Business Agenda 26 Spring Issue by Malta Business Bureau

Agenda Business

ISSUE 26 Spring 2016 NEWSPAPER POST

The official publication of the Malta Business Bureau

Workplace stress: health epidemic of this century? Dott. Edward Curmi shares his views

In this issue: Luxembourg’s and Ireland’s ambassadors to the EU on what makes a successful Presidency from a small state perspective | Winston Zahra Snr shares the story of his impressive career | MBB BUSINESS NEWS |

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Cover Story

Small states

large strides With less than 12 months to go until Malta takes up the Presidency of the EU Council concluding the Trio cycle with the Netherlands and Slovakia, Marie-Claire Grima speaks to Luxembourg’s and Ireland’s ambassadors to the EU, H.E. Georges Friden and H.E. Declan Kelleher, who share their views on the relevance of the Presidency today, and what makes a successful Presidency from a small state perspective.

early 50 years ago, political scientist Professor Robert Keohane defined a small state as one ‘whose leaders consider that it can never, acting alone or in a small group, make a significant impact on the system.’ The European Union’s experience has proven that this particular assertion of a small state has its exceptions. The Union’s successive enlargements and the accession of several various-sized nations over the past decades has reshaped and empowered small states in Europe, and this shines through in fewer places more clearly than the Presidency of the Council of the European Union, a position which is

groups of three, called ‘trios’. The trio (currently made up of the Presidencies of the Netherlands, Slovakia and Malta) sets long-term goals and prepares a common agenda determining the topics and main issues that will be addressed by the Council over an 18-month period. Each of the three countries prepares its own detailed sixmonth programme on the basis of the agreed common agenda.

H.E. Georges Friden held by the government of a different member state and rotates every six months. Member states holding the Presidency work together closely in

Before the Lisbon Treaty was ratified in 2009, the holder of the Presidency assumed political responsibility in all areas of European integration, playing a key role in negotiating high-level political decisions. The Treaty removed a significant amount of the power

“Small states have the huge advantage of being able to reach decisions quickly. With smaller numbers involved in decisionmaking, small administrations have the potential to bring nimbleness and reactivity to a Presidency.” Georges Friden, Luxembourg’s ambassador to the EU

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Cover Story yielded by the Presidency by splitting councils and creating new positions, presumably making it even more difficult for small states in the governing seat to bring about any real longterm changes or developments. However, many argue that having a small state in the driving seat is still an important aspect of EU governance, including Luxembourg’s ambassador to the EU, H.E. Georges Friden. “Since the Lisbon Treaty came into effect, presidencies have had to concentrate on the management of the legislative process, which is now the core business of a Presidency. As the EU is based on the rule of law, the legislative process is obviously a key part of its governance and the Presidency’s role in this regard is central: it is called upon to generate agreement within the Council and defend the Council’s positions in negotiations with the European Parliament. The Presidency is thus responsible both for organising the work at the various levels of the Council, from

H.E. Declan Kelleher

working groups to ministerial meetings, and for representing the Council in the negotiations with Parliament in the framework of the normal legislative procedure.” “The Lisbon Treaty substantially increased the influence of the European Parliament, in particular, in shaping EU decisions. Under the Ordinary Legislative Procedure, it now decides on the vast majority of EU legislation jointly with the Council, and, for example, is also central to the budgetary process,” adds Ireland’s ambassador to the EU, H.E. Declan Kelleher, who saw Ireland assuming the Presidency just as it was emerging from a deep financial crisis in 2013 and securing agreement on the €960 billion, seven-year Multiannual Financial Framework (MFF) budget. “For EU governance to function smoothly, it is essential that there is good communication and engagement between the co-legislators. The Presidency plays an important role here. By building strong relations across the 751- member Parliament, a Presidency lays the foundation for successful cooperation.” The Lisbon Treaty also instituted the concept of ‘trio presidencies’, in which three successive presidencies work together to develop an 18-month political programme, helping to ensure that member states with little or no experience of running a Presidency would be able to rise to a higher level of consistency and coordination in the work of the EU. Despite this, it’s no secret that small states have fewer

“For EU governance to function smoothly, it is essential that there is good communication and engagement between the co-legislators. The Presidency plays an important role here.”

Declan Kelleher, Ireland’s ambassador to the EU resources at their disposal than larger states, which can be a tremendous administrative headache at the best of times. “Malta can expect to coordinate and chair around 1,500 meetings of different levels in Brussels and Luxembourg as well as around 200 meetings in Malta during the Presidency,” Mr Kelleher says. “Each and every one of these engagements needs to be carefully prepared, involving close coordination with 27 other capitals, as well as key figures across the EU institutions. Managing the logistics of an operation this size would be a challenge on its own. But a Presidency needs to do more than simply ensure meetings happen – it must deliver concrete results. This requires the commitment of a supportive government, allowing the putting in place of strong teams of officials in Brussels and the capital dedicated to EU work for the period up to and including the Presidency. For countries with modest public administrations, it can be a challenge to ensure sufficient resources are allocated to the task. Advance and effective preparation both increases the prospect of a successful Presidency and helps to ensure that avail-

able resources are allocated as effectively as possible,” Mr Kelleher adds.

of trust in the Council, the Parliament and the Commission.”

However, the status of small states can also be an advantage – the fact that staff and priorities have to be tightly streamlined can be conducive to efficiency and a disinclination to waste anything, whether its resources or time. “Small states are compelled by force of circumstance to remain focused and concentrate on the most essential files. They cannot afford to get side-tracked and seem spontaneously disinclined to do so,” says Mr Friden. “Secondly, they have the huge advantage of being able to reach decisions quickly, this being the flip side of the coin: with smaller numbers involved in decision-making, small administrations have the potential to bring nimbleness and reactivity to a Presidency, which is of course particularly relevant when confronted with unexpected events, as is inevitable during the six months of a Presidency. Thirdly, they are not encumbered by national priorities to the extent that other member states might be. They will therefore usually be able to play the role of honest broker in a convincing manner, and will enjoy high levels

Mr Kelleher concludes: “the Presidency is not about advancing national priorities, but delivering results for Europe’s citizens. In a group of 28 member states, with common values but sometimes differing interests, a Presidency must be able to find common ground, compromise proposals and negotiate agreements. Above all, it must act as an honest broker. Small states often have an advantage in this respect, in so far as they are seen, and indeed may be more free, to be more impartial. The smaller size of the administration may also be an advantage here in that it facilitates agile decision-making, affording negotiators the flexibility often required to reach successful outcomes.” BA

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Interview Photos: Alan Carville

Bad for business:

workplace stress

and its cost on human health

Unreasonable work demands and dissatisfaction are the main causes of workplace stress – a kind of stress that has huge implications on human health as well as the cost-effectiveness of businesses. Martina Said meets clinical psychologist Dott. Edward Curmi to find out what causes this stress and how to deal with it.

tress is increasingly bearing the blame for many of modern-day life’s perils – specifically, work-related stress. From mental health problems or cardiovascular disease to terrible mood swings or sheer unhappiness, an increasing range of illnesses and conditions are being directly linked to high levels of stress, and nobody is without risk of being hit by it. In fact, stress has recently been called the “health epidemic of the 21st century” by the World Health Organisation, and workplace stress is probably one of the biggest challenges that businesses will face over the next decade or more.

A report published in 2014 by the European Agency for Safety and Health at Work states that work-related stress and psychosocial issues lead to increased absenteeism and staff turnover rates, along with decreased productivity and performance. The implications of this are as wide as they are deep. Clinical psychologist and psychotherapist Dott. Edward Curmi, who pub-

lished his first book Common Sense – a Better Understanding of Emotional Well-being in 2012, likens stress to our tax returns at the end of each year. “We don’t calculate our ‘stress tax’ at all, but it is essential that we do. As humans, we are prone to wear and tear, and if this is not calculated in our bill, chances are we take it for granted. That is when wear and tear takes its toll, eventually leading to burnout.”

family, if you can say that is ‘all’. But yet, they’re unhappy, most times because they’ve worked themselves too thin. They live by the disease I call ‘I’m too busy’, where even a simple ‘hi, how are you?’ is met with ‘I’m too busy’,” asserts Dott. Curmi. “We are a generation living in a time that constantly needs to prove itself, to show the world how good we are and how much we’re doing, but in doing so, we’re forgetting ourselves.”

Dott. Curmi delves into the origins of the term stress, coined by Hans Zeyle, who was a pioneering Austrian-Canadian endocrinologist. “He discovered that when you push people further than they want to go, they push themselves to do more than they can, and end up performing better. But once you push over a certain threshold, production drops below levels that were previously being achieved, due to exhaustion.” This, he adds, is becoming a far too common trait among people of various professions.

Keeping stress at bay is far easier said than done, but at face value, can be tackled by addressing a few, basic things. “I can’t emphasise the importance of exercise enough. I see clients who have made a lot of money, built a house, a business and a family, but have stopped caring for themselves. If you’re an achiever, you know you’ll be experiencing stress, and so you need to exercise. Many people think that doing exercise first thing in the morning leaves you with little energy for the rest of the day, but it is quite the opposite – besides the release of feel-good hormones like oxytocin and serotonin, you gain energy throughout the day.”

“In therapy, I see lots of people from different work and life backgrounds, including many businessmen who seem to have it all – money, a happy

The importance of exercise is followed closely by a healthy diet which includes a balanced intake of food – they do say you are what you eat, after all – as well as sleep. “The body gets traumatised when it doesn’t get enough rest, and the mind needs sleep so that it can file the day’s events. We know through research that mental health issues often arise when there are erratic patterns of sleep.” Lack of sleep is also associated with irritability, anger, aggression and depression, says Dott. Curmi. “People in business, especially employers or leaders, have lots of problems on their plate, and one of the worst things they can do is switch on a computer or tablet to browse through emails before they sleep. Some say it relaxes them, and perhaps it does, but what if there is one worrying email? Chances are you’ll take that into your dreams and rumi-

nate about it, and that will disrupt your sleep pattern.” He adds that burnout is not the same as a fever that passes after a week – it can take individuals two years or more to recover from the effects of burnout. Some people never get over it. “Everybody is susceptible to burnout,” he asserts. “We talk of business people or well-off individuals, but in reality, it touches all professions because we are not different to each other. It affects the builder whose body is exhausted, the politician who is constantly exposed to public criticism and even the surgeon whose work is a matter of life and death.” Asked for the most common causes of stress among businesspeople in particular, Dott. Curmi says cases vary on a person-by-person basis, but there is evidence to suggest that bankruptcy affects men extremely

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Interview badly, especially in later years, as well as issues that arise within family businesses. “Many children try to live up to their ‘guru fathers’, and that puts a lot of pressure on them. Running a family business is an art, but one should keep ‘family’ and ‘business’ on two different binaries, because somewhere along the line, someone will get hurt. This distinction all stems from the leader at the top – some fathers or mothers do this beautifully, others struggle to know when to wear their different caps.” On a deeper level – when a healthy lifestyle alone doesn’t cut it – Dott. Curmi advises to take heed of other measures. “Learning to delegate is paramount – many people at the top have this indispensable syndrome, that only they can fix things, but they feel a huge sense of relief when they realise they can let go and empower other people to do things for them.” There’s also having the courage to move on when the time is right. “From a young age we are told to stay with jobs that are safe. Speaking for myself, I worked at hospital for 15 years before opening my private practice. We feel we must stick to the system because that is what’s safe, but when people realise that the system is getting to them, one of the best things they can do

is re-invent themselves,” he explains. “There is an element of fear tied to this, but I think people get damaged more when they are in the same position for too long without progressing.”

ness. Using Mark Zuckerberg and Bill Gates as examples, both billionaires have donated large portions of their fortunes to charity, leaving far less for their children than what they earned in the course of their lifetime. “Many peo-

“The more people I meet the more I realise that what everyone needs is to connect, be recognised and feel understood. These are priceless.” Through his years of experience, Dott. Curmi has come to the conclusion that money doesn’t buy happiness, only temporary satisfaction and a better lifestyle. “The more people I meet the more I realise that what everyone needs is to connect, be recognised and feel understood. These are priceless.” Donning luxuries in the form of expensive food, designer clothes and a fancy car are nothing more than a status symbol and, in the end, superficial, he asserts. “While there is nothing wrong with wanting these things, what we really need is to be well inside, achieve harmony and be at peace with ourselves. Unfortunately, when you have, you want more and it’s never enough – finding that balance could be tricky and complicated.” He adds that what people do with their money also affects their level of happi-

ple with successful businesses feel the need to give back, and this offers more than just temporary satisfaction.” Dott. Curmi himself is an example of this. After discovering the benefits of laughter therapy during his studies abroad, he set up, together with colleagues and friends, the NGO Dr Klown at Mater Dei Hospital, dedicated to providing clown doctor services to sick children. All proceeds from his second book, called More Common Sense following the success of his first release, will go towards Dr Klown.

“We are lucky to say that children in hospital get to experience the clowns, which help alleviate the anxiety and fear that we all associate with hospital. Our clowns are all volunteers with different backgrounds – doctors, electricians, business people, all of whom have worked very hard to get to where they are, but tell us that the happiness they feel when they get to the wards and work with these children is immeasurable,” says Dott. Curmi. “With Dr Klown, we are breaking boundaries with laughter, and be it a child or a burnt-out adult, laughter is the best medicine for everyone.” BA ‘More Common Sense’ is available at all Agenda Bookshops. All proceeds will go towards Dr Klown.

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Editorial Publisher Content House Group Mallia Buildings 3, Level 2, Triq in-Negozju Mriehel BKR 3000 Tel: (+356) 2132 0713 Email: info@contenthouse.com.mt www.contenthouse.com.mt

Joe Tanti

20 years of service The MBB’s 20th anniversary coincides with a new look for the Business Agenda, one which reflects current local and international trends and developments giving it a wider appeal. Starting with this issue, this visual makeover goes hand in hand with a content revamp further complementing our work in the areas of EU and business affairs. Upon taking a holistic approach in making these improvements, we have recently launched our new website – a powerful tool on which to better communicate our work and services and keep our audience in the know. This issue includes an interesting article featuring comments from MEP Therese Comodini Cachia and Markus Breyer, Director General Business -Europe, on the controversial issue of geo-blocking. Moreover, as Malta gears up to assume its upcoming position to chair the EU Presidency, our cover story asks Luxembourg’s and Ireland’s Ambassadors to the EU, H.E. Georges Friden and H.E. Declan Kelleher to share their views on the relevance of the Presidency today and what makes a successful Presidency, particularly from a small state perspective.

We have also sought to give our readers an even more harmonious balance between business and lifestyle, work and leisure. In this regard, a number of new segments have now been introduced, particularly interviews with key society members such as veteran businessman Winston Zahra Snr on his impressive career as well as psychologist Edward Curmi on the effects of workplace stress on businesspeople and employees at large. Experience reminds us of the importance and inevitability of change in any organisation, company or insti-

tution – not just in terms of physical upgrades, but also in policies, attitudes, tasks and processes. For two decades, the MBB has thrived in its EU policy work, and has in recent years also begun targeting legislative lobbying in Brussels with European legislators. The MBB has also sought to become more effective by increasing efforts on the uptake of various initiatives by tapping EU funding opportunities and participating in EU programmes for the benefit of the business community.

By embracing change and development, in this issue we unveil a fresh identity that aims to capture the MBB’s underlying values and vision for the now and tomorrow. With this in mind, we would like you to celebrate this landmark year with us. I hope you enjoy reading through this issue!

All MBB publications including the Business Agenda may be accessed on our recently launched site www.mbb.org.mt

Malta Business Bureau Cornerline, Level 1, Dun Karm Street, Birkirkara, BKR 9039 Tel: 00356 2125 1719 Email: info@mbb.org.mt infobrussels@mbb.org.mt www.mbb.org.mt

The Malta Business Bureau is a nonprofit making organisation acting as the European-Business Advisory and Support Office of the Malta Chamber of Commerce, Enterprise and Industry, and the Malta Hotels and Restaurants Association. The MBB has two offices, the Head Office in Malta and the Representation Office in Brussels. Editor: Joe Tanti Deputy Editor: Martina Said Design: Nicholas Cutajar Editorial Team: Ana Vella, Daniel Debono, Mark Seychell, Sarah Micallef, Jo Caruana and MarieClaire Grima Publication Sales Manager: Matthew Spiteri Advertising Sales Executive: Kurt Cauchi Advertising Sales Coordinators: Lindsey Napier and Marvic Cutajar Business Agenda is the quarterly publication of the Malta Business Bureau. It is distributed to all members of the Malta Chamber of Commerce, Enterprise and Industry, all the members of the Malta Hotels and Restaurants Association, and to all other leading businesses by Mailbox Distribution Services, part of Mailbox Group. Business Agenda is also distributed by the Malta Business Bureau to leading European and business institutions in Brussels.

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Tourism

A better class of

tourist

Over the past two decades, Malta’s tourism offering has diversified, and the islands now offer a much wider – and more lucrative – range of options than simply fun in the sun. Marie-Claire Grima speaks to three different stakeholders within the tourism industry to discuss what Malta is offering its visitors and how to maintain the tourism industry’s year-onyear momentum.

ast year, nearly 1.8 million people visited Malta, a record-breaking figure in a long line of recordbreaking figures. Statistics for 2015 reported that not only was there a 7.5 per cent increase in arrivals over and above the previous year, and a five per cent increase in the number of guest nights spent, but also an increased expenditure in all sectors, pointing towards a general improvement in Malta's overall product offering. Its bid to escape its fate as a cheap, sun-and-sand family holiday destination, thriving only in the summer months but cold and stagnant

in winter, has proved to be successful. A new breed of tourists visiting Malta are looking for a diversified range of experiences on their holiday, but are they finding them? “Today’s tourists have access to the world right from their computers, meaning that they no longer need to buy the pre-packaged ‘sun-and-sand’ holidays that were pushed in previous years,” says Andrew Ellul, director at Casa Ellul, a luxury boutique hotel in Valletta much-beloved by visiting celebrities. “Nowadays travellers know exactly what they want and they can find it online. For this reason, boutique

ideal and more personalised hotel that suits their characters, a home away from home, somewhere where they are more than just a room number. Another interesting point is the rise of Valletta as a destination in its own right. We are finding that more and more of our guests come to ‘Valletta’ and not ‘Malta’ – a number of them don’t even leave the city.”

Andrew Ellul hotels like ours have soared in popularity. Guests are now able to find the

“The Government has invested heavily in the island’s touristic sites and monuments – and rightly so – but seems to have overlooked the fact that not all tourists come to Malta to visit Hagar Qim,” Mr Ellul continues. “A large num-

ber of tourists simply travel to relax, unwind and spoil themselves. Malta is certainly lacking when it comes to high-quality leisure services – where are all the private beach clubs, the high-end bars, the fine-dining restaurants and the luxury retail stores? Where are these high-net-worth tourists supposed to go to enjoy their time, and spend their money, once they leave the hotel? Perhaps now the Government should look more into investment schemes, incentivising the private sector to invest in such outlets rather than creating barriers for those wishing to provide such luxury services. The regeneration of Valletta has proven that it is a business model that works, so it just needs to be taken to the next level to keep it all moving forward.” Paul Bugeja, CEO of the Malta Tourism Authority, says the MTA is under no illusion that several competing destinations can provide a more extensive offer of sandy beaches and holi-

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Tourism day resorts, but believes that Malta and Gozo offer much more than just sun and sand. “Over the years we have made it our mission to position the islands in a way that sets them apart from the competition, by developing and promoting segments and niches that create an additional motivation to choose the Maltese islands over other destinations,” he states.

Paul Bugeja “The development of segments such as meetings, incentives, conferencing, exhibitions, diving, English language-learning, city trips, weekend and wellness breaks, cultural study trips, pilgrimage tours, weddings, active holidays, as well as a number of other sub-niches have created a unique product for the Maltese islands – a product which no longer relies on sun and sea to attract visitors,” he asserts. “Our small size allows us to present the diversity of our tourism product without obliging tourists to spend precious holiday time travelling from one site or city to another, and the establishment

of Malta and Gozo as year-round destinations – unlike many competing neighbours that close down during the winter months – has been a critical progression in terms of the overall sustainability of the tourism sector, particularly with regard to improved career opportunities.” Tourism Minister Edward Zammit-Lewis concurs. “Quality tourism is not just about higher spending tourists, but about the socio-economic benefits this can bring to our islands, which can be achieved in many ways. It is important that all stakeholders within the industry follow a process of qualitative change which has to be adopted across the islands, adding value to our offer and enabling us to promote high-quality tourism and target 'higher value' markets which can deliver a much higher return to the country.” “The role of the Institute for Tourism Studies (ITS) will continue to prove critical towards achieving these objectives.” To this end, Dr Zammit-Lewis says that the ITS has to grow and develop further, both in terms of academic excellence and in the number of students who enrol in it. Last year, the first ITS syllabus which had undergone a comprehensive Quality Assurance process was launched, a technical committee was set up to identify and address existing skills gaps within the industry, and the Institute’s courses were made available to tourism fulltime employees seeking industry-related qualifications.

Another development, this time in conjunction with the Malta Hotels and Restaurants Association (MHRA), was a sponsorship scheme which will guarantee private sector job placements for ITS students. All this complements the allocation of €56 million towards a new state-of-the-art ITS campus at Smart City, and further planned collaboration with the University of Malta and other hospitality sector educational institutions. The increasing diversification of the Maltese economy, Dr Zammit-Lewis says, has presented the country’s workforce with a wide range of career options to choose from, and tourism is often overlooked as a viable professional path for young graduates.

“Malta’s tourism competitiveness can only be sustained if growth is accompanied by the development of, and investment in, our human resources. To this end, we have been engaging all related stakeholders to secure

Edward Zammit-Lewis

their commitment towards measures designed to enhance the working conditions and the professional quality of the tourism workforce. While considerations such as employment generation and remuneration rates will be at the top of our agenda, we are also stressing on the ‘softer’ aspects, such as career development, entry qualifications and continuous personal development. This will allow us to bridge the gap between the mentality of just having a job in tourism, and the delivery of excellence in hospitality by those who want to develop a career within this sector.” BA

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Society Photos: Alan Carville

“I treat life like a book, in which you have chapters that start and end” Telling Winston Zahra Snr’s story

To many, Winston Zahra Snr is a name synonymous with the local tourism sector. For the first in the Business Agenda’s new series of veteran interviews, the respected businessman shares the story of his impressive career with Sarah Micallef, revealing how he went from two rental cars to five successful hotels.

mpeccably dressed in a sharp suit with matching tie and pocket square, which he confidently points out “should always either match or contrast completely”, Winston Zahra Snr is at once energetic and easy-going, with a palpable enthusiasm for a sector within which he has been directly involved for the past 45 years. While it may be hard to believe, the Chairman of Island Hotels Group – who had developed five hotels by the time the group was sold in a €50 million acquisition deal last year – started his working life as a school teacher. “I went to St Michael’s Training College and intended to be a teacher for the rest of my life,” Mr Zahra recalls, adding that it was at college that much of his character was built. But, after teaching for nine years, he chose to change direction – setting up a business with his brother Tony. At a time when the local tourism industry was still in its infancy, the two decided to start a car hire company. “When Malta gained its Independence in 1964, tourism was chosen as one of the pillars of the economy,” Mr Zahra says, explaining that he and Tony saw an opportunity, despite not having much money to begin with. “I think we had about Lm200 (c €465) between us. We bought two cars and started renting them out, and with every Lm100 we managed to make from renting those two cars, we bought another car, and another and another,” he continues. Realising that they “needed tourists to rent the cars”, the brothers decided to set up a travel company called Alpine Travel, which still exists today, and went on to expand into insurance and manufacturing. In 1971, at a time when the majority of tourism was coming from the UK, the Zahras invested in a tour operating company in Sheffield, eventually relocating it to London, which proved to be very successful.

“We were building up a vertical operation,” Mr Zahra says, looking back on this formative time. “The tour operating was feeding the travel section, and the travel section was feeding the car hire. But when I went into business my dream was always to have a hotel, and eventually it came true.” In 1979, the Zahra brothers partnered up with the Rizzo family to build Malta’s first aparthotel – the Riza. “At that time, the banks were not lending money for hotel building due to a government policy, and we didn’t have enough to build, so we entered a partnership,” Mr Zahra explains. Unfortunately however, this only lasted five years; after which, we were bought out,” he says, admitting his disappointment in losing his ‘baby’ – so much so that he decided to retire.

“When I went into business my dream was always to have a hotel, and eventually it came true.” In 1985, Winston Zahra Snr sold his 50 per cent sharehold of the company to his brother Tony and went into retirement. He was 45 years old. “I spent about six months in retirement, until Zaren Vassallo, the Riza hotel contractor, approached me to manage his hotel – the Bugibba Holiday Complex – which at the time was a 220 bed hotel very similar to the Riza,” Mr Zahra smiles. The offer developed into an equally shared partnership, and saw the businessman back at the helm of his own enterprise. Looking back, Mr Zahra admits that at first, he considered the hotel as a hobbyhorse of sorts, but quickly began to feel excited about the business again, and started looking to expand. “I was young and still had a lot of energy,” he

chuckles, adding with a smile, “even now I still have a lot of energy!” The partners set their sights on a piece of land in St George’s Bay which they thought would be ideal for a five-star hotel, but it was not to be: despite discussions with the government and a letter of intent in hand, the land was given to a French company instead. Shaking off his disappointment, Mr Zahra moved on, until one day as he was leaving the Bugibba Holiday Complex, he was struck with an idea to expand it. “I thought, ‘there’s this big piece of land… what are we doing trying to build somewhere else?’” The resulting extension took the hotel from 220 beds to nearly 1,000 beds, going from employing 20 members of staff to 200. Once again, Mr Zahra took care of the project management, and the build was pulled off in a remarkably short time – starting in September 1989 and finalising the following June. Fresh from the success of the Bugibba Holiday Complex extension, we began looking for another hotel in 1992. The old Salina Bay hotel was up for sale and the pair took the plunge. “It only had 110 rooms when we bought it, and was in a devastating state,” says Mr Zahra, who was happy to don his project management hat once again to gut and extend the hotel. It was reopened as the Coastline in 1994. “It became a benchmark for four-star hotels,” he maintains proudly, adding that they invested heavily in making it a nice place to stay. “I believe that we have a moral obligation to tourists, who save up their money to come here on holiday. We have an obligation to supply good accommodation, good food, value for money and service with a smile. I have always believed in this and still do,” he affirms. Meanwhile, as work was being carried out at the Coastline, an idea for a separate company was born at a party held at Mr Zahra’s house. “I normally engaged an outside caterer for such

events, but I thought, we’ve got our own staff, why not do our own catering?” As it happened, Winston Jr had just returned from his studies abroad. He took charge of the catering arm of the company and began building it into the successful Island Caterers we know today.

which joined as experts in running the casino. “We won the tender, which was for 10 years, but stayed for 12, throughout which I was the chairman. It was very successful while it lasted, but unfortunately we lost it when it was up for tender again at the end of our lease.”

The paint had barely dried at the Coastline when the partners were approached by the same French company that had acquired the St George’s Bay site years earlier. They wanted to sell, and after some negotiating, Mr Zahra and Mr Vassallo agreed to buy. A target date of two and a half years was set for building the Radisson SAS Bay Point Resort, which Mr Zahra cut down to 18 months once works had started. “I always believed that you have to build in the shortest amount of time possible. We had just finished building the Coastline and were quite cash strapped, but by that time, the banks were lending money to build hotels, so we took a calculated risk. We made the deadline, and the hotel proved to be another success,” he says.

With Island Hotels and Island Caterers doing well, they set their sights on the Golden Sands in late 2001. After a round of tough negotiations with the Fenechs, the two parties came to an agreement, and Island Hotels Group acquired the old hotel with the intention of refurbishing. Soon after, it was realised that it would be better to demolish the old hotel and develop a purpose-built timeshare resort. It took 26 months to develop the new Golden Sands Hotel.

With three hotels under their belt and staff numbers reaching 600, the pair formed the holding company – Island Hotels Group. The Dragonara Casino came next, for which the government put up a tender. Mr Zahra formed a consortium of the main contenders – the Corinthia, the Westin and Island Hotels as well as Air Malta and Accor,

“I built five hotels – the Riza, the Bugibba Holiday Complex, the Coastline, The Radisson St Julians and the Golden Sands. I always set a date and always achieved that date. I was handson – I used to be on site at six o’clock in the morning and sometimes leave at midnight. This hotel was a special challenge since we had committed ourselves to hold the CHOGM conference in November 2005, but we opened in September, so we achieved our target. The hotel was very successful and still is – I believe it’s one of the best hotels in Malta,” says Mr Zahra. Here Mr Zahra points out that the success of

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Society the company is not only his, and stresses the support he always had, primarily from his sons Winston Jr and Trevor as well as all the management and staff. “I always believed that our management and staff are our greatest assets,” he adds. In 2009, Mr Zahra’s long-time partner, Zaren Vassallo, decided to leave the company. “My family and I decided to buy him out. It was an important decision and it needed a lot of money. In order to do it, we decided to go public and put the company on the stock exchange in 2009,” he explains. The Zahras bought 25 per cent of his ex-partner’s share and offered the rest to the public, making the Zahras the major shareholders. Winning a government tender for the Hal Ferh Complex came next for Island Hotels Group – for which Mr Zahra says plans are ready and should begin shortly – but in 2015 something unprecedented happened. “I treat life like a book, in which you have chapters that start and end,” he says of the Zahras’ decision to sell the Group to Corinthia’s investment arm, International Hotels Investment. “The Corinthia Group are developing a massive project in St George’s Bay, and in October 2014, Mr Alfred Pisani approached me to sell the Radisson St Julians to them,” he explains, adding that he didn’t like the idea of selling the hotel, but suggested Corinthia buy the whole company instead. The deal was finalised last August.

As we sit in Mr Zahra’s office at the Radisson Golden Sands, he smiles and says, “so you might ask me why I’m still here! Mr Pisani wanted me to stay on as Chairman of the Group, for the smoothest transition possible. The sale created a certain amount of uncertainty with the staff – after all, we employ about 1,000 people – so my decision to stay was to make sure that the transition would go in the smoothest way possible, which is in fact what happened.” The next question is obvious. Was it difficult to bid farewell to a company after nurturing it for 29 years? “It wasn’t an easy decision, and if you think with your heart, it makes it harder. I believe that what I did is what everybody should do when they’ve worked hard for a number of years. There comes a time when you should reap the fruits of your hard work and enjoy life a bit more,” he says earnestly. But while he may be on the way out when it comes to Island Hotels, Winston Zahra Snr is far from what one would call retired. Apart from doing his fair share of voluntary work, he’s on the Board of Directors at Caritas, and is the CEO of the President’s Trust. And in his free time? He fills that too – listing reading, travelling, spending time on his boat and enjoying his family as his main activities. Last year, the family spent six weeks in Greece, and earlier this year enjoyed a getaway in Hawaii. “I keep myself busy, otherwise I get into mischief!” he chuckles. -And as he begins to step away from the sector with which so many have come to

“I was hands-on – I used to be on site at six o’clock in the morning and sometimes leave at midnight.” associate him – having also been president of the MHRA as well as member of the Malta Tourism Authority for a number of years – I ask, how has it all changed, since starting out? And what does the future hold? “Tourism in the ‘60s, ‘70s and ‘80s was completely different. At the time, about 80 per cent of tourists were British. However, diversification has happened gradually and it has been successful – today only about 30 to 35 per cent of tourists come from the UK,” he reflects. “The booking system has also changed,” he continues, explaining how everything used to be done manually, from reservations to accounts. Bookings would come primarily through tour operators, and by January, which was the period in which holiday makers would book their holidays, you would have about 75 per cent of your bookings for the entire season. “Nowadays it’s different. First of all, you don’t rely on tour operators, as almost everything is online. In the past, rates were set one and a half years before the season begun, while nowadays booking online means that rates change according to occupancy.” Besides this, Mr Zahra notes that clients’ expectations have also changed drastically. “Before, the majority were

‘bucket and spade’ tourists, so accommodation was secondary. Nowadays, unless you have a good product, you will not survive. This is why it is imperative that we improve the infrastructure of the island as well as our hotels,” he says, pointing to the state of the roads as an area that requires attention, as it changes the face of our islands. Looking towards the future of the industry, Mr Zahra feels that it will retain its position as one of the main pillars of the economy, but points out that there is still work to be done. “You hear people saying, ‘let’s market Malta to a higher level of tourist’, but it doesn’t happen like that – you need

to upgrade the island. Once that is done, the profile of the tourist will also change automatically.” As for what the future holds for the energetic businessman, who was recently awarded the Member of the Order of Merit (MOM) by Government for his contribution to the development of the tourism industry, as well as a lifetime achievement award by the Mediterranean Tourism Marem Nostrum, in his own words: “who knows?” Apart from voluntary work, hobbies and spending time with family – particularly his wife, who gets a special mention for her unfailing support throughout his career – he admits, with a twinkle in his eye, “if a challenge crops up… who knows what’s round the corner!” BA

BUSINESSAgenda | Spring 2016

Company Profile Photos: Alan Carville

Matthew Formosa, Director at JF Group

Building on a legacy of

quality service

F Group started out as JF Security and Consultancy Services Ltd nearly 20 years ago, in 1997. The founder, Peter Formosa, bought out an existing company and strove to establish it as one of the leading players in the market. When the competitive edge was obtained, the family-run firm where Peter now sits as chairman branched out into various sectors, leading to the creation of JF Group, which is now under the stewardship of his son, Matthew. The core business of the Group is servicebased and involves the provision of personnel services in various sectors. While its flagship services are JF Security and JF Cleaning, there are several other subsidiary companies. The Group services the hospitality and construction businesses with personnel, while a logistics company and a temping agency also form part of the Group. The fact that JF Group is a family-owned business gives the company a different mentality and perspective, Matthew says. “The advantages of dealing with a family-run business are evident. Our approach is hands-on, we place an emphasis on meeting the client and the employee face-to-face in order to get to know them better, and we guarantee professionalism in whatever service we offer. We deliver excellent results to our clients by understanding their requirements and delivering on all our promises. JF Group are players in several challenging industries, and we approach each new task with the same amount of pride and expertise.”

With its involvement in so many different sectors, Matthew says that JF Group puts a priority on looking after and training the workforce on whom the responsibility for maintaining its reputation for quality service rests. “JF Group is a large organisation, but on the market, it is competing against even bigger players. Hence, training and orientation are pivotal within our organisation; a subsidiary company of ours, Aurelia, operates as a Certified Trainee Academy, offering courses ranging from fire-fighting and first aid to customer care and many others, as well as issuing security licences.” “The Group also provides for onsite training of all personnel, even specific

to various clients of ours. We firmly believe in listening to and supporting the employee in the best way we can, and we will go out of our way to find a solution to any problem or setback. Additionally, we offer our employees continuous support through meetings held to understand difficulties they may face on site and discussing possible solution scenarios. We also have dedicated management teams in place; operation managers command vast experience within their respective fields and all operations are supported by a 24-hour control room together with duty managers for both day and night shifts.”

Having grown up with the company, Matthew says that his proudest moment was seeing the Group develop into what it is today. “Becoming one of the frontrunners within our industry required a lot of commitment and determination on my father’s part. Our present status as industry leaders as well as the future developments we have planned could not have taken shape without all the hard work carried out in the past. Our mission today is to maintain our status at the top level. Witnessing the growth that we have registered puts our company on a par with many of the bigger companies operating in our market – this was supported by the accreditation to ISO 9001 certificate of all our activities.”

Speaking of future developments, the outline of a new JF Group subsidiary has already started to emerge. “Healthcare services are essential for our country and we believe that there is a space for our organisation to contribute towards this sector. As of this year we have already began showing our presence within the industry,” Matthew says. “In the meantime, we plan to continue servicing our clients in the best possible way, creating more jobs within the market and contributing to Malta’s continuous economic growth.” BA JF Group, Vinci Buildings, B Bontadini Street, Birkirkara. T: 2069 1053; www.jfgroup.com.mt

BUSINESSAgenda | Spring 2016

Case Study Photos: Alan Carville

Compliance in the world of costs) of a business, because it carries with it huge financial implications in terms of penalties, personal responsibility and reputational risk.” One of the prevalent challenges faced with online businesses these days is to get clients to understand that documentation is required and to train staff to handle this process. So how does FXDD ensure that its clients do comply? This, it seems, is the million dollar question. “Firstly, we ensure that there are proper and strong procedures in place, which our staff, wherever they are based, use as guidelines. If solid procedures are established, I wouldn’t go so far as saying that it’s easy, but the rest falls into place. As a compliance department in this regulated business, we constantly invest in training and monitor our staff to ensure that they are up-to-date with the regulatory environment and understand the importance of their role within a regulated business. We communicate with our New York office on a daily basis to ensure

Monitoring the activities of an online business in foreign exchange – where rules, regulations and technology are ever-changing – can be an uphill battle. Nicola Mallia, Chief Legal and Compliance Officer at FXDD chats with Martina Said about the risks and rewards of an online business.

“

Being an exclusively online business means that, in reality, our market is the world,” says Nicola Mallia, Chief Legal and Compliance Officer at FXDD. But with a market so extensive and wide-ranging comes a flood of legal and compliance issues, and the ambition to prevent and pre-empt them lie at the core of this company’s operations.

FXDD, a foreign exchange company for predominantly retail clients, has been based in Malta for around six years. The company has been in operation in the United States for longer, but it recently closed its license operations in the US to focus on the activities of the Malta-based office. “We are now the only licensed company within the FXDD group,” says Dr Mallia. “We have quite a large client base in Asia, although our primary focus is the European market.” Dr Mallia goes on to explain that the main problem with having an exclusively online business is in fact compliance, which refers to the work carried out by compliance officers to ensure

that a company, in this case a regulated investment services company, complies with all the laws that are applicable to it, such as laws pertaining to investment services, data protection, consumer law, money laundering and others. “We also need to ensure that every department, such as finance, for instance, complies with its own obligations as well, such as VAT, financial reporting and tax laws. We are also subject to the rules of the Malta Financial Services Authority (MFSA) and the Financial Intelligence Analysis Unit (FIAU).”

implementation of the money laundering regulations, Dr Mallia states that many of the regulations currently in force were drafted based on faceto-face business relationships, such as those conducted by banks, where documentation and information are exchanged in person. She notes positively that the authorities are now in the process of updating these regulations and are very actively seeking the input of the stakeholders in various industries to ensure that the country has an updated, modern regulatory framework. She continues that “com-

“Compliance is one of the most important sectors of a business, because it carries with it huge financial implications in terms of penalties, personal responsibility and reputational risk.” With particular reference to the difficulties faced by the company with the

pliance has now become one of the most important sectors (and biggest

BUSINESSAgenda | Spring 2016

Case Study that they are also complying with procedures.” As a result of ever-changing technology, Dr Mallia says that the company’s procedures are forever changing. “Our procedures are live documents – since we’re constantly upgrading our systems and applications, we can never really have a final document. Each document needs to be thoroughly researched, amended, sent to the directors for approval, then ensure that staff is trained to ensure that they understand the changes. Even our regulators are constantly changing their procedures to keep up with technology, so this is certainly one of our priorities here.” Being supported by the right technology makes having an online business far easier, says Dr Mallia, such as technology that is able to verify whether a document is fake or whether an identification document like a passport has been tampered with. The downside is that such technology can be quite costly, which could in some cases be prohibitive especially for smaller business. “It is one of the biggest costs of a company in this field as the list of obligations keeps getting longer and the types of obligations more complex. Companies need to beef up their compliance department, which means more salaries and training, but at the same time, the department has to be proportionate to the size of the company – it doesn’t make sense to have a compliance department of 10 people in an office made up of 14 people, for instance. Yet, with the obligations that are ongoing, you could almost justify the need for that kind of staff complement,” states Dr Mallia. “The next best step is to invest in technology.” On the flip side, Dr Mallia says that one of the biggest benefits of an online company is that it is easier to communicate with clients and to conduct good and thorough research thanks to the internet. “Access to information is one of our greatest tools, and you’d be amazed with what you can find if you

“In the end, you need to weigh the risks. One of the principal tasks of the compliance department is to ensure that the business understands the risks that it faces and has the tools and systems and educated staff in place to take the appropriate decisions based on that information.” search well.” Furthermore, it is also easier to keep up-to-date with regulatory changes through the literature available online. Asked whether the risk of fraud is more likely in an online business, Dr Mallia agrees that it is indeed more likely, and also more rampant due to less direct, face-to-face contact with clients. “A person can purport himself or herself to be someone they are not, and this is

a constant struggle. When monitoring clients’ transactions and where funds are being deposited, the risk of fraud is always at the back of every team member’s mind. However, there are several ways to prohibit it – there are jobs in place for analysts and managers to look out for fraud, but if the proper procedures are in place and every member of the team knows what they have to do, then you can catch out a red flag on time.”

Seeing as FXDD services clients from all over the world, identifying and verifying them prior to engaging with them can be tricky, but standard measures and strict parameters help reduce the element of risk. “Clients fill in an application online and send it to us together with all the correct documentation in specified requirements, one of them being that all documents must be sent to us in colour. We also make use of a number of online tools to verify these

documents, and once we realise that a client is sending us dodgy documentation, we simply reject them,” states Dr Mallia. “In the end, you need to weigh the risks. One of the principal tasks of the compliance department is to ensure that the business understands the risks that it faces and has the tools, systems and educated staff in place to take the appropriate decisions based on that information.” BA

BUSINESSAgenda | Spring 2016

MBB News MBB releases two publications Layman’s Guidebook on EU direct Funds

The Transatlantic Trade and Investment Partnership – What is in it for Maltese Business? The recent MBB publication highlights the potential impact that the trade agreement currently under negotiation between the EU and the United States could have on Maltese businesses. The report identifies a number of challenges and opportunities associated with the mutual opening of the EU and US markets. Prior to the publication, a consultation exercise held at sectoral level was used to collect various perspectives on the Transatlantic Trade Investment Partnership from the domestic business community as well as local MEPs. The exercise was successful in creating good ground to stimulate a wider discussion on the topic whilst seeking to reflect Malta’s general enterprise outlook.

The MBB has published a Layman’s Guidebook on EU Direct Funds as part of the Innovation Leaders project. The publication is a practical guideline on the Creative Europe, Erasmus+ and Horizon 2020 funding streams. Additionally, it also showcases the best project ideas as a result of this initiative.

Both publications are available in a downloadable PDF version upon request. Kindly contact the Malta Business Bureau on info@mbb.org.mt

Business Agenda News Updates 15th January MBB greets CEPS Chief Executive Centre for European Policy Studies (CEPS) CEO, Karel Lannoo, paid the MBB a courtesy visit in January. CEPS is a leading think tank and forum for debate on EU affairs which aims to carry out policy research leading to solutions to the challenges facing Europe.

making their contributions and the concrete steps needed to implement the WG mandates. Mr Tanti represents BUSINESSEUROPE on the Higher Education Working Group and EUROCHAMBRES on the VET Working Group. During that week, Mr Tanti, representing the employers’ perspective, also participated in a Peer Learning Activity (PLA) on developing future skills in higher education, which took place on the 25th-26th of February. The PLA discussed the promotion of transferable skills, particularly interpersonal, communication, leadership and organisation skills.

MBB Training In recent months, MBB representatives have attended a number of Enterprise Europe Network (EEN) localised training and capacity building workshops. Last November, training on the enhancement of innovation management capacities was provided by IMP³rove – the European Innovation Management Academy. The objective was to help local EEN contact points gain greater insight on innovation management benchmarking compliant with European innovation management standards. Other coaching sessions in January and February 2016 focused on methods of providing EEN clients with relevant solutions whilst also coaching members of the local consortia to harmonise their respective professional strengths and deliver the EEN service in synchrony.

24th March MBB meetS Special Representative for the City of London MBB Director Dr John Vassallo, and Senior Executive on EU Policy Mark Seychell met Jeremy Brown, the Special Representative for the City of London in a meeting organised by the British High Commission in Malta. Key topics of discussion focused on the City of London’s contribution to the EU priorities of economy growth, prosperity and jobs, and possible synergies with the priorities of Maltese businesses. Also present for the meeting were Anton Borg, President of the Malta Chamber of Commerce, Enterprise an Industry, and Paul Abela, President of the GRTU.

The meeting’s agenda was centred around current issues and priorities between Malta and the EU and views on cooperation with the EU Commission, free movement challenges, innovation policies and tax harmonisation were shared. Several possible areas of collaboration between the Malta Business Bureau and CEPS were also discussed.

11th February MBB CEO participates in panel discussion IN Thessaloniki 5th April SME Round Table at the EESC

In February, a workshop on Fostering Partnerships and Continuing Training was organised by CEDEFOP in Thessaloniki, Greece. MBB CEO Joe Tanti was invited to join the panel discussion on ‘Putting the views Together – priorities and ways forward’, together with representatives from the Higher Education Committee of the European Trade Union Committee for Education (ETUCE), the European Universities Continuing Education Network (EUCEN) and the University of Groningen International Tuning Academy. Views on the priorities and ways forward to promote successful partnerships between higher education institutions and enterprises in the field of continuing training were exchanged during the panel. An organic mix of stakeholders and institutions within the forum created an opportunity for the sharing and presentation of views on the key drivers necessary to promote these important partnerships.

22nd – 26th February MBB CEO re-appointed on European Commission Education and Training 2020 Working Groups MBB CEO Joe Tanti was re-appointed as expert on the European Commission’s Working Groups on the Modernisation of Higher Education, and Vocational Education and Training. The kick-off meetings for the new term (2016-2018), which took place in Brussels on the 22nd-23rd of February, discussed the overall policy context in which the new working groups will be

A high-level round table organised by the European Economic and Social Committee (EESC) brought together leaders from the EU institutions, European business organisations and national business representatives. The purpose of the meeting was to exchange views on the future of EU SME policy. The priorities outlined for the future EU SME Policy were the promotion of entrepreneurship, smart regulation, digitalisation, skills, access to finance and trade.

12th – 15th March MBB showcases its water conservation initiatives as part of World Water Day 2016 On 12th and 13th March, the MBB took part in an Open Weekend at the Water Services Corporation. During the event, the MBB exhibited its various water conservation initiatives through the EU LIFE+ Investing in Water project and its recent report – The potential for energy and water savings within the EU through flow rate regulation and greywater treatment. As part of World Water Day 2016, the MBB was also invited to give a talk on water conservation at the Intercontinental Hotel on 15th March as part of the Catch the Drop Campaign led by HSBC. Teachers and students from over 20 schools attended, participating in a quiz on water-related issues. The event came to an end following the presentation of certificates to the young participants and a closing speech delivered by HSBC CEO Andrew Beane.

MBB EU Affairs Manager Daniel Debono accompanied Malta Chamber President Anton Borg who made an intervention on the importance of smart regulations and that companies should not be discriminated against based on the type of investment undertaken.

8th April 18 businesses awarded ‘Energy Efficiency Commitment’ certificate On 8th April, the Sustainable Energy and Water Conservation Unit (SEWCU) within the Ministry for Energy and Health held an event whereby 18 local non-SMEs which have signed voluntary agreements with SEWCU to implement findings from their respective energy audits, were presented with an official certification recognising their Energy Efficiency commitment. The companies were also granted the associated ‘Energy Efficiency Partner Initiative’ logo.

BUSINESSAgenda | Spring 2016

MBB News

Besides commemorating the milestone of the already established Energy Efficiency Partnership agreements reached to date, the event encouraged further stakeholders to follow the same path. Throughout the past months, the MBB has been closely collaborating with SEWCU to promote the voluntary agreements with Malta’s non-SMEs which, as a result have been more cooperative in this matter. These voluntary agreements stem from the Energy Efficiency Directive which calls upon non-SMEs to carry out energy audits and subsequently encourages the implementation of their findings. Consequently, approximately 8,500m tons in CO2 emissions will be saved in the first year of this initiative, ultimately making our industry more competitive and sustainable. In his address during the event, MBB CEO Joe Tanti, stated that part of the MBB’s portfolio is environmental legislation and policy. “We are particularly proud of having helped Malta to reduce its water consumption through the EU LIFE+ Investing in Water Project.” MBB’s latest contribution has been to facilitate the agreement between non-SMEs and SEWCU on energy efficiency measures to be implemented by the business sector, and the support offered by the State on these measures. Within just seven months from

the start of this process, today over 30 per cent of Malta's nonSMEs have signed this agreement, and this number is expected to grow over the coming months and years. Emphasising this achievement, Mr Tanti said “for a third of the country’s largest businesses to voluntarily sign an agreement declaring their intention and indicate measures to be taken to reduce their energy consumption, in such a short time, is very significant. In fact, it highlights that not only is the awareness of the importance of energy and water conservation present, but that the motivation to act is also present amongst the business sector.” Mr Tanti thanked the Sustainable Energy and Water Conservation Unit within the Ministry for Energy and Health for their collaboration and credited the enterprises for their commitment and recognition of the need to increase energy efficiency. Daniel Azzopardi, CEO of SEWCU, highlighted the role of the Agency as the Ministry’s “policy and technical arm and is there to primarily design and implement energy and water policy”. Mr Azzopardi also maintained that “the Agency focuses on a three pillar structure in drafting such policy i.e. Security of Supply, Sustainability and Affordability.” Highlighting the fact that the industry and services sectors are responsible for a large portion of energy consumption in Malta, Mr Azzopardi reiterated that there was still the potential for greater energy efficiency. He continued that with

the right software (policy making) and the right hardware (investment by the industry), Malta could benefit from enhanced competitiveness via greater energy efficiency and water conservation – thus describing this as a win-win scenario at both a micro and macro level. To conclude the event, Ronald Mizzi, Permanent Secretary of the MEH and Daniel Azzopardi, CEO of SEWCU, presented certificates of recognition to the relevant stakeholders. Voluntary agreements were reached with the following nonSMEs: Carlo Gavazzi, Methode Electronics Malta Ltd, ST Microelectronics, Bank of Valletta, H.S.B.C., Enemalta p.l.c., Water Services Corporation, Foster Clarks Products Ltd, Baxter, Malta Freeport, Playmobil Malta Ltd, Toly Products Ltd, Trelleborg Sealing Solutions (Malta) Ltd, Besedo, AX Holdings, Eden Leisure Group, De La Rue Currency and Security Print Ltd, and Group 4 Services. The event, moderated by TV presenter Pauline Agius, was addressed by Rados Horacek, Team Leader Energy Efficiency, DG ENERGY at the European Commission. A panel of Industry Representatives was later chaired by Architect David Xuereb, Chairman of the Environmental Committee within the Malta Chamber of Commerce, Enterprise and Industry. BA

BUSINESSAgenda | Spring 2016

Food & Drink Photos: Alan Carville

Capital of nightlife:

discovering

Valletta’s

bar scene

As the streets of the capital city come alive with music and laughter, Sarah Micallef looks into the trend of exciting new bars and nightlife spots opening up in Valletta, as part of its regeneration and transformation into a popular nightlife area.

Drink at Tico Tico

ust a few short years ago, the capital city of Valletta was renowned for being a bustling hive of activity by day and a ghost town by night. With the closure of its infamous bars, bordellos and music venues in the 1960s, following Malta’s Independence and the decline in British and American servicemen on the island, Valletta’s raucous night-time spirit was all but snuffed out, leaving nothing but faded neon, peeling paint and padlocked doors – until recently.

Tico Tico

Over the last handful of years, more and more trendy bars and nightlife hotspots have been throwing open their doors, filling the capital with familiar music and laughter. Walking along the streets after sunset, the atmosphere is a buzzing one, with a tone of revelry that echoes countless past nights of merry-making. Many of the

Above and right: Loop Bar

recently opened establishments centre around the infamous Strait Street, but the level of entertainment is a far cry from its bawdy past. Rather, the crowd it attracts today is decidedly more upmarket, with many viewing Valletta as a stylish alternative to Paceville – Malta’s only other significant entertainment destination for far too long. And as Valletta embarks on its transformation into a popular nightlife area, the drinks are well and truly flowing. Ranging from an array of colourful cocktails to the more familiar beers, wine and spirits, Valletta’s new crop of bars has it all. One of the first to open its doors among the current generation of hotspots is Tico Tico on Strait Street, which has been around just over four years. Owners Clint Debono and Mark

Zammit saw potential in the capital when many looked past it, realising that there weren’t many places to go after dinner. “Valletta was one of the few capital cities that was dead after 6pm,” says Clint. “When we decided to invest there, many thought we were crazy, as it had become derelict. But people from all walks of life used to speak about it with such fond memories… we decided to go for it.” The alcohol of choice at Tico Tico is mainly a selection of cocktails and shooters, with a crowd ranging from teenagers to seniors gathering there to have a good time, and in some cases, reminisce about old times. “People that were stationed in Malta some 30 or 40 years ago love its regeneration, and give us photos and share memories,” Clint continues.

BUSINESSAgenda | Spring 2016

Food & Drink

Café Society

Meanwhile, neighbouring Loop Bar opened its doors afresh three years ago, following an extensive restoration which brought it back to its former wartime glory. Owner Sander Agius’ story is similar to Clint’s – “when I first took over the bar, everyone was telling me off and saying that I was crazy,” he says, though they’re sure to be biting their tongues now. “If you come on a Friday or Saturday night right after the theatre, you’d immediately realise that it was a fantastic idea. Valletta is picking up in all respects – it is a lot more attractive than it used to be, with buildings and sites increasing in value,” he maintains. And while the crowd at Loop ranges from 30-somethings to seniors, the drinks on offer are a varied selection from big-name brands to select whiskies, gin and wine, with the aim, according to Sander, of re-living the magic of the old Strait Street nowadays. But the magic is not limited to Strait Street alone. A few streets parallel, over on St John’s Street, Café Society – the brainchild of Electro Swing Malta trio Mike Carbone, Tom Devenish and Alex

Spiteri Gingell – opened its doors last summer. Coming as a natural progression from their shared love of music, Café Society takes its namesake from a 1930s New York nightclub renowned for breaking down the barriers of segregation between race and social class, and which launched the careers of Jazz greats like Billie Holiday. Similarly, Valletta’s version, Mike explains, encourages inclusion and a coming together of like-minded artists, DJs and musicians. “When considering our options of where to invest, Valletta was an absolute no brainer. Its aura of nostalgia, coupled with the sense of vibrancy and excitement that seems to be simmering under the surface of our capital city at the moment, made it the ideal spot to plant the seeds for our next adventure,” he says. Speaking of Valletta’s transformation into a popular nightlife destination, Mike asserts, “Valletta seems to be going through an awakening. The rate of regeneration and the enthusiastic investment that is currently underway are all sure signs that the city is finally

going to wake up and shine with the majesty it so rightly deserves. I feel that the days when tourists used to comment that Valletta is a ‘ghost town’ at night are already a thing of the past.” Apart from offering a platform for a wide range of musicians and performers, Café Society prides itself on serving a range of unique and original cocktails. “We have a fantastic team behind the bar and often get together, brainstorm and spend enjoyable sessions tasting and perfecting our recipes,” Mike continues, adding that they strive for fresh, local, simple and delicious combinations. Another recent addition to the capital’s nightlife complement is gin-centric Yard 32, a gin and tapas bar run by Sara Brunetto and Alessandro Marcuzzo, which welcomed its first punters last November. Boasting the largest gin selection on the island, the Italian duo devel-

Cocktails at Café Society

oped the concept for the bar while travelling through Spain, and aim to offer customers only the best choice of gin, “making them forget about low category and commercial gins!” At Yard 32, tapas are prepared daily to complement their range of 49 gins and 29 brands of tonic, with Sara and Alessandro ensuring that “each gin is best served with the right tonic for it, in

order to match with the botanicals of that particular gin.” With a client base ranging from people in their mid-twenties right up into their forties, the duo believe that Valletta is on its way up, maintaining, “as a capital city, Valletta is getting better and better, even though there’s still a way to go. Our customers want to drink the right way and try new drink expe-

Yard 32 Gin & Tapas Bar

BUSINESSAgenda | Spring 2016

Food & Drink the enormous potential of this city, and I see many great opportunities for Valletta.” That being said, there is still plenty of room for improvement, and a way to go for the capital to fulfil its potential. “We need support from Government and the Local Council,” Umberto says, adding that Valletta still has problems that need to be addressed. Clint, from Tico Tico, is in agreement, stating, “there’s a lot that has been done but a lot more we can do. Valletta should be promoted more as a destination among the cultured tourist. We should work more closely together and pull one rope. There are some very interesting projects coming up and a lot of foreign and local investment alike. People should receive help and encouragement to open new establishments in the area.”

LAB Crossover Bar

riences. We see a lot of gin lovers, and a lot that are starting to like gin for the first time, as they see the difference in our gins.” But the newest kid on the block is further up along Strait Street – the

Cocktails at LAB Bar

two-month-old LAB. Owner and cocktail-whizz Umberto Sparacio explains that LAB, as the name indicates, is “a place where drink experiments are created, where we research and innovate. It’s a place where we share our creativity and experience collected around

Europe. The idea is simple: to astound each customer with what we do and rediscover the pleasure of drinking well.” Every cocktail at LAB is built around the customer’s tastes, and among

the drinks on offer, you’ll find smoked cocktails, modern molecular spherifications and homemade preparations. The decision to open in Valletta, according to Umberto, is that “we believe it is the right alternative to the commercial nightlife on the north of the island. Valletta is the capital and I believe it’s right that this city, full of history, resumes the cultural guidance of the island – it is no coincidence that it will be European Capital of Culture in 2018. Many have already understood

Tonic selection at Yard 32

Loop Bar’s Sander shares the sentiment, adding that the future is bright for Valletta, and sees it placing amongst the best cities in Europe. “It has been lacking this ranking for decades, but is rapidly getting there. The more people believe in it by investing, the faster the growth is. However, this growth carries concerns and problems which need to be addressed quickly: parking and better litter facilities top the list.” And indeed, as Café Society’s Mike Carbone concludes, “with the support from relevant authorities helping to encourage its evolution as a melting pot for art, culture and heritage, the sky is the limit for Valletta.” BA

BUSINESSAgenda | Spring 2016

Dining Out

BUSINESSAgenda | Spring 2016

Human Resources

An employee-focused

future

From training initiatives to team building activities, can an investment in your team really help to boost your bottom line? Jo Caruana asks the experts to find out.

ichard Branson is one of the world’s foremost businessmen. Having set up his first business – a magazine – aged 16, he has gone on to amass no less than 400 companies since, as well as a knighthood and a net worth of €4.6 billion.

He has certainly done well, which is why it’s no surprise that, when Mr Branson has some advice to give, the business world sits up to listen. “Put your staff first, customers second, and shareholders third,” Mr Branson said in a recent interview, raising a few eyebrows. After all, haven’t we always been taught to put our customers first, above all else? “If you look after your staff, they'll look after your customers. It's that simple,” he continued. “Train people well enough so they can leave, treat them well enough so they don't want to.”

“Business performance is the result of employee performance.” The above quotes whizzed round the world at breakneck speed, encouraging business owners to sit up and question whether they should consider following his advice. Could putting your staff first really be a viable alternative that would please customers, boost

your bottom line and reduce team turnover, all in one fell swoop? “Business has, and always will be, about people,” says Marvin Cuschieri, director general at the Foundation for Human Resources Development (FHRD), which provides a vast array of training initiatives for individuals and teams. “It is useless having the leanest and most advanced operations if your workforce is not engaged and on board.”

Marvin Cuschieri Agreeing, Danica Fava, who runs specialist team building company Outdoor Living, says, “Life is a chain. We all depend on one another and, hence, it's important that everyone in the chain is happy and proud about the work they are doing. This will help them to perform at their best. You see, when people are happy in life, they positively affect the people around them. In business, that’s what we strive for – to positively impact our clients with our products or services. For the most part, our employees are our clients’ first point of contact with the company, so it’s vital for them to pass on positivity. After all,

business performance is the result of employee performance.”

employees are about expressing their ideas and opinions, the more confident and engaged they will become.

“It is useless having the leanest and most advanced operations if your workforce is not engaged and on board.” Specialists argue that there are many ways for companies to make their business more staff focused. For instance, it’s important for your team to work in an environment that is complementary to the work that they do, with the right tools and spaces to enable their success. They also need to feel listened to as people, not numbers within an organisation, so it helps to have an open door policy and to offer flexible solutions to the day-to-day requests that may crop up. In addition, it is also important for them to feel invested in, whether through continuous professional development (CPD) or training initiatives. “Team building is also fantastic for bringing people together and encouraging collaboration and teamwork, which has also been shown to make employees feel happier at work,” continues Mr Cuschieri. “Such activities help individuals to see their counterparts and management in a different light, and allow them to connect in an alternative environment. It also boosts collaborative work and communication, because employees can better understand each other’s strengths and weaknesses. The more comfortable

“Beyond that, providing both on-thejob and off-the-job training for your staff is a great way to enable employees to develop throughout their career path, as well as to improve the skills they need on a daily basis. With this in mind, the best people to ask about what things should be included in their training are the employees themselves. It is important to get your staff involved at early stages and not just carry out training for the sake of it.”

Danica Fava Ms Fava goes on to explain that, when choosing an activity for your staff, it’s very important to look at how it will be executed and to consider how employ-

ees will relate their team building experience to their everyday life. “With the emergence of more flexible teams, collaborative events are becoming more and more popular,” she says. “Through these types of activities, teams share and communicate their knowledge with each other to achieve one goal. “We recently introduced two new collaborative events – Beat the Box and Chain Reaction. Beat the Box follows the trend of ‘escape rooms’, however it is based on teamwork. Teams use their different skills to come up with creative solutions to crack the code. In Chain Reaction, each team builds a simple machine that then has to be joined to those of other teams to build a bigger ‘chain reaction’. For organisations that feel they cannot afford a couple of hours during the day for a team event, we now also have team building events that can take place pre- or during dinner. It’s this kind of flexibility and fun approach that we believe really helps teams to succeed, and individuals to feel appreciated and invested in.” So, whether through team building, training, increased flexibility or an investment in workplace well-being, it seems that keeping employees motivated and engaged really is the key to every organisation’s success. “There isn’t a magic formula for keeping everyone happy, since different people are motivated in different ways,” Mr Cuschieri continues. “But, from research we carried out locally with our members last year via our annual HR Pulse survey, it is clear that employees are not motivated solely by their take home package. “On the contrary, there is so much that can, and needs, to be done to ensure that the employee/employer relationship works both ways. It really is a worthwhile investment when it comes to retaining the very best talent,” he concludes. BA

BUSINESSAgenda | Spring 2016

Business Update Get the Complete Picture with an IPro2 Evaluation hyperglycemia excursions, and facilitate clinical decisions leading to improved glycemic control.

IPro™2 is a Professional Continuous Glucose Monitoring (CGM) device designed to provide you with a more complete picture of your glucose levels, by collecting blinded glucose data in an easy way. An IPro™2 evaluation can record your glucose levels 24 hours a day for up to six days and will provide your healthcare provider with insights into how your meals, medication and daily activities really affect your glucose levels. With the IPro, you can get up to 288 glucose readings per day displayed in a personalised report useful to diagnose hypoglycemia and

Safety Information Continuous glucose monitoring systems are limited to sale by or on the order of a physician and should only be used under the direction of a healthcare professional familiar with the risks associated with the use of these systems. The information they provide is intended to supplement, not replace, readings from a home glucose meter. Insertion of a glucose sensor may cause bleeding or irritation at the insertion site. Consult a physician immediately if you experience significant pain or if you suspect that the site is infected. *This information is designed to help you learn more about the Ipro. It is intended to provide you with helpful information but is for information purposes only, is not medical advice and should not be used as an alternative to speaking with your doctor. Technoline Ltd, 51, Edgar Bernard Street, Gzira. T: 2134 4345.

Discover BOV JAIME Financing Package

MaltaPost supports local companies and protects their sensitive data MaltaPost’s comprehensive list of document management solutions is designed to allow businesses to focus on their core competences and business priorities by providing for all archival, retrieval, digitisation and, where required, the destruction of paper records. By utilising MaltaPost’s secure archiving facilities, businesses are putting their valuable office space to better use while having the peace of mind that their physical documents or other sensitive records and media are secured in MaltaPost’s state-of-the-art document management facilities. MaltaPost’s document management storage facilities are equipped with 24-hour CCTV monitoring, controlled access, fire detection alarms, as well as temperature, humidity and vermin controls, and equipped with the latest technology to accurately track all documents from the initial collection to their final disposal. Should a client require any physical document in hand, MaltaPost will retrieve it, and deliver it to their office on the same day through its efficient courier services.

This new financing tool is the result of an agreement reached between the European Investment Fund (EIF) and Bank of Valletta. This package makes use of EU Structural and Investment Funds resources contributed by the Government of Malta, and co-funded by the European Union through Horizon 2020 resources and EIB Group resources. What’s in it for SMEs? BOV JAIME addresses important constraints for SMEs seeking finance, namely reduced collateral requirements. It is estimated that this package will enable the bank to assist over 700 Maltese SMEs by providing €50 million worth of financing at a reduced interest rate of more than 2 per cent resulting in a final interest rate of 3.5 per cent.

The new financing tool continues to build on the bank’s track record as the bank in Malta for SMEs. The bank’s first initiative – the BOV JEREMIE Financing package – became a reference case study at EU level, followed by BOV4SME and BOV Start Plus. Bank of Valletta is committed to continue using its expertise both locally and through its office in Brussels to maximise existing opportunities for the Maltese entrepreneur to tap into EU funds. Further information about the BOV JAIME Financing Package can be obtained from bov.com, or by contacting Bank of Valletta on T: 2275 1529. Bank of Valletta p.l.c. is a publicly limited company licenced to conduct Banking and Investment Services business by the Malta Financial Services Authority.

MaltaPost’s Document Management Services operate within stringent quality standards and are MSA EN ISO 9001:2008 certified. Furthermore, MaltaPost is an affiliated member of NAID Europe (National Association for Information Destruction), PRISM (Professional Records and Information Services Management) and the Information and Records Management Society. MaltaPost p.l.c., 305, Qormi Road, Marsa. T: 2596 1720; E: business@maltapost.com; www.maltapost.com/business

Having invested in high speed document scanning systems, MaltaPost provides businesses with an opportunity to digitise all those valu-

Valletta Hub

– Malta’s hottest co-working space in the heart of its capital It’s no news that finding appropriate office space in Malta is becoming increasingly tiresome, especially when one begins to look within the walls of the capital, Valletta. Steve Mercieca realised this and took it upon himself as an opportunity, and launched Valletta Hub, a co-working space strategically situated in the heart of Valletta.

SMEs in Malta seeking finance can now benefit from BOV JAIME (Joint Assistance Initiative for Maltese Enterprises) Financing Package.

able business records, providing clients with better security and preservation, and also allowing these to be categorised effectively and retrieved on demand.

Over the past few years, Malta has seen a number of successful co-working offices open up across the island. The reason they have been so popular is because of the flexibility they offer. People may sign up to a number of different packages without having to commit to a long office lease. A positive synergy is also created as these co-work-

ing spaces bring a number of people from different backgrounds and varied talents together. If you’re a person who needs to be situated in Valletta but not at the right stage in your career to open up an office, Valletta Hub may be the right solution for you. The office space is fully kitted out with ordinary office needs, including 24/7 access, admin services 9am till 5pm, internet, phone line, water and coffee, printing services, a meeting room and board room, all available via prior booking. www.vallettahub.com

BUSINESSAgenda | Spring 2016

Business Update New Planning Authority: More autonomous, efficient and effective changes in the administration, and thus this reform was carried out together with the management of the Authority so that it could be done efficiently and with little inconvenience to the stakeholders.

The new Planning Authority has been launched. The new legislative act came into force, whereby the Malta Environment and Planning Authority, better known as MEPA, is now split into two autonomous authorities, independent of one another. The Planning Authority is now responsible for development planning, while the protection of the environment is now the remit of the new Environment Resource Authority (ERA). During the launch, the Parliamentary Secretary for Planning and Simplification of Administrative Processes, Dr Deborah Schembri said this reform will provide resilient structures so that Malta will have a sustainable land use and planning system, and more efficiency in the administration process, as advocated by this government. She emphasised that the change in the law entails

The Chairman of the Executive Council of the new Planning Authority, Johann Buttigieg, described this reform as a holistic change, where the Authority was strengthening all that was good, whilst addressing the challenges it faced. He said from now on, the Planning Authority will be operating within new structures and systems whose primary aims are to ensure effective and efficient processes. Whilst lessening the bureaucracy, these processes would continue to ensure that planning and development are done in a sustainable manner. The Chairman of the Planning Board, Perit Vincent Cassar said that as society becomes more conscious of the need to conserve the environment, this reform was crucial to safeguard the interests of both the environment and of sustainable development through autonomous and independent entities. He explained how this demerger will ensure better decisions with the involvement of all the right parties. www.pa.org.mt

Stunning Summer 2016 Collection at Marella Marella’s new Summer 2016 collection expresses lightness, vitality and energy, like the season to which it is dedicated, without losing the practicality and functionality of the brand. The collection is thought for an urban traveller, a woman who choses travelling not just as an escape from reality, but also as an experience and constant reference for her daily life. Everything follows vague 70s shapes, but denim withdraws any exotic vibe. The silhouettes evoke a journey: kimono jacquard jackets or clean-cut blouses match fluid pants and maxi vests, creating a new idea of the suit in neutral hues, light as

bamboo. Layering is unexpected with prints too: polka dots and stripes, small and big, alternating on cotton and crêpe de chine, on knitwear and trench. As the summer heat gets closer, the navy style gets revamped, sailor stripes are triumphant and unusual overflows in the range of blues add personality and originality. It’s all blooming, as flowers get bigger and colours get softer: grey, ivory and bamboo for the shirt dress, a maxi skirt and a silk vôile top. Dorkins/Fashions Ltd. Holland Court, Flat 1, Bisazza Street, Sliema. T: 2132 3387.

Team Building – a necessary expense or a worthwhile investment?

By Bernard Micallef Cann, General Manager, Jugs Malta

Team building is an ongoing process that helps a work group evolve into a cohesive unit. But how does having a good laugh or interacting with members who are not on one’s direct team impact their performance? Seeing a different side of people, breaking out of one’s comfort zone and using simple topics for banter or as ice-breakers all have an impact on employee morale, which has proven to have a direct impact on productivity and employee retention. But this dies out pretty quickly as does everything today, hence the importance of a team building programme to reap the real benefits and not simply tick the box on my yearly staff event. The positive effects are measurable on team performances, but the key is ‘ongoing’. So is team building an art or a science? According to Eentrepreneur. com, when it comes to motivation and keeping your team happy, it’s a bit of both. The quality of the work you do will never exceed the quality of the team behind it. So why is it that managers find team building so difficult and is seen as an impossible task? Team building considerably improves communication among employees and skills and techniques needed for a successful team are actually practiced and improved during a team building

activity. One study shows however that 31 per cent of office workers say they can’t stand team building activities. This is most likely because of the activities employees are forced to do. Some simple activities that have proven to be successful and which can help motivation include volunteering, physical activity, outings, professional development activities and sharing meals. It is these activities which lead to employees realising what can be achieved if everyone works together to accomplish a goal.

Now that we’ve seen what team building can do for the company, are there any benefits for employees? Collaboration between workers can be improved with team building. Working together can help departments understand what each individual needs from the other employees and be more sensitive towards the way they work together. Additionally, employees can be more creative and imaginative during activities, enabling them to break out of their daily routine, and highlight strengths or sides of a person not known before.

In our experience, team building activities need to be designed and created with management objectives in mind. Our 15 years of experience in the field have taught us that the first point of contact should be the Human Resources manager or whoever knows the employees best. The first question we ask is, what needs to be achieved and what are the internal issues which need to be tackled? Once we have a clear understanding of this, we proceed to tailor team building activities or facilitated workshops combined with team building activities. This depends on the needs. Many firms use the latter in order to introduce new schemes or strategies the company adopts because they believe in constant involvement of and communication with their employees.

Motivation and loyalty are the most evident benefits of team building. If the employees succeed in the team building activities, their confidence increases at the office. Employees often also feel that if their company takes the time (and money) to organise a team building event, then they feel there is more commitment from the organisation’s side as well. JUGS Malta specialises in producing exclusive, innovative and tailored activities and events. JUGS also provides audio-visual equipment as well as the professional technical support to go with it. Their successful and innovative operating formula has made JUGS Malta the leading entertainment entity in Malta and partner of choice for leading destination management companies and hotels. They have also had

the pleasure of working with various renowned international brands such as McDonalds, IBM, FORD, GSK, BP, SAAB, BMW, and DEUTSCHE BANK among others. JUGS are also one of the founding partners behind the highly suc-

cessful Business Leaders Malta conferences. T: 2138 3825; E: info@jugsmalta.com; www.jugsmalta.com

BUSINESSAgenda | Spring 2016

EU Policy

Time to

unblock the geo-block? From streaming sites to online retailers, geoblocking is the practice of blocking certain goods or services from being used or viewed outside particular countries. But doesn’t this go against the EU’s single market project? Jo Caruana asks the experts.

ave you ever tried to buy a product online but found that that item wasn’t available for sale to Malta? Or tried to watch a film on a streaming site, only to find that the programme wasn’t ‘licensed in your country’? Both of these scenarios point to geo-blocking – the practice of restricting access to internet content based upon the user’s geographical location. Used by countries to block foreign material as well as by movie and TV studios to restrict viewing to specific regions, geo-blocking is accomplished by excluding targeted internet addresses. And, while many argue the case for geo-blocking, others believe that it goes against what the European Union stands for. So, should it be allowed? MEP Therese Comodini Cachia explains that by limiting consumer opportunities and choice, geo-blocking – or, more precisely, a lack of cross-border access – is a significant cause of consumer dissatisfaction. “The European Commission (EC) has responded to this by identifying the prevention of ‘unjustified geo-blocking’ as a priority for its Digital Single Market Strategy,” she says. “However, in the debate on geo-blocking, it is very important to distinctly distinguish between geo-blocking that may be justified for social, cultural and economic reasons, and the lack of portability of content.

“It’s important to carefully analyse differences on a case-by-case basis and to look at the reasons behind the different treatment.” Markus J Beyrer

“Limiting cross-border portability means that consumers who have lawfully subscribed to online services in a certain member state are not allowed access to the same service when they are temporarily in another member state. Thus, the legislative proposal currently put forward by the EC contains focused proposals on how lack of portability of legally acquired content is to be addressed,” Dr Comodini Cachia continues. She goes on to explain that geo-blocking is often the result of business mod-

els that may, at times, have failed to adapt to the digital opportunities of today or which represent the way an industry has established itself over the years. “So, the removal of geo-blocking would necessitate changes in contracts which may have been concluded before the digital revolution even took place. “But then there are creative industries which, due to the cultural diversity in Europe, strongly depend on territoriality as an element of geo-blocking. So the scenarios that this debate covers range from being blocked from buying from an online shop by being diverted to a different page which brings about different prices, to the creation of films in the different European languages or our minority languages. In a way, when we speak of the film industry and geo-blocking we cannot think of the Hollywood model and expect to adopt the same framework. The European film industry reflects different cultural and linguistic demands embedded in Europe’s diversity. “So, while I am in favour of the portability of lawfully-acquired content to the extent that I campaign for it in my work as a MEP, and this has heavily featured in the dossiers assigned to me, I am prepared to analyse and distinguish between justified and unjustified geo-blocking and find measures that will address consumer dissatisfaction. In addition, I do believe that transparency in transactions will empower consumers but will also start to address unjustified geo-blocking.” Speaking from a business perspective, Markus J Beyrer, the director general of BusinessEurope, states that the organisation fully shares consumers’ common interest not to be subjected to unjustified differential treatment in price or otherwise, or refusal of supply. “However, there are objective and justified reasons for differences in treatment, such as those linked to different market conditions, to competitive pressures or differences in purchasing power,” he says.

In fact there are many situations where geo-blocking can also be a result of different or additional national regulations, like extra labelling requirements, compliance issues, additional health and safety regulations or differences in shipping, distance and delivery costs. “All of these make a difference to the online services that people can access, as well as the way they can access them. In terms of compliance issues, for instance, a company may have to geo-block when it owns the brand rights of some products in a particular number of member states, or when it needs to comply with specific national health and safety or labelling requirements. If not, that company runs the risk of infringing intellectual property rights. Finally, different electronic waste disposal regulations or different VAT rates are also examples of justified reasons.” As Mr Beyrer explains, these objective and justified reasons are often the direct result of the still-remaining fragmentation within the single market, which has been caused by the lack of harmonisation, lack of mutual recognition, additional national regulations and the diverse interpretation of EU legislation. “However, it’s important to carefully analyse differences on a case-by-case basis and to look at the reasons behind the different treatment,” he continues. “For example, it is important to make distinction in this debate between same-service same-place situations, such as a car-rental company in a certain country selling a similar service to consumers from different member states, and the sale of a similar product to consumers based in different countries.” Asked about the reality of geo-blocking and its impact on e-commerce and the real economy, Dr Comodini Cachia states that, on the one hand, geo-blocking is a reality for consumers who express dissatisfaction with it and demand that we, as policy makers, do away with it, while, on the other, geo-blocking is a reality which some businesses embrace and demand that it is retained. “Geo-blocking’s impact on e-commerce and the economy varies depending on the industry sector. However what is equally a challenge for e-commerce and the European economy is the hesitation that European businesses seem to have towards tapping into the digital technologies that make e-commerce possible. “The percentage of Europeans who participate in e-commerce is also very low. Yet, studies have shown that accelerating the digitalisation of industry is crucial for boosting job creation and economic growth in Europe. This concerns all sectors of the economy, from industry to services, education and the public sector. While 75 per cent of Europeans used the internet on a regular basis in 2014, only 15 per cent shopped online from another country. Moreover, only seven per cent of SMEs sell online cross-border. “These figures show that European SMEs are still hesitant when it comes to tapping into the European market, while consumers have a distrust

BUSINESSAgenda | Spring 2016

EU Policy in online shopping across borders. This may be indicative of a European society that has not as yet assimilated or understood the digital revolution that it has lived in the last few years. It is also true that legislation, policy and national structures have not entirely embraced the digital potential either. “What is certain, though, is that digital technologies are shaping consumer demands, making the distinction between goods and services less clear, and will continuously offer new challenges. It is important for the economy that businesses embrace digital opportunities that enhance their trading and that assist them in fulfilling consumer demands. Labelling technology as disruptive will not help businesses tap into its full potential,” Dr Comodini Cachia continues.

is expected in the spring of 2016. Facilitating the digitalisation of industry, as well as promoting the development of digital skills, are measures that will truly benefit the digital economy,” he says. As for geo-blocking legislation, Mr Beyrer suggests that creating more transparency on delivery restrictions could help to avoid complaints and accommodate some of the recipients’ – both consumers’ and businesses’ – concerns with regards to not having access to a certain service or receiving differential treatment. “However, the legislator should not aim to force companies to sell cross-border at any cost, and should also avoid putting excessive administrative burdens on companies through the introduction of complicated explanation obliga-

“The European Commission has identified the prevention of ‘unjustified geo-blocking’ as a priority for its Digital Single Market Strategy.” MEP Therese Comodini Cachia Meanwhile, and with all of this in mind, Mr Beyrer believes that the European Commission should focus on competitiveness-enhancing measures, before taking concrete steps on geo-blocking. “At BusinessEurope we are looking forward to seeing the action plan on the digitalisation of the industry, which

tions for their website,” he says. “In fact, it can be very burdensome to indicate specific countries and conditions for every different product. So much so, that the 2011 Consumer Rights Directive already laid down important information requirements in this respect.

“That said, it is clear that the fundamental principle of contractual freedom must not deviate into a default obligation to supply. Rather, the focus should be on tackling differentiated treatment at the root: addressing challenges to online trade across borders and the remaining fragmentation in the single market,” he says. Now, looking ahead, Dr Comodini Cachia believes there is need not only for a more integrated single market where rules for business do not change extensively across borders, but also for technologically-neutral rules. “This will help increase the availability and accessibility of content online, while ensuring fair remuneration to the many parties involved in the creation and distribution of content.

“Improving cross-border portability for the creative sector is for example a response to mitigate the effects of territorial licensing and geo-blocking in the audiovisual sector, in particular for short-term travellers (about 5 million Europeans per day). Similarly, enhancing cross-border trade and service would help long-term travellers as well (about 13 million Europeans). Improving accessibility of digital content would be beneficial for both consumers and content providers especially seeing the potential demand for cross-border services subscriptions.” Finally, Mr Beyrer explains that, with a better functioning and more integrated single market, it would be possible for geo-blocking to occur less frequently.

“At the moment, companies need to geo-block for certain reasons, such as to comply with additional national regulation that is linked to labelling or health requirements. In the future, and with less obstacles to trade and more similar national markets, it will become much easier to serve more countries, or even to serve the entire single market. “In any case, in line with the principle of contractual freedom, businesses are free to determine the geographic scope to which they target their activities within the EU, even when selling online. It will always be up to the companies themselves to determine where they want to offer their goods and services,” he concludes. BA

BUSINESSAgenda | Spring 2016