CorporateDispatch PRO - Edition 17 by The Dispatch Media

Corporate DispatchPro

Issue No.17 | February 2021

Corporate DispatchPro The Journal of CI Group

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Issue No.17 | February 2021

Corporate DispatchPro The Journal of CI Group EDITORIAL TEAM Managing Editor - Jesmond Saliba Editor – Nathanael Muscat

CONTRIBUTORS Dasha Afanasieva Denise Grech Dr JosAnn Cutajar Keith Zahra Liam Proud Lisa Jucca PRODUCTION ASSISTANT Laura Grima Shirley Zammit DESIGN TEAM Matthew Borg Nicholas Azzopardi

CONTENTS Myanmar on the brink

This month in pictures

Generating fairness

Renewables approaching a tipping point

Moving on from oil

The canary leaves the coal mine

The social function of communities

Malta Insights

Malta News Roundup

CommuniqEU 49 Greek banking reform takes hazy turn

Russian retail IPO offers crowded bet on misery

Vivendi’s music spinoff is Bolloré shuffle

SOURCES

Published By

ADDITIONAL SOURCES

Design Produced

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Corporate DispatchPro Cover Story

Myanmar on the brink Hours before the Burmese parliament was set to certify the results of the general election held in November, the country’s powerful armed forces seized control of government and declared a year-long state of emergency. The iconic leader of the National League for Democracy, Aung San Suu Kyi, was placed under house arrest along with others from the higher echelons of the party that won the elections by a landslide. The military, whose proxy political party suffered a trashing at the polls, contested the results and filed as many as 200 complaints claiming fraud in the electoral process. Tension in the country of 54 million has been building in the weeks before the re-opening of parliament and the army’s spokesperson persistently refused to rule out any takeover attempt. Then, in the night hours of February 1, tanks and armed SUVs descended on the capital Nay Pyi Taw in an operation that moved with absolute efficiency. In the morning, the Burmese woke up stunned but not surprised. A country that has only started a gradual process of democratisation a decade ago, Myanmar knows military rule all too well. The surprise came from the other side. Supporters of the pro-democracy NLD party erupted into large demonstrations, defying a ban on gatherings and a night curfew. Tens of thousands of people across the country are publicly demanding the release of Suu Kyi, who is now facing criminal charges for allegedly owning walkie-talkies. Teachers have been at the forefront of the civil disobedience movement while civil servants have resigned en mass, crippling the government’s bureaucracy. 3

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Corporate DispatchPro The police, which is under the control of the military, met the demonstrations with water cannon and tear gas and rubber bullets, but a number of officers in an eastern state are reported to have revolted and joined the protestors. In his first address since taking control, army General Min Aung Hlaign tried to reassure citizens – and presumably fleeing foreign businesses – that there will not be a slide back to the times of the Junta which held the Southeast Asian country in its grip for fifty years. But people are having none of it and some activists are raising the stakes, calling for a complete removal of the military’s administrative powers. Besides contesting elections, the army, by constitution, also appoints an unelected 25 percent of parliament members, effectively blocking any constitutional amendments which require a 75 percent majority. The military played a vital role in Burma’s independence movement in the mid-20th century. The NLD leader herself is the daughter of the revered Aung San, founder of the Myanmar Armed Forces. The first coup in 1962, however, imposed a brutal one-party system which enacted martial law for twelve years. Popular uprisings in 1989 and 2007 were summarily crushed by the Junta and hundreds of people were killed at the hands of the army. The recent events evoke memories of the not-so-distant past for the Burmese, but the context this time is different. Those who lived through the final decades of military rule have now tasted the opportunities of democracy, as limited as the experience was. The younger ones are better educated and more connected, and less prepared to back down. The military may have found itself in an unfamiliar scenario, but few believe that it will acquiesce to public anger. Western countries are fearing that the situation may spiral out of control, reversing the significant democratic wins made in the last years. The night coup sought to arrest the brisk pace of change in the country, but the people’s uninhibited response shows that a deeper transformation had already dawned on Myanmar. 5

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DENMARK WILL REOPEN SCHOOLS FOR CHILDREN NEXT WEEK Denmark will take the first step towards easing its coronavirus lockdown next week, reopening schools for the youngest children, the Nordic country’s government said on Monday. Denmark, in a tough coronavirus lockdown since December, saw a decline in new coronavirus infections and hospitalizations in January after a drastic increase in the previous month. Schools will reopen for children in 1st to 4th grade starting next Monday, Health Minister Magnus Heunicke told a news briefing.

FLYDUBAI SAYS CATANIA AND NAPLES, SALZBURG AND MALTA WILL BE JOINING ITS EUROPEAN NETWORK Flydubai, the Dubai-based airline, today announced that Catania and Naples in Italy, Salzburg in Austria and Malta will be joining its European network from May 2021. The carrier has grown its network to more than 65 destinations as countries continue to gradually lift travel restrictions.

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Corporate DispatchPro AS PANDEMIC WORSENS, PORTUGAL REPORTS NEARLY HALF OF ALL ITS COVID-19 DEATHS IN JANUARY Portugal reported close to half of all its COVID-19 deaths in January, highlighting the severe worsening of the pandemic in a country whose plight has caused several European nations to offer help. Hospitals across the nation of just over 10 million appear on the verge of collapse, with ambulances queuing sometimes for hours for lack of beds and some health units struggling to find enough refrigerated space to preserve the bodies of the deceased.

ITALY’S MUSEUMS REOPEN AGAIN AFTER COVID-19 CLOSURE People visit the Uffizi Gallery in Florence, Italy, as it reopened on Thursday. Museums and archaeological sites in ‘yellow zone’ regions reopened to the public again after being shut due to the coronavirus pandemic lockdown.

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AMAZON TO OPEN TWO NEW HUBS IN ITALY THIS YEAR Amazon will open two new logistics centres in Italy this year, investing over 230 million euros ($278 million), the world’s largest online retailer said on Monday. With the two new hubs- a distribution centre in the north-western city of Novara and a fulfilment centre close to the city of Modena – Amazon will create 1,100 new jobs in the coming three years.

CHINA COMPLETES BUILDING OF FIRST OF 6 OF TEMPORARY HOSPITAL IN 5 DAYS China’s Covid-19 situation was often seen as being under control. The recent arrival of the WHO delegation to investigate the origins of the pandemic, was preluded with a series of news releases related to an ‘increase in cases’ in certain areas. Whether this is coincidental or not is to be seen, given China’s release of information.

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Corporate DispatchPro SINOVAC SAYS ITS COVID-19 VACCINE MORE EFFECTIVE WITH LONGER DOSING INTERVAL China’s Sinovac Biotech said on Monday that a clinical trial in Brazil showed its COVID-19 vaccine was almost 20 percentage points more effective in a small sub-group of patients who received their two doses longer apart. The protection rate for 1,394 participants who received doses of either CoronaVac or placebo three weeks apart was nearly 70%, a Sinovac spokesman said.

DEAD WHALE REMOVED FROM ITALIAN PORT OF SORRENTO Photos made available by the press office of the Italian Coast Guard (Guardia Costiera) shows the complex operations of removal and transport of a specimen of whale identified last 17 January, in the port of Sorrento, southern Italy, 20 January 2021.

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BRITISH TO FACE BAN ON ENTERING EU UNDER GERMAN PLAN TO SHUT BORDERS European governments would be allowed to ban all UK residents from entering their countries and cut all passenger transport links with Britain under a German proposal to the European Union, the Times reported on Thursday. EU member states are free to impose temporary bans on entry and on transporting passengers entering from non-EU countries with virus variant areas, the Times reported citing a draft proposal reviewed by the newspaper.

LLOYD AUSTIN BECOMES AMERICA’S FIRST BLACK DEFENSE SECRETARY The retired Army general Lloyd Austin made history on Friday by becoming America’s first Black defense secretary, arriving at the Pentagon minutes after his Senate confirmation to a busy schedule that included a call with NATO’s secretary general. “See you around campus,” the 67-year-old Austin said as he greeted reporters on the steps of the Pentagon.

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Corporate DispatchPro KOBE BRYANT MURAL IN TAGUIG, PHILIPPINES An image taken with a drone shows a mural of the late former Los Angeles Lakers basketball player Kobe Bryant and his daughter Gianna at a housing community on their death anniversary in Taguig, Philippines, 26 January 2021. Bryant and his 13-year-old daughter were killed along with seven others in a helicopter crash in Calabasas, California, the USA on 26 January 2020.

AUSCHWITZ SURVIVORS MARK ANNIVERSARY VIRTUALLY AMID PANDEMIC FEARS Marian Turski, a 94-year-old survivor of the Auschwitz death camp, will mark the 76th anniversary of its liberation by Soviet troops on Wednesday only virtually, aware that he might never return as the coronavirus pandemic drags on.

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Corporate DispatchPro Editorial

Generating fairness This month, a consortium in New South Wales, Australia, announced plans for the world’s biggest battery. And at an estimated $2.4 billion, it will also be the priciest. The project, due to begin in 2022, will be eight times larger than the current title holder, 1,500 kilometres to its west in South Australia. Completed in 2017, the Hornsdale Power Reserve is a gigantic lithium-ion battery designed to serve the grid, rather than homes or vehicles. But such projects are not limited to the Wide Brown Land; similar plants have cropped up in other countries from California to Lithuania and from Chile to London. Large-scale batteries solve the instability associated with renewable sources by storing up the energy produced and distributing it according to demand. While more regions and companies are betting on lithium-ion technologies, researchers are fast exploring alternative ways of generating renewable power. Betavoltaic technology, radio waves recycling, and triboelectricty may well be as futuristic as their names sound, but the global trajectory is clear: energy will decouple from fossil fuels and solutions will co-exist in a plurality of technologies. The ambitious transition towards clean energy will decelerate climate change, create new economic opportunities, and allow the earth to heal from decades of industrial-scale ravaging. But the transformation also phases out skills, jobs, and industries. Crucially, international pressure from financial institutions and powerful economies to switch from the old technologies may put poorer regions at a disadvantage if they are not supported. 13

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The climate emergency compels governments to adopt clean and more efficient solutions. The imbalance between developed and developing countries, however, demands a fair transition. It is no use denouncing new coal-fired plants in South Asia, for example, when most of that energy goes into satisfying the binge-shopping habits of consumers in western countries. The energy systems that have nurtured economies – primarily in developed countries – are now threatening a climate catastrophe, but world powers would be wise to balance remedies with the risks of mass human displacement. The main question about new energy solutions should not be who gets them first, but who gets them last. JESMOND SALIBA 15

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Renewables approaching a tipping point One of the executive orders signed by President Biden on his first day in office, was to revoke the permits for the construction of the Keystone XL pipeline connecting tar sands in Alberta, Canada to refineries in the Gulf Coast of Texas. Critics of the project, which was halted by Barack Obama in 2015 and revived by Donald Trump in 2017, praised the new President’s resolve before proceeding to demand the shutting down of another two pipelines, the Dakota Access and the Line 3. The White House National Climate Advisor, Gina McCarthy, assured alarmed oil companies of a common-sense approach to fossil fuels, but the Biden administration has set a clear goal of decarbonising the US energy sector by 2035. The shift to renewable sources such as wind and solar, is a global trend. Nine out of ten signatory countries of the Paris Agreement earmarked renewables as part of their strategies to arrest the rise in the planet’s temperature. More than 130 governments committed to quantified renewable energy targets in their Nationally Determined Contributions. A report by the International Renewable Energy Agency estimates that, if commitments were met by all countries, the capacity for power generation from renewables would jump by 42 percent within the decade, producing an estimated 3,564 gigawatts by 2030. Last year, the EU Commission announced that the share of renewable energy in the bloc more than doubled from 2004,

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Corporate DispatchPro accounting for 19.7 percent in 2019. This put the EU well on course to reach the agreed 2020 target of growing the portion of renewables to a fifth of total energy consumption. The EC now set its sights on a 32 percent share of renewable energy in gross final consumption by 2030. The worldwide leap to non-fossils is, perhaps, best illustrated in the inauguration of the Gujarat wind and solar park in India, last December. Prime Minister Narendra Modi described the 30 gigawatt project as the world’s largest renewable energy facility, bringing the ambition to generate 175 gigawatts from renewables by 2022 fully into view. The International Energy Agency calculates that renewables have been the energy sources most resilient to the disruptions of the pandemic while demand for renewable electricity remained virtually unaffected throughout the crisis. Indeed, despite restrictions on production facilities and supply chains in 2020, demand for energy from renewables registered an increase of one percent from 2019. The switch from fossils to renewables, however, has wider implications than environmental protection. Governments must contend with delicate social and economic issues as much as ecological ones. A collaborative migration model to renewable solutions ensures a just and successful outcome on all fronts.

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Moving on from oil At the height of the Covid-19 emergency, the CEOs of some of the world’s biggest oil and gas companies, reiterated their commitment to an emissionsreduction manifesto announced in 2014. The twelve members of the Oil and Gas Climate Initiative declared that the pandemic would not deter their efforts towards accelerated transitions to lower carbon energy. The public statement was not a cloud of hot words in a climate of global turbulence: the risks to fossil-centric energy production have been evident to the industry for the last decade, at least. The CEO of the world’s biggest asset manager, BlackRock, advised clients in 2020 that the corporation would make sustainability a central consideration in investing, keeping an eye on oil and gas companies. The investor community has a crucial role to play in the speed and intensity with which the industry shifts from hydrocarbons. That said, more than half of global oil and gas production is controlled by national governments, not companies. In this scenario, efforts by investors need to be matched with policies. The EU Commission, for example, set out strict goals to reach netzero emissions across the Single Market economy by 2050. While the European Green Deal was officially launched in 2019, the EU Parliament had been pushing in its direction for years. European oil majors, in fact, responded with their own decarbonisation strategies. Shell has committed to cut 30 percent of its carbon footprint by 2035; Total plans to place a fifth of its capital investments in clean energy projects over the next decade; Repsol expects a net-zero output by 2050. 21

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Corporate DispatchPro BP took a majority stake in a major European solar power operator and invested in an Israeli battery-charging project. ExxonMobil is focusing on biofuels and recently announced a breakthrough with its algae-based research.

Their competitors in the US have taken a less aggressive approach, betting on another decade of strong demand for oil. Indeed, in February 2021 Brent crude reached $60 for the first time in a year amid restrictions on supply. Some analysts are predicting it to keep rising. But that is not to say that American oil and gas companies are being complacent. Chevron, ExxonMobil, and Occidental vowed to reduce a minimum of 20 kilogrammes of CO2 equivalent per barrel by 2025. Climate experts, however, believe that bolder targets can be set while applying them to baseline emissions, rather than a company’s overall output. Even before consumers start burning through oil and gas products, the process of extracting resources and distributing them accounts for 15 percent of the industry’s greenhouse emissions. Part of the solution lies in developments such as carbon capture technologies and renewables. Total started investing early in new technology such as solar photovoltaics and has ventured in wind and hydropower too. BP took a majority stake in a major European solar power operator and invested in an Israeli battery-charging project. ExxonMobil is focusing on biofuels and recently announced a breakthrough with its algae-based research. Such capital investments indicate a general transition towards a greener future for oil and gas companies, but the contrast in strategies by the main players suggests that the road ahead is still being laid. Big oil is oftentimes seen as a stumbling block in the shift to more sustainable energy production. But with the right investment, policies, and technology they can become the single most important force in achieving global ambitions of net-zero emissions. 23

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The canary leaves the coal mine In early 1882, Holborn Circus in central London came alight with a burst of electricity generated by a newly-built facility nearby. The Holborn Viaduct power station became the world’s first coal-fired power plant to produce electricity for public consumption. The power station itself closed down after only three years, but coalfired plants quickly mushroomed all over the UK and its colonies, Europe, and the US. Even before electricity production, coal had already emerged as the crucial resource to power a new generation of steam engines that gave rise to the Industrial Revolution. The carbon-rich material quickly became a major commodity and a prized material in the period of the great wars in the first half of the 20th century. Indeed, the international collaboration that developed into the European Union, was founded on the creation of a common market for coal and steel. Today, coal’s dominance in the west has subsided significantly as environmental concerns grow stronger and cheaper alternatives become more widely available. OECD countries registered a net decline of 68 gigawatts of coal power capacity since the start of the millennium, and EU members retired 62 plants since 2016 according to a live monitoring project by Europe Beyond Coal. The bloc has 312 coal-fired power stations generating a combined 126 megawatts while Greece and Poland are each planning to add a new facility. However, lack of funding and – in the case of Greece – a set timeline for the phasing out of coal use are putting these projects in doubt. At a global scale, the rate of planned coal-powered capacity dropped by two-thirds since 2015. But the coal fleet remains in a state of

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Corporate DispatchPro overall expansion, driven by China’s increase in commissioning and new permits. The world’s second-biggest economy accounts for half of the current global capacity and four in ten projects for new coal-fired plants are located in China. But many of these, though not the majority, are designated for back-up power options. Meanwhile, financial markets are introducing new standards to restrict or ban financing of thermal coal. A growing list of banks, asset managers, pension funds and insurance providers have officially declared that they will assess their investment strategies within the framework of the Paris Agreement, which suggests divestment from the fossil fuels. The use of coal launched an unprecedented era of human development that has raised quality of life for billions of people. But the coal addiction has taken its toll on the environment, polluting water and air, wiping out natural habitats, generating waste, and dangerously raising the planet’s temperature. As ironic as it sounds, this arc of development can only reach its potential if the world finds a way back out of the coal mine.

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Corporate DispatchPro PROF. JOSANN CUTAJAR

The social function of communities A community consists of a group of individuals or families that share certain values, interests, services, institutions, and/or geographical proximity. Fellin (2001) defines ‘community’ as a functional special unit that meets people’s sustenance needs, leads them to form collective identities, and facilitates social interaction. Communities are not limited to neighbourhoods, but include professional groups, enthusiasts of a particular local, national, or global sport, diasporas, and/or online communities. Some communities are linked to a place, online ones are linked to a particular location in cyber space. Diasporas feel an emotional belonging to a geographic space which they might or might not have visited physically. Netting, Kettner, McMurtry, and Thomas (2017) maintain that one of the characteristics of a community involves geographical proximity. Geographical proximity used to be a factor but nowadays, thanks to ICT, proximity can also occur through cyberspace. In Malta we still tend to identify with certain places and the communities (religious, political, leisure) linked to certain neighbourhoods or towns. Although geographical parameters between one locality or another might be hazy in certain areas of Malta – the Qormi, Hamrun, Sta. Venera and Albert Town areas being a case in point – a good number of Maltese feel an affinity with one locality or another. The Maltese like to use symbols to differentiate between communities, especially when these are found in the same locality. In Żabbar, for example, residents who support the philharmonic club referred to as tal-Baqra use the colour blue to distinguish themselves from the community referred to as ‘ta’ San Mikiel’, which uses the colour green to demonstrate their allegiance to

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Corporate DispatchPro this band club. At the same time, they are united by their allegiance to their patron saint, il-Madonna tal-Grazzja (Our Lady of Graces) which serves as a totemic symbol, a social glue to hold the different factions within the same locality together in spite of secularization. US AND THEM Anthony Cohen (2001) underlines that we use the term ‘community’ when we want to identify between ‘us’ and ‘them’. Symbols are often used to differentiate between those who are considered insiders and those perceived as outsiders to the community. The Maltese use the term ‘iswed ’ when they want to underline that they are being socially excluded from something. This term is linked with the Roman Catholic religion since black symbolizes evil, the devil, sin, death, so it has negative connotations. The term community implies that people who are part of the community have something similar to each other, while those outside do not. This sense of belonging leads to a sense of attachment

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to a group and/or place, which might eventually translate into involvement, and commitment. Members of parliament, for example, are very committed to their constituents, and this often translates into particular ministries employing quite a substantial number of people deriving from the area with which the minister or secretary is linked. For others, commitment means fighting for a cause. People have died in the name of ‘democracy’ or killed in the name of their ‘country’, two abstract concepts which feel very real for those involved. Cohen maintains that people construct community symbolically, rendering community a repository of meaning, and a resource at the same time. Community is a point of reference where social identity is involved. Community activists within the LGBTIQ, disability, race and ethnic arena come together for a cause. Others come together because of an interest in sports, in politics, etc. While women tend to form part of groups involved in social issues, men tend to frequent football clubs, boċċi clubs, or band clubs. Putnam (2000) underlined that the activities based on the social identification with a place, interest or a cause help to consolidate social bonding. Social bonding leads to trust and reciprocity among disparate individuals. COMMUNITIES AND SOCIAL FUNCTIONS Communities have social functions, one of which is the ability to respond to the needs of its members. The members’ needs can be addressed by resources found within the community. Lin, Cook, and Burt (2008) refer to this as collective efficacy. Neighbourhood watch is based on collective efficacy whereby community members look out for each other. Collective efficacy is a safety net for the socially excluded and the materially deprived (Cutajar, 2014). Life would be harder if community members did not share the few resources they have with each other. Fellin (2001) maintains that community competence is enhanced when residents have a commitment to each other, are aware of their shared values and interests, are open in their communication, and participate widely in community decision making. This commitment to each other is being eroded through social, cultural and physical mobility, which is leading to fragmentation, alienation and disengagement according to Hardcastle, Powers, and Wenocur 32

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(2011). The Maltese have also been used to being ruled for centuries, by past colonial masters, by the Roman Catholic Church, by men. So, I think it might take time for the majority to catch up and realise that, by participating in decision making, they will make sure that their needs and interests are taken into consideration. Not everybody is in a position to participate in decision making. Communities delineate who can participate and who cannot. Hardcastle et al. (2011) differentiate between horizontal and vertical structures. Horizontal structures are more apparent when the individuals involved share the same space, know each other, and therefore can take decisions together. Vertical structures involve hierarchical levels of authority which are found beyond the geographic boundaries shared by community members. In my research (Cutajar, 2018) on Gozo and Bormla, it was evident that distance from authority impacts on the community’s efficacy to 33

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Corporate DispatchPro access resources or to voice their concerns. Distance can be spatial or social and it can affect what Putnam refers to as bridging social capital, that is the groups’ efficacy to rope in the help of outsiders who have power. Gozitans are somewhat geographically removed from the centre of power. Bormla, as a ‘blighted’ locality, is socially removed (Boswell, 1994). People’s feeling that they do not have a say in decision making or that their feedback does not count undermines cohesion and leads to fragmentation and alienation, maintain Hardcastle et al. (2011). This sense of alienation can lead to anomie or normlessness for people who do not feel that they belong in the ‘normative’ community. It is not only immigrants who might feel socially excluded, but all those who face social disenfranchisement, those communities who are made to feel different. And, in Malta, we are constantly coming up with ways of underlining who is part of a community, and who does not belong. SOCIAL ENGAGEMENT Communities have assets and capacities which are communally shared, and which people tend to take for granted until they disappear. The Legion of Mary volunteers are a case in point. In some communities, volunteers still pay home visits to the elderly and the lonely. This helps keep people feeling that they are part of the community and keeps them mentally healthy and socially engaged. Some communities help people cope and grow towards self-fulfillment. They help produce people who are functioning well physically, psychologically, socially, and spiritually. They produce people with little need for human services since community members will look out for each other. Social turnover in some areas is what I feel is somewhat undermining this. Living in each other’s pocket is not healthy either. Internecine ‘warfare’ among professional groups or neighbourhoods undermines the group’s self-efficacy. We take community for granted until it starts going wrong. More research needs to be conducted on communities to find out what makes them efficacious, and what might undermine this efficacy.

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E-COMMERCE GENERATES €2.1 BILLION IN 2020 Turnover from e-commerce sales rose by 6.4 percent in 2020 compared with the previous year, reaching a total €2.1 billion. Figures by the Nationals Statistics Office show that eight in ten web orders last year were placed on the business’ own websites or apps while the remaining sales came through online marketplaces. The share of companies conducting business online grew from slightly under 24 percent in 2019 to 26.2 percent in 2020, outpacing the average across the EU where around a fifth of businesses report e-commerce options. The highest increase observed in the accommodation and food service sector, rising by 4.7 percentage points year-on-year. On the other hand, companies in the manufacturing and energy sector and the construction sector reduced their e-commerce activities by 1.6 percentage points and 0.8 percentage points, respectively. More than one in eight businesses in Malta have their own website, a higher rate than the EU average of 77 percent. The most common website features are description of products and price lists, found in 92.5 of all sites, and links to social media pages, present 77.5 percent of the time. Just over 40 percent of websites incorporate tools for online ordering, reservation or booking. 37

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Corporate DispatchPro TOURISM PLUMMETS BY THREE-FOURTHS IN 2020 Total inbound tourism reached 658,567 between January and December 2020, a 76.1 percent decline from the preceding twelve months. Figures by the National Statistics Office show a total of 5.2 million nights spent, registering a 73.0 percent decrease from 2019. Holiday trips amounted to nearly nine in every ten visits, comparable to the year before, while business trips made seven percent of all inbound tourism. The total number of repeat tourists dropped by 72.3 percent from 2019, but its share rose from 25 percent of all incoming trips to 29 percent in 2020. EU travellers remained the largest market, contributing to 68.2 percent of all visits. The share of non-EU tourists, however, grew from 16.3 percent in 2019 to 31.7 in 2020.

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Corporate DispatchPro MALTA’S MINIMUM WAGE CLOSE TO EU AVERAGE Malta’s minimum wage (€785 a month) ranked in the middle when compared to other EU countries, Eurostat reported. As of 1 January 2021, 21 out of the 27 Member States of the EU have national minimum wages. In January 2021, ten Member States, located in the east of the EU, had minimum wages below €700 per month: Bulgaria (€332), Hungary (€442), Romania (€458), Latvia (€500), Croatia (€563), Czechia (€579), Estonia (€584), Poland (€614), Slovakia (€623) and Lithuania (€642). MOODY’S PREDICT STRONG ECONOMIC REBOUND BUT GOVERNANCE ISSUES REMAIN Credit rating agency has left Malta’s classification at A2 Stable, indicating that it expects the Maltese economy to recover from the pandemic without significant lasting scars and public finances brought under control. Among the country’s strengths, Moody’s listed Malta’s track record of strong economic growth, elevated wealth levels and a moderate government debt burden.

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Corporate DispatchPro On the other hand, it said that “institutional challenges related to the rule of law, control of corruption and money laundering supervision remain,” while acknowledging some reforms on the matter. It said that it expected those reform efforts to be maintained, with systemic risks from the financial sector, “including those related to money laundering and the financing of terrorism” to be contained. The report found that the pandemic and measures taken to halt its spread caused the Maltese economy to contract by 9.9 per cent of GDP year-on-year in the third quarter of 2020, a somewhat better performance than the 16.1 per cent year-on-year contraction in the second quarter. PRIVATE CARS MAKE THREE-FOURTHS OF ALL VEHICLES The number of registered cars reached a record of 400,586 in the third quarter 2020. Figures by the National Statistics Office show a rise of more than 5,000 vehicles from the previous quarter, equivalent to a net average increase rate of 56 new cars per day. In the first and second quarters, the daily rate of new cars experienced a decrease. Passengers cars made 67.7 percent of all new registrations, amounting to 3,490 vehicles. Of these, 55 percent were newly licensed used cars and 45 percent brand new models. Motorbikes made 17.6 percent of all new registrations with lorries, buses, and agricultural and special purposes vehicles making the remaining 15.3 percent. Compared with Q3 2019, the total number of registered vehicles increased by 14.5 percent. By the end of September 2020, passenger cars excluding garage hire, lease, taxi, or self-drive stood at 73.8 percent of total licensed stock the biggest single vehicle group. Commercial vehicles including goods-carrying cars made 14.6 percent. There were 448 route buses in the third quarter last year, including 30 newly licensed ones.

Passengers cars made 67.7 percent of all new registrations, amounting to 3,490 vehicles. Of these, 55 percent were newly licensed used cars and 45 percent brand new models. 43

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Corporate DispatchPro DENISE GRECH

Malta News ROUNDUP The EU Commission’s winter forecast expects Malta’s economy to grow by 4.5 percent this year after a biting contraction in 2019. The report anticipates a modest recovery in 2022 as net exports return to normal levels. The Auditor General told a parliamentary committee that the Electrogas power station agreement includes four liability clauses that would force the government to pay investors €417 million if the deal were terminated. Media house LovinMalta filed a constitutional action seeking to annul a provision in the Broadcasting Act that allows political party stations to circumvent the impartiality principle by cancelling each other out. One and Net, the media arms of the two political parties, said they will challenge the case.

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The Nationalist Party criticised the appointment of former Finance Minister Edward Scicluna as governor of the Central Bank, which gives him an automatic seat on the Financial Services Authority board. The PN said the move is a blow to the country’s credibility. Finance Minister Clyde Caruana said that Air Malta is losing €170,000 every day in operational losses. The minister said the government will seek permission from Brussels to inject state support into the ailing national airline. The Union of Midwives and Nurses said that initial talks with the authorities over an exodus of nurses leaving for the UK were encouraging. Reports revealed that British recruiters were targeting healthcare workers in Malta to keep up with the demand in the sector. 46

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Corporate DispatchPro The Abortion Support Network announced that more than 200 people sought its services since it was established in Malta in 2019. The NGO said request for help ranged from advice on abortion clinics to funding for trips abroad. The state broadcaster, PBS, was ordered by the Industrial Tribunal to pay former CEO John Bundy €230,000 for unfair dismissal. The PBS board, which had fired Bundy over allegations of breaching procurement rules, vowed to appeal the ruling. A contractor and a construction worker charged with the involuntary homicide of a woman who died in a house collapse last year, chose to stand trial. Another two men facing the same charges will be judged by a Court of Magistrates. A country lane in Dwejra was paved over with cement by Infrastructure Malta, the agency responsible for roadbuilding. Members of a conservation NGO deplored the decision, pointing out that the path had historical value.

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Corporate DispatchPro KEITH ZAHRA

ECONOMY

EC forecasts challenging Winter for Europe, but light at end of the tunnel The European Commission is forecasting a challenging winter but sees light at the end of the tunnel as the vaccination process gathers pace. In its Winter 2021 Economic Forecast, the EC projects the euro area economy to grow by 3.8 percent in both 2021 and 2022. The forecast projects that the EU economy will grow by 3.7 percent in 2021 and 3.9 percent in 2022. The euro area and EU economies are expected to reach their pre-crisis levels of output earlier than anticipated in the Autumn 2020 Economic Forecast, largely because of the stronger than expected growth momentum projected in the second half of 2021 and in 2022. After strong growth in the third quarter of 2020, economic activity contracted again in the fourth quarter as a second wave of the pandemic triggered renewed containment measures. With those measures still in place, the EU and euro area economies are expected to contract in the first quarter of 2021. Economic growth is set to resume in the spring and gather momentum in the summer as vaccination programmes progress and containment measures gradually ease. An improved outlook for the global economy is also set to support the recovery. Risks surrounding the forecast are more balanced since the autumn, though they remain high. They are mainly related to the evolution of the pandemic and the success of vaccination campaigns. On the positive side, the forecast notes that NextGenerationEU, the EU’s recovery instrument of which the centrepiece is the Recovery and Resilience Facility (RRF), could fuel stronger growth than projected since the envisaged funding has - for the most part - not yet been incorporated into this forecast.

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Corporate DispatchPro KEITH ZAHRA

TRADE

Stronger trade enforcement rules enacted Robust new trade enforcement rules have entered into force to further strengthen the EU’s toolbox in defending its interests. With the update of the EU’s Trade Enforcement Regulation, the EU is able to act in a broader range of circumstances. The new rules upgrade the EU’s enforcement by empowering the EU to act to protect its trade interests in the World Trade Organization and under bilateral agreements when a trade dispute is blocked despite the EU’s good faith effort to follow dispute settlement procedures. The regulation previously only allowed action after the completion of dispute settlement procedures. The new rules also expand the scope of the regulation and of possible trade policy countermeasures to services and certain trade-related aspects of intellectual property rights. The regulation previously only permitted countermeasures in goods. The proposal to amend the existing Enforcement Regulation came as a reaction to the blockage of the operations of the WTO Appellate Body. The current regulation – a basis under EU law for adopting trade countermeasures – requires that a dispute goes all the way through the WTO procedures, including the appeal stage, before the Union can react. The lack of a functioning WTO Appellate Body allows WTO Members to avoid their obligations and escape a binding ruling by simply appealing a panel report. The revised Regulation enables the EU to react even if the WTO has not delivered a final ruling because the other WTO member blocks the dispute procedure by appealing to the non-functioning Appellate Body and by not agreeing to an alternative arbitration under WTO Dispute Settlement Agreement.

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Corporate DispatchPro KEITH ZAHRA

ENVIRONMENT

Commission to consult on environmental crime The Commission has launched a public consultation on environmental crime, as parts of its efforts to review EU rules on the subject. The results of this public consultation will feed into the review of the EU rules on environmental crime. The Directive (Directive 2008/99/EC) requires member states to treat activities that breach EU environmental legislation, such as illegal shipment of waste, trade in endangered species or in ozonedepleting substances, as criminal offences. A legislative proposal for a revised Directive is expected by the end of 2021. An evaluation of the Directive, carried out in 2019-2020, concluded that room for improvement remains when it comes to reducing environmental crime and prosecuting offenders. The revision addresses those issues, by making use of the EU’s reinforced competence in the field of criminal law under the Lisbon Treaty as well as ensure better coordination of the rules with other green initiatives. The public consultation will gather views from individuals and groups with interest and expertise in the matter, like members of the general public, academics, businesses and NGOs. The public consultation is open until 4 May 2021.

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Corporate DispatchPro KEITH ZAHRA

SOCIAL MEDIA

MEPs call for better regulation of social media MEPs have called for democratic oversight of tech giants to safeguard freedom of expression. In a debate with Secretary of State for European Affairs Ana Paula Zacarias from the Portuguese Presidency of the Council, and Commission Vice-President Věra Jourová, a number of MEPs from different political parties criticised the vast power of social media platforms and their worrying impact on politics and freedom of speech. Citing various decisions taken by the platforms to censor content or accounts, a large majority in the chamber highlighted the lack of clear rules governing such decisions and the lack of transparency of big tech practices. They urged the Commission to address the issue in the Digital Services Act and the Digital Markets Act, and as part of the Democracy Action Plan. Most speakers focused on the need to provide legal certainty when removing content, and to ensure that such decisions lie with democratically accountable authorities, and not with private companies, in order to safeguard freedom of speech.

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Corporate DispatchPro LISA JUCCA VIA REUTERS BREAKINGVIEWS

Greek banking reform takes hazy turn Greece’s reform of its hard-hit financial sector is taking a hazy turn. On the eve of a big recapitalisation of Piraeus Bank, the head of its largest shareholder, the Hellenic Financial Stability Fund, abruptly quit.

While running the fund, which has stakes in Greece’s four large banks, Austrian Martin Czurda championed better corporate governance. His departure takes a shine off expected improvements to Greek banking, including a bad debt cleanup plan and new insolvency code. Czurda’s exit comes at an inopportune time. Piraeus – arguably the problem child of Greece’s banking sector - is prepping a capital increase that could amount to 1 billion euros, more than its current market capitalisation of about 700 million euros. Its biggest investor is the bailout fund, established during the euro zone crisis to prop up local lenders. The fund’s stake in Piraeus shot up to 61% from 26% after it missed a December coupon payment on 2 billion euros of contingent convertible bonds, triggering a share conversion. If public investors enthusiastically back the capital increase, the fund could pare its stake to below 30%, an option liked by the government of Prime Minister Kyriakos Mitsotakis, who favours a swift privatisation of Greek banks. With more capital, Piraeus could also accelerate a cleanup of its balance sheet, which was still saddled with nearly 23 billion euros of dodgy loans at end September. 57

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Corporate DispatchPro Many of the banking changes that Greece is pushing through are welcome. The country is implementing a bad debt cleanup programme, known as Hercules, which is modelled around a successful Italian system of state guarantees. Athens is also overhauling its inefficient and complex insolvency laws to give investors more certainty about the timing and processes in cases of bankruptcy. Yet, investors may question whether Czurda’s exit may herald a backsliding of good corporate governance practice. Under his tenure, the bailout fund fought against cozy boardrooms. In 2018, for instance, it intervened to prevent a member of Alpha Bank’s founding family from becoming CEO. It also pushed for more independent and female directors at National Bank of Greece Without more clarity investors may believe Greece is moving two steps forward and one step backwards.

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Corporate DispatchPro DASHA AFANASIEVA VIA REUTERS BREAKINGVIEWS

Russian retail IPO offers crowded bet on misery A stagnant economy, sanctions and low oil prices are the standard risk factors that Russian companies hoping to go public tend to flag to investors. But for Fix Price, they are part of the allure. The company, which could be worth $9 billion, is a bet on the country’s stagnant incomes. The only worry is fending off new entrants. Goldman Sachs-backed Fix Price has 4,200 stores in Russia as well as Belarus, Kazakhstan, Uzbekistan, Kyrgyzstan, Latvia and Georgia, flogging household items like dustpans or toothpaste at pre-set prices. The challenge of the model is to find enough suppliers willing to sell at those levels and getting products on shelves that punters want or need. The format is proving popular in other countries, with both European Action and B&M growing rapidly. Poland’s Dino Polska, probably the closest listed competitor, is valued at 27 billion zloty ($7 billion) including debt, or around 21 times this year’s forecast EBITDA. Assume Fix Price can grow its top line this year by 30%, and make the same 19% margin as 2020. That would imply a valuation as high as $14 billion including cash on the same multiple. Investors will want a discount, given it’s a new listing and to compensate them for the risks of doing business in former Soviet states. A 34% haircut would bring the equity value close to the $9 billion being touted by people familiar with the offer. The question is how long Chief Executive Dmitry Kirsanov will be able to sustain last year’s 33% top line growth rate. The pressure on Russians’ real incomes, which fell 3.5% last year, could help as cashstrapped consumers are more likely to prioritise price over expensive brands. And, even though Fix Price is 14 years old, it still has scope to expand. Euromonitor reckons there’s room for up to 11,700 discount stores

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Corporate DispatchPro across Russia, nearly three times the Goldman-backed group’s footprint. In Poland there are almost 35 Dino stores per million people compared to fewer than 28 stores per million people in Russia. The problem for Kirsanov is that major supermarkets are catching on: X5 Retail and Magnit, the country’s top two supermarkets, are launching their own discount chains, bringing greater scale and financial muscle. To persuade investors they are getting a bargain, Kirsanov will need to show he can win the discount war.

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Corporate DispatchPro LIAM PROUD VIA REUTERS BREAKINGVIEWS

Vivendi’s $40 billion music spinoff is Bolloré shuffle The only surprising thing about Vincent Bolloré’s plan to spin off a chunk of Universal Music is that he didn’t think of it sooner. The French billionaire has contrived an ingenious way of unwinding a conglomerate discount at Vivendi, the media group he controls, while also retaining his grip on Taylor Swift’s music label. Vivendi announced on Saturday that it’s considering handing its investors 60% of Universal. The Paris-based conglomerate would list the label on the Amsterdam exchange while hanging onto a 20% stake, matching the shareholding held by a consortium led by Chinese technology giant Tencent. Bolloré is targeting a minimum price tag of 30 billion euros for the business, which is also home to Elton John and Ariana Grande. That looks achievable. Smaller peer Warner Music is valued at almost 16 times expected EBITDA for 2023, using median estimates compiled by Refinitiv. Apply the same multiple to UBS analysts’ forecast for Universal’s EBITDA that year and the label would be worth 33 billion euros including debt. Assuming net debt of 1.5 times 2021 EBITDA, the equity value would be just over 30 billion euros. The spinoff should help unwind Vivendi’s conglomerate discount, handing an uplift to its shareholders. After the move, they will directly own Universal shares worth around 18 billion euros in addition to their investment in Vivendi. The French group’s remaining assets, which include pay-TV station Canal+, should have an equity value of 18.4 billion euros, using UBS sum-of-the-parts estimates, adding the remaining 20% Universal stake, and netting off the portion of net debt that remains on Vivendi’s balance sheet. 65

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Corporate DispatchPro

Add it all up, and Vivendi investors would hold stock worth 36.6 billion euros, or 6.7 billion euros more than the conglomerate was worth at Friday’s closing price. Investors clearly see the upside, adding about 5.3 billion euros to Vivendi’s market value on Monday morning. Bolloré, whose family holding group owns 27% of Vivendi, gets his share of the upside. Even better, however, he will retain control of both groups. The spinoff will hand him about 16% of Universal’s shares directly. Combined with the one-fifth of the label still owned by Vivendi, he’ll have sway over about 36% of the music group. The reshuffle should benefit all Vivendi shareholders but, as usual, Bolloré will gain the most. 67

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CorporateDispatch PRO - Edition 17

Articles inside

Russian retail IPO offers crowded bet on misery

Vivendi’s music spinoff is Bolloré shuffle

Greek banking reform takes hazy turn

CommuniqEU

Malta News Roundup

The social function of communities

Malta Insights

This month in pictures

Renewables approaching a tipping point

Moving on from oil

The canary leaves the coal mine

Myanmar on the brink