the fact that Malta, as an EU member state, abides by the EU agreed directive on automatic mandatory disclosures,” the statement from the Finance Ministry said. “Furthermore, Malta has not only cooperated in the discussion and compilation of information on such schemes, but also made a number of commitments so as to further mitigate any potential risks. This shows Malta’s commitment to ensure that the Malta Programmes are not used for the purpose of circumventing the CRS.” The Ministry also emphasised that “persons benefitting under the IIP and the MRVP do not automatically become resident for tax purposes in Malta nor are they granted any tax-related benefits once a person obtains citizenship/residence through such schemes.”

For the purposes of the CRS, therefore, the Ministry stated that “Malta financial institutions cannot conclude that an individual is tax resident in Malta, and consequently not disclose information, purely on the basis of such individual’s qualification under any of the Malta Programmes.”

The Ministry said it looked forward to further engagement with the OECD so that “a proper analysis is carried out and the Malta Programmes are removed from the stated category. ”

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Construction site safety remains an issue, but awareness of risk has increased Rebecca Anastasi Health and safety issues on construction sites remain a concern, but awareness of the risks involved on the workplace and the measures that should be taken to prevent them has become more widespread, according to the Occupational Health and Safety Authority (OHSA) and the Malta Employers’ Association (MEA).

Although the National Statistics Office (NSO) reported a 3.8 per cent increase in non-fatal accidents at work in the first half of 2018, the OHSA stressed that there “is evidence, both factual and anecdotal, which proves more people are aware of the risks prevalent at their places of work and the control measures which are required by law to be taken.”

Yet, speaking to this newspaper, OHSA’s Chief Executive Officer Dr Mark Gauci was quick to point out that “while it is a given that workplace incidents have been reduced through OHSA’s actions, there still remain issues, especially those relating to construction activities.”

Dr Gauci said that the solution was not as straightforward as whether or not employees had enough safety gear, and was dependent on the completion of an adequate site risk assessment, which laid out the specific requirements. “An employer has the responsibility to ensure the protection of his employees’ health and safety (H&S) at all times. This can be achieved through the implementation of the socalled hierarchy of control measures,” Dr Gauci said.

He went on to explain that it is never enough for an employer to simply provide personal protective equipment (PPE).

“Most people seem to believe that a worker on a construction site should always be dressed up like ‘Bob the Builder’, but Maltese and European laws do not specify the list of PPE which should be worn in every work situation. The decision regarding what PPE is to be used, depends on a risk assessment.” For example, he said, hard hats are only to be worn when there is a risk of falling objects.

“ere needs to be a focus on the causes and circumstances of workplace accidents, and on factors which make workplaces and work activities inherently more dangerous than others.” – Dr Mark Gauci, CEO, OHSA Dr Gauci also noted that “in terms of legislation, PPE should only be used as a last resort” and “collective protective measures should be given priority over individual protective ones.” But he took issue with “cases where workers tended to adopt a negative attitude towards the use of PPE,” saying that “such an attitude is often the result of a lack of information, training and supervision, none of which should be underestimated.”

Dr Gauci went on to emphasise that construction was not the only high-risk sector, pointing to industries such as manufacturing as well as transportation and storage as also having their fair share of risks. “For instance, the transportation and storage sector is associated with the highest rate of claims (in terms of the number of injuries per 100,000 workers) for injury benefits in terms of the Social Security Act. In a few words, workplace accidents occur in all industries,” he asserted. This statement corroborates recent NSO findings which state that the majority of non-fatal accidents in the first half of 2018 occurred in manufacturing (15.4 per cent) – compared to construc-

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tion’s 15.1 per cent - while another 13.7 per cent occurred in transportation and storage.

Yet, Dr Gauci also pointed out that “no work activity, and no economic sector should be excluded, not even work in an office.” He bemoaned the focus in the media on “what’s visible” rather than drawing attention on less perceptible workplace risks and threats. “Consequences may be as severe as cancer or chronic disease, all of which may be caused by specific work activities,” he said. “There needs to be a focus on the causes and circumstances of workplace accidents, and on factors which make workplaces and work activities inherently more dangerous than others.”

Thus, ensuring healthier and safer workplaces, according to the OHSA CEO, requires a more holistic approach, which includes improving job quality, working conditions, competitiveness and the sustainability of operations. He also recommended the implementation of initiatives promoting “training, information, awareness and self-regulation” in each industry. This would require cooperation from employees, he said.

“The achievement of healthier and safer workplaces necessitates a collective effort.

OHSA has long been advocating the principle of self-regulation, a principle where employers themselves recognise that it is in their best interests to ensure such a workplace. Workers then cooperate with their employer in the preventive and protective measures that are required to be taken,” he concluded.

These statements were echoed by Joseph Farrugia, Director General of the MEA who said that while “construction sites are prone to accidents due to the nature of the work,” this is not an issue limited to the construction industry, but to “practically all workplaces, though not necessarily to the same extent.” To quote an example, he noted that even an office environment can have safety hazards, such as slippery floors, exposed wiring, and poor lighting which could result in physical injury.

Mr Farrugia also stressed that there has been “a gradual change in workplace culture over the past decade,” resulting in an Continued on page 13

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

Managing Editor Marie-Claire Grima

EDITORIAL

When complacency just won’t do The 2019 Budget went in like a lion and out like a lamb. It was a mild Budget, with no new tariffs, taxes or duties, or too many shocks to the system – indeed, governments have long learned not to unveil any surprise tax hikes on Budget Day. Overall, for the general public, there were plenty of positive incentives that will no doubt improve the quality of life for many – for instance, the increase in pensions; VAT refunds for people installing a reverse-osmosis system; the repetition of the negative income tax measure; the extra day of leave and many others. This gave it more than just a whiff of being an election Budget, given the upcoming European Parliament elections in 2019. The Government is playing to win, and these Budget goodies will certainly help the current administration continue to consolidate power.

However, one has to be cautious because not all that glitters is gold. While such popular measures are all well and good, there has to be a balance struck between keeping the public happy and safeguarding national competitiveness. With Malta’s HR shortages showing no signs of letting up, the fine line between giving back to the employee and taking from the employer has to be toed carefully. It’s heartening to hear that a Competitiveness Board has been set up for this very same reason – and also encouraging to hear the Finance Minister himself say, in this edition’s cover story, that Malta’s competitiveness needs to be jealously guarded. It’s a statement that’s repeated so many times that it has become cliché, but we really cannot afford to rest on our laurels.

The economy is doing well, there’s no doubt about that. And there were several business-friendly measures introduced in the 2019 Budget, including the extension of the reduced stamp duty on family business transfers, support for start-ups, and the establishment of the aforementioned Competitiveness Board. But economies move in cycles, and Malta is currently surfing the crest. Any fissures or cracks have to be attended to immediately, before they develop into more serious problems. And while it’s important to main-

tain an even keel, the Budget seems to be gradually becoming more of a book-keeping exercise. It could certainly use more bold strokes to paint a macro-economic blueprint and vision for the future. Complacency will simply not do. Here, we’re not talking about continuing to fuel the fire of the industries which are currently working at maximum capacity, and which have more than enough on their plate to keep them going, but identifying other niches where Malta can be successful, as it has been in tourism and iGaming.

And if we can shift the focus to a greener, more sustainable economy, that would be even better. At the beginning of October, the world’s leading climate scientists issued a terrifying warning, saying that there were only a dozen years left for global warming to be kept to a maximum of 1.5C, beyond which even 0.5C would significantly worsen the risks of drought, floods, extreme heat and poverty for hundreds of millions of people. The UN’s Intergovernmental Panel on Climate Change (IPCC) mapped out four pathways to achieve this, involving different combinations of land use and technological change. These include reforestation, shifting to electric transport systems, greater adoption of carbon capture technology, and cutting carbon pollution by 45 per cent by 2030, which would come down to zero by 2050. It’s a long shot, but we’re still in time – just about – and we need to pull together to make it happen. Government, policy makers and heads of industry have to be at the forefront of this change, if it is to happen in any meaningful way.

People have now become accustomed to Budget Day; there’s no longer the sense of dread that something will be announced that will make life more difficult or unmanageable, and that’s a good thing. But that doesn’t mean that Budget shouldn’t be used to lay the groundwork for measures that will result in a societal sea change. Change can be frightening, but sometimes it is needed. And if you can’t change the direction of the wind, the best thing to do is adjust your sails.

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BUSINESS OPINION

e economic highlights of the 2019 Budget KEY BUDGET 2019 MEASURES

André Zarb Enjoying a budget surplus for the third consecutive year, Malta has maintained its economic momentum, remaining one of the best performing economies in Europe. The economy grew by 6.7 per cent in real terms in 2017 and positive results have been achieved in various sectors, including local and foreign investment, tourism and exports.

The public debt target of 60 per cent of GDP has been surpassed and now stands at around 47 per cent. It is projected to continue to reduce to 43.8 per cent in 2019.

Unemployment stands at 3.8 per cent and 90 per cent of the new jobs created were in the private sector. Inflation as of September 2018 stood at 1.7 per cent and the cost of living adjustment (COLA) has been set at €2.33 per week for the coming year.

Malta has also signed the Multilateral Convention To Implement Tax Treaty-Related Measures To Prevent Base Erosion And Profit Shifting (MLI) and a number of other measures are in the process of being transposed for implementation by the applicable deadlines including ATAD II, EU Mandatory

Disclosure and the EU Dispute Resolution Mechanism.

Following the successes of blockchain within the Maltese islands, the Government has shown its willingness to continue developing and nurturing the fintech sector in Malta. Focused efforts on fintech have also been established in the 2019 Budget, to continue capitalising on Malta’s growing prominence as a global centre for cryptocurrency and blockchain technology, whilst also promoting Malta as a hub for digital economy and disruptive technologies.

The specific measures introduced in the 2019 Budget which will help this forward include the

Fintech Accelerator Programme launched by the Malta Stock Exchange to help support fintech start-ups and entrepreneurs by providing resources, infrastructure and professional business services and facilities; setting up Tech MT to help encourage disruptive technologies such as the Internet of Things and artificial intelligence; and the establishment of the Malta Digital Innovation Authority for further regulation of blockchain technology, as well as the creation of a specialised unit on fintech with the Malta Financial Services Authority.

André Zarb is Tax Partner at KPMG Malta.

▪ Additional day of vacation leave granted, increasing to 26 days per annum.

▪ Refund of tax of between €40 and €68 will be granted to individuals in the labour force earning less than €60,000.

▪ An increase in Children’s Allowance to a maximum of €96 per annum per child to families earning less than €20,000 per annum.

▪ Social security pensions are subject to a €4.50 weekly increase, this inclusive of the €2.33 COLA. ▪ The tax exempt pension threshold will be increased to €13,434 from the current €13,200.

▪ Private pensions: tax credit for qualifying contributions to increase from €150 to €500.

▪ The maximum tax deduction for school fees paid by parents to private independent schools will be increased to €300 per child.

▪ The reduction in duty on the transfer of family businesses to 1.5 per cent will be extended by a year until end of 2019.

▪ A VAT rate reduction to 5 per cent on certain electronic publications such as e-books.

▪ Continued efforts in attracting further investment to Malta upon Brexit.

▪ A number of international anti-tax avoidance measures, in line with the Anti-Tax Avoidance Directive (ATAD), to be introduced or implemented, including interest limitation rules; exit taxation; general anti-abuse rule (GAAR), and Controlled Foreign Company (CFC) rules.

“Following the successes of blockchain within the Maltese islands, the Government has shown its willingness to continue developing and nurturing the fintech sector in Malta.”

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Manufacturing, transportation and storage all high-risk sectors for workplace injuries Continued from page 9 increase in attention to occupational health and safety with many companies creating a safer environment and employees becoming “more conscious of safety procedures through educational and training campaigns, as well as enforcement.”

“Injury can be due to carelessness and, perhaps, a macho attitude towards work in potentially high-risk situations.” – Joseph Farrugia, Director General, Malta Employers Association

“There is still a lot of improvement to be done,” the Director General said. “Prevention is always the best strategy.” To this end, Mr Farrugia advocated for an increase in awareness as “a necessary first step to change behaviour,” as well as the provision of safety equipment, training in H&S procedures and the implementation of an H&S policy given to all employees on engagement. He highlighted the responsibility of employers to provide for these, saying that companies are specifically responsible for training and enforcement. He also positively referred to “the strict regulatory framework” there was in place to prevent physical injuries and mental issues in the workplace.

Mr Farrugia added that employees’ attitudes were central to making this work. “Injury can be due to carelessness and, perhaps, a macho attitude towards work in potentially high-risk situations,” he explained. And while an employer can even impose fines on employees for failing to abide by company procedures, Mr Farrugia insisted that employees needed to act responsibly, “without the need for constant enforcement by management.”

This cooperation from all parties would ensure that fatal and non-fatal accidents, injuries and incidents, are prevented.

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CASE STUDY

Women at work – how FXDD Malta is helping its female workforce stay on target Marie-Claire Grima REBECCA PORTELLI, HEAD OF FINANCE, FXDD MALTA PHOTOS: INIGO TAYLOR

FXDD Malta’s Head of Finance, Rebecca Portelli, started her career in the field when she was still a teenager. “I started working in accounting at the age of 19, hence taking the decision to study ACCA. I joined KPMG where I was part of an audit team focusing on financial services firms at the time, allowing me to gain a very good knowledge about the sector. After six years working there, I was ready to face the industry, and found a job as the accountant of an online forex trading company.”

She joined FXDD Malta over three years ago, which also deals with online forex trading, but on a much larger scale, and was appointed Head of Finance due to her knowledge and expertise.

“My team and I start off every month by closing off the previous month’s management accounts so as to present them to the Board of Directors. Besides my daily duties, which vary from day to day and month to month, there are the regulatory submissions, which need to be prepared a few weeks in advance, as some information is required from other respective departments within the company. Together with the

Compliance team, we work closely to ensure that we do not miss out on any regulatory changes, and inform each other of any significant developments.”

“The most challenging part of my work remains keeping up to date with any changes in the accounting standards. As warranted accountants, we are obliged to attend to a number of Continuing Professional Education hours to help us keep in line with these changes and also act as refresher courses,” Ms Portelli explained. She added that on the other hand, the most satisfying aspect of the job is “keeping up with deadlines, especially at yearend. This requires team planning and communication.”

Finance remains a male-dominated field. Indeed, Ms Portelli is one of the precious few women in senior finance roles in Malta. Of course, it’s not just a problem endemic to Malta – studies conducted by the Harvard Business School show that when it comes to senior roles in venture capital, private equity, and hedge funds, women always occupy less than 10 per cent of senior management roles. But FXDD Malta seems to be one of the few rare exceptions – here, the number of women in its ranks has increased over the years, and now the women out-

“Having teams made up of men and women within a company leads to more creative teams and diversity, which eventually optimises the decision-making process.”

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CASE STUDY

number their male counterparts.

“The finance department is made up of five women, including myself. But company-wide, there are currently 12 female employees to only five men – a 30-70 ratio,” Ms Portelli said.

The number of women in FXDD Malta’s workplace may have something to do with the firm’s flexible work policies, which help working parents to successfully tackle their responsibilities at home with their career. While Ms Portelli is at the office every day, she spends some time each morning working remotely. “I have the advantage of working a couple of hours from home, which enables me to be with my youngest until she starts nursery,” Ms Portelli said. “I have two children under the age of three, so I have to juggle between them and work. My day is quite hectic, but once I set a routine, all is manageable.”

As a working mother with a high-powered job, Ms Portelli is naturally vocal about women’s potential within the workforce.

“Having teams made up of men and women within a company leads to more creative teams and diversity, which eventually optimises the decision-making process. Women are born multitaskers, and this is considered beneficial, especially when cou-

pled with the flexibility of working from home. Finally, women are known to be ‘givers’, which encourages other team members around them and allows them to flourish as more efficient employees.

There shouldn’t be any obstacles to women entering the world of finance. I believe that as long as one has the experience, knowledge and dedication, then there shouldn’t be any difficulties.”

Ms Portelli said that opportunities have also increased for working women at FXDD, with management bringing on several new programmes and changes that, when all is said and done, benefit both men and women. “Such facilities include the flexibility of working at reduced hours, working from home, and more. Finance can be quite flexible as an industry, since it does not always require direct contact with the customer, which makes it ideal for the woman who prefers or has to work from home.”

“Sometimes one just needs to take an unexpected day off if one of the children is sick. Also, any appointments such as check-ups are usually done during office hours, so we are quite flexible in getting to the appointment, and working for the hours lost later or

on another day. Once again, there is a limit and depends on the appointment, but as long as the work is done efficiently, one can be flexible.”

Ms Portelli stated that the most important lesson she has learnt as a female leader in the world of finance is the ability to multi-task.

“I like to plan my week beforehand and prioritise. Having a schedule of what I need to do for the week helps me get my duties done more efficiently and smoothly, especially when it comes to deadlines. I list my deadlines in my calendar, with a reminder set a week before so that I can schedule accordingly. Obviously other matters arise on a daily basis, but this depends on my to-do-list, whether I should prioritise it, or if it can be done at a later stage.”

Asked about whether the company has any plans in the pipeline, Ms Portelli says that FXDD Malta is currently enhancing new marketing campaigns, and constantly planning new projects to expand business within the EU. If the firm’s enthusiasm and commitment to a truly diverse and flexible workforce is anything to go by, there seems to be no limit to the heights that FXDD Malta – and all its employees – can reach.

“Finance can be quite flexible as an industry, since it does not always require direct contact with the customer.”

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GO powers businesses with gigabyte conn It may only have been six months since CEO Nikhil Patil accepted his post as the head of GO plc, but his history with the company dates back several years. “It has indeed been quite a journey, and it is this rollercoaster ride that, in a strange way, keeps pulling me back and keeps things interesting,” Mr Patil said. “The times ahead are as exciting, as they are challenging.”

Mr Patil is referring to an unprecedented agreement with another telecommunications operator that will allow it to use GO’s fibre network to offer broadband services to its customers.

“This agreement is testament to the power and the capabilities of GO’s network, as well as GO’s ability to be an enabler of business opportunities,” Mr Patil said. “This would have not been possible had GO not continuously invested millions of euro to ensure a robust electronic communications infrastructure to service the increased demand and to support Malta’s growing economy and emerging industries. One must appreciate that behind every decision we take as a company lie a number of legal, regulatory and commercial complexities.”

This led Mr Patil to the second development over the past weeks, one which the CEO said he is very proud of – GO plc’s €2 million fund towards supporting start-ups, which was announced at the recent DELTA Summit. “GO has a strong history of investment so I think this announcement primarily confirms our commitment to continue on our investment path, so that GO is always ready for fu-

“We have invested a considerable amount of energy and resources to put a plan into action to improve our customers’ experience with GO.”

ture requirements. We know our core competencies well, but we are also aware of areas where we would rather partner with others than try and build them ourselves.

This is why we have opened our doors to promising start-ups from emerging industries such as artificial intelligence (AI), Internet of Things (IoT), blockchain and the like. We have the infrastructure, the expertise and the resources, to support them. Their success is our success, which can only augur well for the future of this country.”

While GO has invested heavily in its networks to ensure that it can deliver cutting-edge technology to its customers, it has not stopped there.

Mr Patil said that there are two main questions that drive everything at GO – “are we generating more value for our customers, and are we delivering returns for our shareholders?”

“Over the past couple of months, we have taken on board a lot of the feedback we have received from our valued customers. We have invested a considerable amount of energy and resources to put a plan into action to improve our customers’ experience with GO, whether it is on the customer sup-

port front, or whether it is seamlessly connecting our customers to the people and the content they love. We are living up to this commitment,” he said.

“We are experiencing marked improvements, particularly in our call centre activities. On the product and service fronts, we are constantly designing solutions based on customer expectations. Customers want to be connected 24/7, expect seamless integration of their devices whenever and wherever possible, and expect the best service. We want to exceed these expectations, but everything takes time. We have been the first to market on many fronts such as with our TV Anywhere app which allows customers to enjoy TV content anywhere without consuming data from their respective bundles.

We launched the Music Wildcard, again for customers to enjoy their favourite music from apps like Spotify without consuming mobile data. There is a lot more that needs to be done. But we have started this journey and are fully committed to continue adding value to our customers.”

Mr Patil also added that as a group, GO plc have the capacity to provide bespoke product and service solutions to businesses of all sizes. “Businesses today can come to GO and we can provide all the communications services and ICT solutions they require, all under one roof. Just as we do in our residential arm, we are continuously monitoring the market to analyse and evaluate emerging business needs and catering for these accordingly. In fact, I am very happy to announce that we will shortly be launching two new business products. The first is a unified communications product based on Voice over Internet technology that will gradually replace our business fixed-voice telephony in its entirety. The single most important advantage is the mobility that this allows over existing fixed voice connection, plus the inclusion of instant messaging features that allow for much more collaboration capabilities.”

“The second product is based on a bundle which incorporates fixed telephony, Internet and TV services under the umbrella of Business Infinity Pack. We are fully aware that with more services going into the cloud, upload speeds are becoming critical for any business operation. In fact, with this product, we will be delivering the highest available internet speeds on the market, that is up to 1Gb download by 500Mb upload.

The value of this product lies in the fact that it will allow businesses to fully tailor their communication needs, without compromising on quality due to cost considerations.

The fact that this product will keep on being developed as technologies are on-boarded, will make it the go-to product for businesses of all kinds.”

Mr Patil continued by saying that beyond the business aspect, the customers’ experience is critical to the company. “We have listened carefully to customer feedback, have understood and internalised this, and as mentioned

NIKHIL PATIL, CEO, GO PLC

previously, have started to implement several corrective measures over the past months that are now bearing fruit. We started this process by allocating and increasing resources that are purely dedicated to improving customer experience. In fact, we created a new role of Chief Customer Experience Officer to help GO deliver the best possible experience to everyone who engages with the GO brand. So far we have significantly improved responsiveness at the call centre, so people are connecting with us much faster, and we have streamlined processes in our retail outlets, which has increased efficiency across the board. We are also increasing the lines and channels of communication with our customers, and there is a lot more to look forward to.”

“Our efforts do not stop here. We are always looking to ensure that existing and potential customers have access to the latest technologies. To give just one example, 80,000 homes in Malta have access to fibre technology, giving them the opportunity to enjoy exceptional quality

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nections, focuses on customer experience

“Businesses today can come to GO and we can provide all the communications services and ICT solutions they require, all under one roof.” broadband services, at superfast speeds.”

While operating and maintaining three nationwide networks, in an environment that is characterised by an unprecedented amount of infrastructural, road and construction works is a challenge in and of itself, Mr Patil said the biggest challenge for GO lies in finding an adequate workforce supply. “Of course, this is no justification and this is why we have a number of work-around and interim solutions for our customers.

We always strive to minimise negative impact on our customers as much as possible. Unfortunately, circumstantial incidents beyond our control can sometimes compound the issue, however as I said,

addressing these issues, in the shortest time possible is at the very top of our agenda.”

Looking ahead, Mr Patil said the company has already been very active behind the scenes with regards to IoT and it is certainly driving a lot of our activity in the near future.

“Without going into much detail, I can safely say that technically we are very prepared. If IoT is going to be the new battleground on which communications companies are going to forge their competitive edge over the next few years, then I can confidently say that GO is already ahead of the game. We have a number of interesting and exciting initiatives coming up, so all I can say on this is – watch this space!”

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Poverty levels down as Ministry seeks to cater to societal changes The past few years have seen a decrease in the number of people in Malta that are severely materially deprived, as well as at risk of poverty, according to recently-released Eurostat figures.

The number of people at risk of poverty started climbing in 2007, when there were 79,000 people at risk, and peaked in 2013 and 2014, when 99,000 people fell into that bracket for both years.

Since then, the number has been steadily decreasing, and as of 2017, 83,000 people are in this bracket, a figure approaching pre-financial crisis digits. The number of people who are severely materially deprived has also decreased, and is now at its lowest point ever. After hitting a peak in 2014, when there were 43,000 people considered to be severely materially deprived, the figure has fallen by nearly twothirds, down to 14,000.

Michael Falzon, the Minister for the Family, Children’s Rights and Social Solidarity, outlined what he considers to be the reasons for these improvements.

“The decrease in energy prices has certainly left more money in people’s pockets,” he told this newspaper. “There have also been a lot of initiatives aimed at helping people move into the labour market, including inwork benefits – an amount of money given to people when they return to work, according to the number of children that they have; and the tapering of benefits, which means that when people find employment once again, their unemployment benefits are not withdrawn at one go, but gradually over a period of three years. This has yielded positive results. Most of the peo-

“Over the last five years, the number of pensioners who can’t afford to warm up their homes has fallen drastically.”

MICHAEL FALZON, MINISTER FOR THE FAMILY, CHILDREN’S RIGHTS AND SOCIAL SOLIDARITY. PHOTO: ALAN CARVILLE

ple who made use of this scheme at the end of three years have not returned to unemployment, but have kept their jobs.” Dr Falzon also mentioned free childcare, which he says was instrumental in helping women stay in the workforce after having children, and even returning to work after

being absent for years, as well as tax rebates for women who go back to work.

Eurostat figures show that the young (under-18s) and the elderly (over-65s) are the two age brackets that are most at risk of poverty, and Dr Falzon elaborated on the measures that have

been taken specifically to target these two groups. “In 2013, there were around 4,000 minors living in severe material deprivation – that number has fallen by half.

Of course, one would like to see far fewer, but it’s a very significant decrease. The free school transport and free childcare ini-

tiatives will also help towards this. The overall growth of the economy and the increased number of job opportunities will reflect in the young people’s well-being.”

As for the aged, Dr Falzon says there was a pension increase in the 2018 Budget, and another increase in this year’s Budget.

“Pensions had been static for nearly 25 years – for many years, the only increase would be in the cost of living adjustment (COLA). This is the fourth consecutive increase in pensions.

Furthermore, as of last year, the increase has been granted to pensioners subscribed to contributory as well as non-contributory pensions. It will be received across the board.”

Furthermore, the tax exemption bracket for people of pensionable age has increased once again, Dr Falzon stated. He also made reference to the decrease in energy prices, which he believes was very beneficial to the over-

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65s. “Over the last five years, the number of pensioners who can’t afford to warm up their homes has fallen drastically.”

The question when it comes to pensions is always that of sustainability – are these regular increases sustainable, especially considering that nearly one in four people in Malta are over 65 years of age? “Sustainability is always an issue, particularly when it comes to pensions. But at the moment, they are sustainable, and there are reasons for that,” Dr Falzon reasoned. “The economy has been registering growth of around 5 per cent year-onyear, and a third of the annual Budget goes towards this Ministry’s aims. It’s prosperity with a purpose. We have had an increase in the labour force – both Maltese and foreign. The non-EU nationals who work here and are duly registered number over 30,000 – and those are just the ones from outside the EU! Furthermore, there has been an increase in the number of Maltese women who have gone into the workforce and are also contributing their own social security and tax payments. That’s how we’re managing to keep pensions sustainable.”

The Ministry is divided into two Secretariats – Persons with

Disability and Active Ageing, and Social Accommodation. The former is responsible for the ongoing refurbishment of St Vincent De Paule, the state-run home for the elderly, an investment to the tune of €8 million. “The oldest part – the Ruzar Briffa wing – is completed. That was the first phase. The second phase is still ongoing,” Dr Falzon said. The Secretariat has also increased all disability allowances, extended the Barthel Index so that more people are eligible for disability benefits, and increased housing for people with disabilities within the community.

Meanwhile, the Social Accommodation Secretariat is collecting feedback following the newly-launched White Paper en-

couraging rental reform and aimed at helping people who live in private rented housing.

“Housing is one of the biggest thorns in our sides,” Dr Falzon admitted. “But there’s a lot being done. The main issue is that there is a much bigger demand than there is supply, especially with the number of foreign workers.” The Secretariat is currently overseeing a housing project which will render 680 new units, costing around €58 million, in 16 different locations around Malta, financed by a loan through the Council of Europe Bank and the European Investment Bank. Dr Falzon also mentioned the project announced by Prime Minister Joseph Muscat in May, which aims to provide another 500

“e economy has been registering growth of around 5 per cent year-onyear, and a third of the annual Budget goes towards this Ministry’s aims.

It’s prosperity with a purpose.”

housing units, costing €50 million, which will be funded through the Individual Investor’s Programme (IIP).

The Ministry is also investing significant time and energy in children’s welfare, a subject evidently dear to Dr Falzon. “We’re doing a lot of work with adoptions. We introduced a €10,000 grant this year to make good for the expenses incurred by parents. Last year, 45 foreign-born children were adopted by Maltese parents, and statistics look good this year too. The three countries where the highest number of adopted children in Malta come from are India, Portugal and Slovakia, due to the arrangements in place. We’ve set up agreements with a new country – Bulgaria – and we’re working on introducing another country, but it’s too early to say which. Additionally, the fostering allowance was raised to €100 per week, and we’re trying to get more foster carers on board, because we have a great deal of children – around 400 in all – under a care order.”

Dr Falzon also discussed the upcoming Child Protection Act for children who are under a care order. “The law currently in place has been with us since the early 1980s, and it’s up for an overhaul.

We want to beef it up to cater to the children’s needs. We’ve engaged in consultation with stakeholders – doctors, social workers, police, the UNHCR, the Church, the President’s Foundation for the Wellbeing Of Society – anyone who encounters vulnerable children on a day-to-day basis. We received a lot of feedback, which shows that people really took an interest – in fact, we extended the public consultation by another six weeks and received another flood of responses. When it is finalised and introduced next year, it will be a milestone for this Ministry.”

Such legislative updates are necessary when “social realities have changed so drastically since the 1970s and 1980s,” Dr Falzon said, mentioning among other issues, the increasing number of single parents and divorced couples, and the rising number of children being brought up by their grandparents while both parents are out at work. “Society will continue to change, and such issues affect how legislation is drawn up. If there are changes in society, Government has to be there to make the necessary changes to law and policy. After all, change is the only constant.

And it is the duty of Government and the law to provide for a changing society.”

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ERA regulation activity aims to reduce environmental impact Martina Said Established in 2016 after breaking off from the Malta Environment and Planning Authority (MEPA) to become an environmental Authority in its own right, ERA is a young Authority with a lot of work ahead of it, said Perit Michelle Piccinino, Director of the Environment and Resources Directorate within ERA. “However, it’s important to make a clear distinction between ERA, which is dictated by the Environment Protection Act, and a non-governmental organisation. ERA operates within a legal and operational framework, and its scope is to protect the environment in the most holistic way possible.”

As the main environmental regulator on the islands, ERA’s mission statement is to safeguard the environment for a sustainable quality of life. It also has the remit to advise Government on environmental policy-making at national level, as well as in the context of international environmental negotiations; to develop evidence-based policy backed by a robust data gathering structure; and to draw up plans, provide a licensing regime and monitor activities that have an environmental impact, and to integrate environmental considerations within the development control process.

The latter point, Ms Piccinino stated, is the role that citizens most associate with the Authority, and stressed that, where planning permits are concerned, the Authority with the final say is the Planning Authority (PA) – the role

“ERA now issues permits pertaining to three main streams of activity: industrial, waste management and nature.” of ERA is that of a Statutory Consultee in the development planning process, meaning that it assesses the proposed development to determine whether it is envisaged to have a significant impact on the environment.

“PA applications all go through our system and are vetted accordingly. ERA justifies its assessment in the same report and either objects the proposal (when the environmental impact cannot be offset or for other related reasons), or puts forward recommendations to be inserted as conditions in the development planning permit to effectively mitigate these impacts,” she asserted.

To date, 41 sq km (13.1 per cent) of land area and 4,138 sq km (35.5 per cent) of Maltese waters are protected by Natura 2000, together with 60 Tree Protection Areas around the islands. ERA works with around 60 committees, namely the Noise Commission, Treated Waste Committee and Water Scarcity Index Working Group, to mainstream environ-

mental targets and objectives.

“This year was a satisfying one for the Authority as it gained more protection at local and EU level of Malta’s marine environment,” Ms Piccinino said. “The next task at hand is to manage them. Work in this sector is horizontal and crosscutting – we need the input and commitment of other entities to manage and protect these sites, and through the establishment of

Ambjent Malta this year, we hope to see a more robust structure in place to manage protected areas.”

Following its set up, Perit Piccinino explained that one crucial regulatory framework that was missing from the previous set-up was one that outlined activities that require an environmental permit. “We made this our priority throughout our first year of operation,” she said.

ERA now issues permits pertaining to three main streams of activity: industrial, waste management and nature. The environmental impact of industrial activity is permitted through a system of notifications, General Binding Rules (GBRs), Environmental Permits and Integrated Pollution Prevention and Control (IPPC) permits – the latter for high-risk installations such as

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power stations – for industrial operations of varying scales and across different industries. Waste management permits and notifications deal primarily with the movement of waste and registration of schemes on waste management; while nature permits relate to activities in protected sites, activities on protected species and access to genetic information of species.

“Any activity relating to waste management requires an environmental permit, namely the recycling or storage of waste for exportation. In the case of industrial activity, permits vary depending on the nature and scale of the activity – ranging from emissions or waste generated to chemicals consumed. Permits for certain activity generated by power stations, landfills and pharmaceutical companies, for instance, are issued through the Industrial Emissions Directive (IED) and thus require an Integrated Pollution Prevention and Control (IPPC) permit. Nature-related permits may pertain to activity taking place in a Natura 2000 protected site, or to the importation, exportation or movement of certain species that require a permit or clearance.”

Perit Piccinino explained that while some overlap does occur be-

tween the ERA’s work as well as that of other entities, there is an effort to streamline processes as much as possible. “ERA works a lot with other entities, and not just the PA, such as with the Environmental Health Directorate on impacts on the environment that have a bearing on health matters, such as tiger mosquito alien species; with vets and Customs in relation to the importation or illegal trafficking of endangered species of wild fauna and flora; as well as with Transport Malta for traffic-related impacts on ambient. However, a permit issued under any Authority does not exonerate anyone from obtaining a permit from ERA on aspects it regulates.”

Following the issuing of permits, compliance and enforcement are then handled by a separate directorate within the ERA, which is responsible for ensuring that conditions stipulated by the permit are adhered to. “The Compliance and Enforcement Directorate is crucial – one does not hold without the other. Although a system is in place for issuing warnings and administrative fines, the main aim is to move those who are engaging in activity that is either illegal or not permitted towards compliance.”

Looking ahead, Perit Piccinino asserted that ERA will be

“ERA operates within a legal and operational framework, and its scope is to protect the environment in the most holistic way possible.” engaging in discussions with all levels of society to shape the future of the local environment.

“This includes the business sector, who we will be specifically targeting through a tailor-made survey to better assess the knowledge that businesses have of their environment permitting obligations and to obtain feedback on any gaps that ERA needs to bridge with this sector. These plans are there because while ERA may be the main environment regulator, the state and future of our environment is the responsibility of us all.”

MICHELLE PICCININO, DIRECTOR ENVIRONMENT AND RESOURCES, ERA

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STOCK MARKET REVIEW

e volatility in the price of oil “Since oil is mostly traded in US Dollars, a stronger US Dollar makes oil relatively more expensive to buy, thus dampening overall demand.”

Christopher Mallia Movements in the price of oil are a recurring theme in financial markets as they impact, directly or indirectly, both the business world as well as our daily lives, in view of oil’s widespread usage.

Given the importance of oil and the various factors – including geopolitical and economic – that influence it, volatility in the price of oil tends to be high.

Oil is traded and quoted in various forms with the two most common standards being the West Texas Intermediate (WTI) and Brent Crude. Although prices for these two standards differ, the trends are generally the same. For the purpose of this article, I will be using WTI as the benchmark price of oil.

The price of oil registered an unprecedented rally that lasted approximately seven years from November 2001 (as the US exited an eight-month recessionary period) until the outbreak of the 2008 global financial crisis. In 2008, the price of oil exceeded the USD100 level for the first time ever and reached an all-time high of USD147.27 in July of that year.

At the time, various analysts had speculated that a price of oil above the USD100 level was probably the new norm.

However, as the 2008 global financial crisis started to unfold, the price of oil slipped all the way down to a level of USD32.40 within a mat-

ter of months. This sharp drop in the price of oil largely reflected serious concerns over the state of health of the global economy, which also contributed to a stronger US Dollar due to its perception as a ‘safe-haven’.

The value of the US Dollar tends to have a negative correlation with the price of oil. Since oil is mostly traded in US Dollars, a stronger US Dollar makes oil relatively more expensive to buy, thus dampening overall demand. In addition, the price of oil was also negatively impacted by increased supply, reflecting the easing of geopolitical tensions between the US and Iran, as well as attempts by the then-US President George W. Bush to lift a ban on offshore drilling in the US. The price of oil started to steadily recover in the first few months of 2009 and by early 2011, it reached a range of between USD80 and USD110 that persisted until mid-

2014. One of the major factors which lifted the price of oil during this period was the Arab Spring.

This led to a shutdown in the production of oil from Libya which, in turn, offers oil of superior quality than that extracted from other regions in the world. Several other factors also influenced the price of oil during this period including geopolitical issues related to Iran, Syria and Crimea, the European debt crisis (which exacerbated uncertainty in the single currency region and reduced demand for oil), the US Presidential Elections and the US fiscal cliff, as well as a 16-day US government shutdown in 2013. Similarly, the unprecedented monetary policy measures implemented by the major central banks around the world also weighed on the price of oil, including the second and third tranches of quantitative easing by the US Federal Reserve.

In July 2014, the price of oil drifted again below the USD80 level. This was mostly due to the restart of oil production in Libya, reflecting an improved socio-political setting in the country. Another important factor was the increase in the supply of oil from the US as well as other countries such as Iraq and Canada. Moreover, the Organization of Petroleum Exporting Countries (OPEC) decided not to reduce oil supplies given their view that the market would adjust itself as certain countries would be constrained to reduce their supply at lower prices.

Additionally, economic challenges in Europe and China were still very evident, leading to a continued level of weak demand. These factors forced the price of oil to drop to a fresh 13-year low of USD26.05 on 11th February 2016.

Since then, the price of oil embarked on an upward trajectory and has recently also recorded its high-

est level in four years. The strong rebound was mostly driven by OPEC’s decision in late 2016 to limit output for the first time since 2008. Shortly afterwards, other countries which are not part of OPEC, such as Russia, decided to further contribute to OPEC’s efforts at stabilising the oil market by also agreeing to reduce oil supplies. This important collaboration between OPEC and nonOPEC countries persisted further in 2017 and this year, resulting in oil stocks for OPEC countries to drop to a three-year low by May 2018.

The recovery in the price of oil over the past four years was also aided by the improved dynamics of the world economy (led by the US), various supply disruptions in Libya, Venezuela and Nigeria, as well as heightened geopolitical tensions between the US and Iran. In contrast, however, the fast pace at which the US continued to infiltrate the oil market and gain market share in recent years partly offset the upward strong momentum in the price of oil. Similarly, this latest rally in the price of oil was also somewhat dampened by the trade dispute between the US and the world’s largest oil importer, China.

The price of oil will continue to be impacted by various factors Continued on page 24

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STOCK MARKET REVIEW

Improved world economy led to recovery in oil price Continued from page 23 also in the future. In fact, some events are already shaping up and will likely be among the main protagonists in future oil price movements. These include the diplomatic relations between the US and Saudi Arabia, after these were recently dented by the murder of the Saudi Arabian-born journalist Jamal Khashoggi who was a critic of the Saudi ruling family. In an opinion piece, the general manager of Al Arabiya (a Saudi-based television station) said that if sanctions were to be imposed against Saudi Arabia, the price of oil might hike considerably through retaliatory measures. On the other hand, news from the US indicates that the country is preparing to enact a bill (which was first drafted in 2007) known as the No Oil Producing and Exporting Cartels Act (NOPEC). This piece of legislation could revoke the sovereign immu-

nity from US legal action which oil producing countries, including OPEC members, currently benefit from. In fact, OPEC has already instructed its members to refrain from disclosing the targeted oil price as this could eventually lead to legal action from the US for manipulating the oil price.

Other possible factors include developments in connection with the trade disputes between the US and most of its trading partners, as well as other geopolitical events in Russia, North Africa and the Middle East, particularly those related to oil producing countries, as well as the continued drive by developed countries to seek alternative sources of energy.

Economic developments will also continue to play a major role in the price of oil. In this respect, it is important to highlight the different stages of the economic cycle at which major economies are in. The US economy has been performing well in recent years and various fac-

“Economic developments will also continue to play a major role in the price of oil.” tors point to further sustained growth in the months ahead. This is positive for the price of oil. On the other hand, recovery across the European Union has been weaker and fragmented with economic growth in Q2 2018, ranging from 2.5 per cent for Ireland to 0.2 per cent in Denmark, France, Greece and Italy.

In China, expansive monetary policy measures are still being adopted to support its economy. Moreover, elevated debt levels continue to be an issue across the world, including the US, Europe and China, which

Rizzo, Farrugia & Co. (Stockbrokers) Ltd, “Rizzo Farrugia”, is a member of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the company/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. Rizzo Farrugia, its directors, the author of this report, other employees or Rizzo Farrugia on behalf of its clients, have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent, and may also have other business relationships with the company/s. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither Rizzo Farrugia, nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report. © 2018 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved.

could ultimately derail any economic progress achieved so far.

Notwithstanding the evolving factors and scenarios that influence the price of oil, this commodity is likely to remain a dominant one for several decades in view of its wide-

spread use. Consequently, the price of oil is very likely to remain highly volatile also in the future.

Christopher Mallia is Head of Research & Investment Consultant at Rizzo, Farrugia & Co (Stockbrokers) Limited.

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Why go paperless?

There has been a huge amount of promotion and awareness on the need to reduce our waste footprint, and much has been written about the importance of going paperless, whether at home or at work. Each year, roughly 400 million metric tonnes of paper are produced and consumed worldwide, with China leading the way, and the United States coming a close second, cutting down approximately 68 million trees every year just to produce paper and paper-related products. This kind of deforestation contributes negatively to overall climate change. In fact, in 2017 the world lost the equivalent of 40 football fields of trees every minute. Between 2006 to 2015, paper and cardboard were the main packaging waste material in the EU with 34.8 million metric tonnes collected in 2015, followed by plastic and glass, 15.9 and 15.8 million tonnes respectively. Overall the paper recycling rate in Europe is fast reaching its maximum.

It’s not all bad news, however, as many areas of life which formerly required paper have now adopted paperless alternatives; from retail purchases to receipts sent via email, the increase in ebooks, contactless cards and online purchases. The digital age has contributed substantially in the fight to reduce paper waste and conserve natural resources, as a move to cloud for data storage has significantly reduced the use of paper. Going paperless results in other benefits such as increased productivity, with less time spent on filing, and a more seamless work experience, as all

“e digital age has contributed substantially in the fight to reduce paper waste and conserve natural resources.”

documents are literally at employees’ fingertips. In turn, going paperless means less time is spent searching for information, and documents are rarely misplaced. The high level of security offered by cloud back-up is another positive factor, as is the accessibility and ease of sharing documents.

Given that paper is classified as a renewable resource, recycling and recovering paper is crucial in this fight against waste. In fact it is estimated that a recycled tonne of paper saves 17 trees. Paper, among many materials, has one of the highest recycling rates, and with constant improvements in separate collection systems and innovation in sorting and recycling technology, this is set to further improve.

GOING PAPERLESS Invest in a reliable cloud data storage system and electronic filing programs Invoices, pay slips, internal memos, company handbooks etc. can be sent by email or saved on company server Reduce the provision of envelopes when requesting hardcopy invoice leading to fewer envelopes purchased.

Once paper needs to be used, resource efficiency methods can be used.

Printers are set in a way that double confirmation needs to be carried out prior to printing. First confirmation from desk, and second confirmation from printer station.

Letter heads are not printed in bulk but are in soft copy and printed on a need-to-use basis.

Once paper waste is generated in an office environment, it must be separated and recycled efficiently.

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BUSINESS UPDATES

Trade Malta – a partner on your global journey HSBC MALTA’S INTERNATIONAL SUBSIDIARY BANKING TEAM LED BY NICHOLAS ELIAS (SEATED, MIDDLE) TOGETHER WITH MICHEL CORDINA (STANDING, MIDDLE)

HSBC Malta launches new international business service HSBC Bank Malta has launched a new service aimed at international companies that have a presence and operate in Malta. This service is being provided via the bank’s International Subsidiary Banking proposition which ensures that HSBC customers worldwide receive the same level of service and a holistic understanding of their business and expansion plans throughout the bank’s global network.

To be able to service these international companies, HSBC Malta has set up a specialist team in Malta made up of five dedicated relation-

ship managers and three analysts.

This team can offer a comprehensive suite of corporate services, working alongside the bank’s Global Markets, Global Trade and Receivables Finance and Global Liquidity and Cash Management product partners.

“HSBC’s Commercial Banking and Global Banking customers can benefit from the bank’s global presence spanning across more than 50 territories including Malta. Corporate customer value from International Subsidiary Banking is growing substantially, evidencing

the strength of HSBC’s global network,” said Michel Cordina, Head of Commercial Banking of HSBC Malta.

The team is led by Nicholas Elias, who previously worked in Corporate Banking with HSBC in London, and who reports directly to Mr Cordina.

“We are proud to be part of the HSBC International Subsidiary Banking proposition and to actively help promote Malta to our international customers as an attractive location for expansion,” Mr Elias said.

Got an idea you think the wider world will love? Considering taking your business international? Regardless of where you are in your export journey, the newly-launched TradeMalta portal has been designed to give you the expert advice, support and opportunities you need to turn potential into reality.

Among the many instructive sectors on the portal, you’ll find information about how to join trade missions, carry out market research, perform a gap analysis to assess your export readiness, and even access international databases to find new customer leads. The site also gives users the chance to understand market trends, apply for international tenders, and browse through the latest business stories from around the world.

Beyond that, TradeMalta also provides hands-on training, and has recently re-opened its ‘Go Global’ programme. The course – SME Internationalisation and Export Man-

agement – which runs from January to April 2019 – has been crafted to give local exporters all the skills they need to take their company on a successful international trajectory.

Taught by leading academics and respected professionals in the field, it is considered one of the most effective internationalisation routes available on the island.

Interested in signing up? The next Go Global course starts on 23rd January 2019 and runs until 3rd April 2019.

Lectures are held every Wednesday from 4pm till 7.30pm. Applications are now being accepted online at www.trademalta.org

e Malta Business OBSERVER

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October 25, 2018

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BUSINESS UPDATES

Scalable Cloud ERP solutions are built for your growing business The faster your business expands, the more important it becomes to have an ERP solution which can accommodate an increasing amount of operational procedures. The right ERP solution can shape the growth of your business by maximising productivity and streamlining operations. Acumatica Cloud ERP is a connected business platform which empowers you to transform your business by putting customer success at the heart of your operations.

Take care of your company’s organisational growing pains Your list of clients will grow as your business expands, which means that your ERP solution needs to be ready to handle common bumps on the road such as heavy workloads, potential costly oversights, and data inaccuracies. Acumatica Cloud ERP is designed to provide on-demand insights for decision makers, as well as automating key processes, and the digitalisation of your data. This leaves your employees with more time to focus on more critical tasks, such as customer relationship building and day-today operations.

Top class, manageable software Small and mid-sized businesses no longer have to settle for lower quality software so-

tems can be used across various devices that support an internet browser.

Software maintenance and support can be managed by your SaaS provider and support partner, so your IT team can focus on revenue generating projects.

A feature for every function Start small and build your way up with Acumatica Cloud ERP which grows along with your business. Begin by implementing tools to optimise financial management and CRM. As your business expands, you can add-on relevant modules such distribution management, manufacturing management, service management, and project accounting.

lutions. The Acumatica SaaS (Software as a Service) model has made ERP more accessible due to lower hardware, software, and personnel costs. The latter three factors are a result of: Costs of data storage, supplier support services, and software tools are spread

across multiple companies, resulting in more affordability.

Service is not priced on the number of users but on resources required, doing away with the need for user licenses.

Employees and server rooms don’t need new hardware, because cloud-based ERP sys-

Work from anywhere, at any time Access important information whenever you want, wherever you are, from any mobile device. The mobile-friendly nature of Acumatica Cloud ERP is perfectly suited for growing business in today’s fast-paced world where everyone is on-the-go.

For more information on how Acumatica Cloud ERP can help accelerate your business growth by maximising productivity and streamlining operations, visit www.computimesoftware.com/acumaticaerp or email info@computimesoftware.com

JAYE Malta receives MQF 3 accreditation

LEFT TO RIGHT: MARK GASAN, JOSEPH GASAN. DR JOSEPH MUSCAT, JOSEPH ZAMMIT, CAROLYN ZAMMIT AND ALASTAIR ZAMMIT

90 years of Ford in Malta GasanZammit Motors Ltd recently celebrated the 90th anniversary of the Ford dealership in Malta, marking this historic date with an elegant stand-up affair at the Grand Hotel Excelsior, in Floriana. The event was attended by Prime Minister Joseph Muscat and as well as a host of local and international distinguished guests, among them a contingency of Ford representatives who also attended the annual general meeting of Ford for Central and Eastern Europe held at the hotel the following day.

In his speech, Mr Gasan said that 90 years ago, his father signed one of the first concessionaire agreements for the Ford Motor Company with Henry Ford himself. “With countless Ford models launched suc-

cessfully in Malta, changing technologies and shifting trends over the decades, the Ford – Gasan connection is amongst the greatest influences that has essentially put Malta on wheels over the years,” he added before going on to talk about the successful merger with Zammit Group six years ago.

His speech was followed by a recorded message from Steven Armstrong, Ford’s president for Europe and a closing message from Prime Minister Muscat.

Over the past decades GasanZammit has established itself as a leader within marine and motorcycle areas in Malta, offering a wide choice of internationally renowned automotive and marine brands, including Ford.

Two of the Junior Achievement Young Enterprise (JAYE) Malta non-formal award programmes – the post-secondary Company Programme and the middle and Secondary Programmes – have been granted Level 3 accreditation within the Malta Qualifications Framework (MQF 3).

“Our new MQF 3 accreditation validates the efforts this organisation has put into ensuring that students at every educational level are given the opportunity to participate in hands-on and experiential activities in entrepreneurship,” said Julian Azzopardi, CEO of JAYE Malta Foundation. “The efforts of our young achievers following our middle school and secondary programmes, as well as our sixth-form company programme, is now formally recognised as equivalent to one O-level.”

The news of this recentlyachieved accreditation – a major milestone for the Foundation – was announced ahead of the JAYE Malta 30th anniversary celebration, which will be held at the InterContinental Malta on 6th December at 7.30pm. This dinner will bring together JAYE alumni, mentors, teachers, partners, stakeholders and friends to continue on this journey of educating, empowering and inspiring young people to reach their full potential across the educational spectrum.

The JAYE Malta 30th anniversary celebration will be held at the InterContinental Malta on 6th December at 7.30pm. For more information, visit www.jayemalta.org or follow JayeMalta on Facebook.

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e Malta Business OBSERVER |

October 25, 2018

BUSINESS UPDATES

omas Smith groupage route expands to the Far East

Earn a 0.5 per cent bonus on investments moved to MeDirect MeDirect has launched a new asset transfer promotion giving customers a 0.5 per cent bonus on the value of investment securities transferred to MeDirect by the 30th November 2018. In addition, MeDirect will refund third-party transfer fees of up to 0.5 per cent of the value of investments transferred. Both the bonus and refund will be paid by the 31st December 2018, making for a rewarding end-of-year gift.

Customers interested in taking advantage of the promotion need only visit one of MeDirect’s branches or login to their online banking to open an investment account. Once this is done, they need to submit a transfer request together with a statement of holdings, showing their investment portfolio.

MeDirect will then contact the existing investment custodian to arrange the transfer.

New and current MeDirect customers can contact MeDirect

by phone on 2557 4400 or via email on info@medirect.com.mt to set up an appointment with one of its branch representatives and kick-start their asset transfer process.

For more information about the promotion, read the terms and conditions on the MeDirect website.

MeDirect Bank (Malta) plc, company registration number C34125, is licensed by the Malta Financial Services Authority under the Banking Act (Cap. 371) and the Investment Services Act (Cap. 370).

Thomas Smith’s specialised freight and logistics transport services have reached new territories, by expanding their existing groupage route to a wider network in the Far East. Together with trailer services operating from European destinations, Thomas Smith now has a hub in Singapore to cater for clients’ growing shipping needs.

Thomas Smith is now able to offer clients groupage services to Malta through the Indian Ocean and the Middle East shipping routes. Through this avenue, extensive alternatives have been made available for cargo imports originating from Bangladesh, Cambodia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, Vietnam and the United Arab Emirates. Merchandise from all the above territories is consolidated through Thomas Smith’s hub in Singapore, with a 16-day transit time, with an average of 30 days’ conveyance from all 17 destinations.

The Far East groupage route was introduced to ensure customers get the best shipping service, irrespective of where cargo is imported. Thomas Smith will handle imports of various commodity types, excluding hazardous and temperature-sensitive products.

Thomas Smith Group is one of the longest-established service group of companies on the island, specialising in international shipping services and insurance.

The Group holds a leading market position in most shipping-related services.