Business Agenda Issue 03 by Malta Business Bureau

ISSUE 03 I july – sept 2010

THIS ISSUE

Economy ECB interest rates remained at a record low, but what does the future hold?

page 10

business agenda

NEWSPAPER POST Tourism update The impact of the volcanic ash disruptions on the tourism industry.

page 12

THE Official Business publication of the Malta business Bureau

Malta’s Negative Trade Gap with Europe Widens Imports from EU countries reach € 14 billion since EU accession.

EU affairs MEP Louis Grech discusses his report on delivering the Single Market to EU citizens.

page 14

A detailed analysis of trade statistics between Malta and the EU countries that today form the EU bloc has shown that Malta’s trade gap is widening, with significant rises in imports compared to exports that are also growing, but at a much slower pace. The statistics clearly show that since EU membership, there is a growing trend for importing more and producing less in Malta.

Interview Dr Joanna Drake talks about the main issues SMEs are facing within the marketplace.

The imports in 2009 when compared to the imports from the same European countries in 2004 have increased by over 30 per cent, while

page 16

exports also registered an increase, but lagged behind with a modest 10 per cent increase when comparing 2009 to 2004. Statistics gathered by the National Statistics Office show that between 2004 and the first quarter of 2010, imports from the EU totalled just over €14 billion, with machinery and transportation equipment making up the largest part of total imports, and a total of over €5 billion worth of equipment imported during this period of time. See page 9 for the full story.

Revisions to MATERNITY LEAVE DIRECTIVE WILL COST MALTESE BUSINESSES € 5.3 MILLION ANNUALLY CASE STUDY Island Hotels Group Holdings plc. have grown from strength to strength. Winston J. Zahra discusses the secrets behind this success.

page 28

A detailed Impact Assessment Report on the potential effects of the proposed EU legislation on maternity leave has revealed that the burden of the proposals on the Maltese economy could exceed €12 million per year.

The report, commissioned by the Malta Business Bureau, gauged the potential impact that these changes could have on the Maltese economy. According to the assessment, increasing maternity leave from

the current statutory 14 weeks to the proposed 20 weeks would potentially cost the Maltese economy €7.5 million in a year. Of this, the cost to private business would amount to €5.3 million in a year. The MBB is putting pressure on

Government to resist introducing the measures in Malta, arguing that the measures are not sustainable. See page 5 for the full story.

BUSINESS AGENDA | july – sept 2010

BUSINESS AGENDA | JUly – sept 2010

editorial

THE SINGLE MARKET IS A PRIORITY The renewed commitment by the EU to pursue the completion of the single market has gained ground and political determination in recent months. This resolve gained momentum particularly through the publication of the ‘Political Guidelines for the new Commission’, where the single market was identified as a strategic objective for the EU. The commitment focuses on discerning the modern-day challenges shaping the European single market whilst also examining the strategy that should make a relaunch of the internal market viable both politically and economically. Based on a direct mandate by President Barroso, Prof Mario Monti was assigned the task to produce an in-depth report with recommendations on how best to re-launch the single market in the context of the international financial and economic crisis. The report, ‘A New Strategy for the Single Market’, highlights the challenges, the initiatives and recommendations which are needed in order to deliver the relaunch of the single market. In his report, Prof Monti highlights that the single market is at a critical point in time, as it faces three main challenges. The first challenge comes from the taxing political and social support for market integration in Europe. More explicitly, this challenge means that today, the single market is seen with suspicion and fear by many

European citizens and political leaders alike. The second challenge for the completion of the single market derives from the uneven policy attention taken with regards to the various components of an effective and sustainable internal market. In other words, the difficulties encountered by the single market, were reported to be the actual ‘welding together’ of national markets into one European market. This is also due to the lack of coherence in innovation, namely in terms of expansion of markets to new sectors due to our fast-evolving economy, and also the effort to ensure that the single market is a space of freedom and opportunity that works for all citizens, consumers and SMEs alike. According to the report, the third challenge comes from a sense of complacency which has built up during the last ten years, where EU member-states feel as if the single market has been completed and could thus be put to rest as a political priority. In this respect, the single market is felt to be yesterday’s news, which definitely needs maintenance but not really active promotion. Conversely, the functioning of the monetary union and the recent rounds of EU enlargement has put the success story of the single market, to a certain extent, back into the limelight.

By Joe Tanti, Chief Executive Officer, MBB

All of these three challenges are in my opinion valid reasons why the single market has lost its momentum, and Monti has really hit the nail on the head in this regard. In the opinion of Maltese business it is now high time to make the best of the EU internal market. The Monti Report is creating a window of opportunity to bring back the political pressure to focus on the single market. It is important, and necessary, to reunite all widespread positions, into the agenda for the relaunch of the single market. It is necessary especially because achieving a deep and efficient single market is a key factor which will determine the EU’s overall macroeconomic performance, also in terms of the solidity of the euro and the economic benefits which the economic and monetary union can deliver to businesses and citizens alike. We note with satisfaction that the European Commission will include elements of MEP Louis Grech’s report in the drawing up of the Commission’s action plan on the future of the European Single Market. MEP Grech’s report was presented in the form of a parliamentary resolution, which was adopted by 578 votes to 28, with 16 abstentions. The report calls for a more ‘holistic approach’ to the EU internal market, one which also takes into account citizens’ concerns. The Monti Report is seen by many as a “package deal” whose

recommendations will inevitably require the cooperation of all member-states’ governments and institutional stakeholders to succeed in the long-term. What the single market does not need right now is more regulation; on the other

hand, what it urgently needs is better regulation. I hope that you all enjoy reading this edition of Business Agenda and we wish our readers an enjoyable summer break.

The Malta Business Bureau is a non-profit making organisation acting as the European 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.

Publisher Content House Ltd Mallia Buildings 3, Level 2 Triq in-Negozju Mriehel QRM3000 Tel: 00356 2132 0712/3 Email: info@contenthouse.com.mt www.contenthouse.com.mt

Malta Business Bureau Casa Leone Pjazza Robert Samut Floriana Tel: 00356 2125 1719 (Malta Office) Tel: 0032 4859 81124 (Brussels Office) Email: info@mbb.org.mt infobrussels@mbb.org.mt www.mbb.org.mt

Editor: Joe Tanti Deputy Editor: Claire Azzopardi

Editorial Team: Omar Cutajar, Mariella Scicluna, Amanda Sciortino

Business Agenda is the quarterly publication of the Malta Business Bureau. It is distributed to all members of the Malta Chamber of Commerce, Enterprise & Industry, all the members of the Malta Hotels & 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.

BUSINESS AGENDA | july – sept 2010

NEW PRESIDENCY, CONTINUED DEDICATION A word from the MBB’s newly appointed President, John A. Huber

Throughout the last year, the Malta Business Bureau has set and reached a number of milestones in relation to the enhancement of its product and services offered to the Maltese business community. A shift towards an added value service was attained over a relatively short span of time. Throughout his Presidency, Mr. George Micallef has definitely set the ball rolling for the MBB, contributing significantly to raise the profile of the organisation on both the local and international level with the launch of the ‘Business Agenda’ being one of several successful feats underpinning the realisation of our new strategic objectives. I have been recently appointed President of the MBB and when I came into office, I was very much looking forward to continue developing and building further upon the actions taking place. A very important element which the MBB has been trying to achieve is steering through structural change. The MBB is thus evolving from an EU business information office to a more focused advisory and support office with new targets and enhanced internal capacity to provide deliverables. To this end, throughout my tenure at the MBB I plan to embark onto new projects, especially EU funded projects. We are currently in the process of developing a number of proposals which we will submit

throughout the coming months. I aim to direct most of the MBB’s efforts towards SMEs, as I believe they need the most attention and guidance when it comes to the maze of EU funding. In this regard we should soon be holding a Mentoring and Training Programme for SMEs, which will be a two-day event aimed to maximise the take-up of both direct and indirect funding by small businesses. Tying in with the above-mentioned events, the MBB will also be commissioning a number of impact assessment studies which will empower the Maltese business community with a greater capacity to influence EU pipeline legislative proposals. This is in line with our commitment to be more proactive rather than reactive within the ambit of the EU decision-making process. The first impact assessment has been concluded and recently published dealing with the revision of the so-known Maternity Leave Directive. The study has generated a remarkable public debate in Malta involving social partners and civil society at large. We are proud that this first pilot initiative on impact assessments has been a resounding success. The compilation of this first impact assessment was undertaken with a reactive approach. However, I am strongly convinced it has served its purpose in providing a strong basis from which we can only gain further

The MBB community believes that these costs are especially relevant given the predominance of micro and small businesses within the private sector’s structural make-up. Such companies would find it particularly difficult, if not altogether impossible to substitute their absent workers.

The full impact assessment report was published in mid-June and is available on the MBB portal: www. mbb.org.mt I encourage you all to visit our website and to delve into the detailed findings and proposals carried in this first-ever impact assessment carried out by the initiative of the Maltese private sector. During my presidency, I pledge the continuation and the further

strengthening of an impact assessment culture in relation to EU proposals impacting Maltese business. This will complement another core goal, that of bolstering the MBB’s profile, both locally and internationally, as the Maltese business voice in Europe. It is my conviction that we can continue to develop a stronger and diversified MBB as an EU advisory service for all the members of the Malta Chamber and MHRA.

THE MALTA BUSINESS BUREAU CONGRATULATES CONTENT HOUSE FOR EUROPEAN BUSINESS AWARDS NOMINATION The Malta Business Bureau has congratulated Content House, one of the leading media companies in Malta, for being awarded the ‘Country Representative’ by the prestigious European Business Awards. Content House is the Media Partner of the Malta Business Bureau and the two organisations jointly publish Business Agenda, the leading quarterly EU & Business publication. Sponsored by HSBC Global, the prestigious European Busi-

ness Awards have identified some of Europe’s brightest businesses based on their ability to demonstrate the three core principles at the heart of the Awards programme. The esteemed panel of judges were looking for organisations to represent Malta who exhibited innovation, business excellence and sustainability. Last year, the judges chose Microsoft Malta for the award for ICT effectiveness for its Smart Women project in the 2009’s European Business Awards.

MBB CEO Joseph Tanti said that the MBB was delighted that its media partner has been chosen as a Country Representative by the European Business Awards. Content House Managing Director Jesmond Bonello said that it’s an honour to be recognised as one of the leading organisations in the field especially since the European Business Awards are widely recognised as the showcase for Europe’s most dynamic companies.

REVISIONS TO MATERNITY LEAVE DIRECTIVE MAY CAUSE HUGE BURDEN ON MALTESE ECONOMY In light of the extensive proposed changes to the current Maternity Leave Directive, the Malta Business Bureau has commissioned a detailed Impact Assessment aimed at gauging the potential impact that these changes could have on the Maltese economy.

experience in this field. We are also looking into studying the impacts of a possible paternity leave directive and the review of the General Product Safety Directive among others. Expanding a bit further into the Impact Assessment on the proposed revision of the Maternity Leave Directive, this study provided an estimate of the costs to the Maltese economy through the possible introduction of EU legislative proposals extending mandatory statutory maternity leave and the introduction of fully-paid two-week long paternity leave. The findings of the report pinpoint, that in economic terms such measures would dent the Maltese GDP by no less than 0.29% and reduce the value-added of private business by 0.25%. These are direct costs that would have to be borne by employers in all economic sectors, resulting according to our estimates to an approximate loss of €9 million in value added per year for the private sector. It is important to note that the final costings are subject to fluctuation factors such as take-up of leave and substitutability of workers.

BUSINESS AGENDA | JUly – sept 2010

The MBB also congratulates the other 14 companies that received the Country Representative Award, who are: AIS Environmental Ltd, Alberta Group, Alert Communications Ltd, Crimsonwing, Diamonds International Ltd, Foster Clark Products LTD, Hudson Holdings Limited, Island Hotels Group Holdings Plc, KPMG Malta, Methode Electronics Malta Limited, MIDI Plc, Premier Capital Limited, Simonds Farsons Cisk plc and Vinci Group.

According to the report, the potential overall burden on the Maltese economy could be to the tune of an annual cost of €12 million. The report estimates that increasing maternity leave from the current statutory 14 weeks to the proposed 20 weeks, would potentially cost the economy €7.5 million worth of value added in a year, which is equivalent to 0.18 per cent of GDP. Of this, the cost to private business would amount to €5.3 million worth of value added in a year, which is equivalent to 0.14 per cent of private sector GDP. Moreover, the proposal to introduce two weeks of paternity leave would cost the economy an estimated €4.8 million in terms of value added in a year, which is equivalent to 0.12 per cent of GDP. Of this, the cost to private business would amount to approximately €3.7 million in a year in term of value added, equivalent to 0.1 per cent of GDP. In total the Impact Assessment estimates that these measures would dent the Maltese economy’s GDP by 0.29 per cent, and reduce the value added of private business by 0.25 per cent. The results have certainly made a number of stakeholders sit up and take interest, particularly the local business community, who could end up shouldering a heavy burden should the current proposals go through. The potential costs to the Maltese economy are especially relevant given the predominance of micro and small and mediumsized enterprises (SMEs), which

“The results have certainly made a number of stakeholders sit up and take interest, particularly the local business community, who could end up shouldering a heavy burden should the current proposals go through.” are expected to be hard-hit by the proposals, particularly due to the heightened difficulties they face to substitute for absent workers who are on parental leave. In Malta, SMEs play a significant role in employment levels , accounting for over 70 per cent of employment in the private sector, but the assessment also found that firms which are relatively large employers, and are especially vulnerable to competitiveness pressures, will also be significantly affected by the proposals. In this respect, it is expected that those industries that have a heavy dependence on SMEs and on female employees are likely to face certain difficulties as a result of the proposed changes. These industries include the manufacturing, wholesale, retail and hospitality sectors, which together account for around 40 per cent of private sector jobs. Another interesting and potentially worrisome effect of the proposed legislative changes lies in the possibility that the extension of

maternity leave could reduce the female employment rate in Malta, which standing at just 37.7 per cent of the working age female population, already lags behind the EU average of 58.6 per cent. According to the report, the proposed changes to the Directive could render women less competitive in the market-place for jobs and could lead to deteriorating employment prospects for everyone by increasing the costs of operation to business. Furthermore, current persisting wage discrepancies that exist between female and male employees in Malta, may actually widen, as employers factor in the potentially increased burden of employing women. However, although there are certainly a number of potentially negative repercussions outlined in the assessment report, a number of alternative proposals are also being put forward for consideration. The MBB maintains that these alternative policy approaches could be better suited to achieve the objective of promoting an improved reconciliation of work, family and private life,

BUSINESS AGENDA | july – sept 2010

CONTINUED FROM Pg5

without having a secondary negative effect on female participation and wage differentials. The proposed alternative measures include focusing on the improvement in the support structures that aid women and men to cope better with parenthood and manage the increased pressures to obtain a better work-life balance. These support structures include: increasing nursery and day-care provision and the subsidisation of such services; introducing incentives to promote home working; incentives to encourage private firms to provide better family-friendly measures, such as on-site nursery care, introducing creative work solutions such as part time, flexitime, home working, compressed working week, job share, annualised hours, term-time work and shift working.

STAKEHOLDERS' OPINION: John A Huber, President of the Malta Business Bureau states that “The findings of the report clearly show that the burden on the economy, particularly on Maltese businesses, of the proposed extension of maternity leave will strongly tarnish Malta’s competitiveness and could be very damaging to local businesses. The MBB urges Government to take into consideration the findings of the report as businesses – and the economy – are not in a position to afford to carry the burden of such proposals. The MBB believes that the cost of these initiatives can

be better spent elsewhere. Our proposals of alternative measures include the improvement of support structures that aid women and men to cope better with parenthood and manage the increased pressures to obtain a better work life balance.”

George Micallef, President of the Malta Hotels and Restaurants Association states that “We are not against the principle of extending maternity and paternity leave, but we are concerned about the manner this may be introduced, which will continue to erode the competitiveness of the islands at a

time when the market is still very sensitive and competition is fierce. The tourism industry has been burdened with substantial increases in its operating costs and the upcoming new legislation governing part-time employment which will particularly impact our industry because of its strong reliance on part-time work. We also have to bear in mind that the industry is still under the affects of one of the worst recession in recent history. Consequently any further increases to our cost base have to be taken in this con-

text of all of this, and we should not underestimate the risks associated with competitive erosion.

Dr Chris Said, Parliamentary Secretary for Consumers, Fair Competition, Local Councils and Public Dialogue states that: “Government welcomes the proposal to revise the Maternity Leave Directive but it deems it inappropriate and unrealistic for the European institutions to take a one size fits all approach. Striking the right balance between the rights of the working mother and the interests of the employers is key. Malta has always urged that any compromise on the length of maternity leave and the level of pay, should seek a balance between national systems that have short and fully paid maternity leave entitlements and national systems that have longer leave entitlements but which are lesser paid. Government can also consider that any extension of the maternity leave period be gradual to minimize any impact on employers, especially small and medium sized enterprises (SMEs). Ultimately working women should not be penalised in any way for being mothers whilst employers should be incentivised to increase employment.”

Helga Ellul, President of the Malta Chamber of Commerce, Enterprise and Industry states that: “Measures such as longer maternity leave can only be counterproductive to female employment and the economy, and would have an adverse effect on the participation rates in the labour market.

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While the Malta Chamber acknowledges that allowing men and women to combine professional and family responsibilities is a key element in tackling the challenge of insufficient market participation of women, longer maternity leave would create a larger financial burden on industry. Within the context of a difficult economic climate, this burden is further magnified. Many do not realise that it is the employer who bears the full cost of an employee’s maternity leave. We must ensure that no measures are implemented to the detriment of female participation in the economy and our employers particularly SMEs. We must seek to put in place the necessary safeguards before implementing new legal obligations that are economically and socially counter-productive. Furthermore, the arrangements made need to be specific to our country’s labour market challenges and our industrial sectors.”

BUSINESS AGENDA | JUly – sept 2010

BUSINESS AGENDA | july – sept 2010

BUSINESS AGENDA | JUly – sept 2010

cover story

The first six years of EU membership:

Malta’s trade gap with Europe widens In the first six years of EU membership, Malta has imported just over €14 billion from other European countries that form part of the Union, and has exported almost €6 billion to the same market, resulting in a significant negative trade gap of over €8 billion.

While accession to the EU, and direct access to the European Single Market of over 500 million citizens, has certainly resulted in easier trade and a higher level of imported products from EU Member States, the export market did not register the same levels of increased trade.

An analysis carried out by Business Agenda shows that import levels in 2009, when compared to 2004 have, increased by over 30 per cent, whereas the increase in exports during the same period of time amounted to just 10 per cent. The statistics indicate that there is a growing trend of importing more products from the EU, while producing less in Malta.

Mr Camilleri believes that “the food and live animals sector will continue to represent a significant part of trade. Due to our geographic constraints and the limited availability of land we are unable to produce the required amount of food and hence the need to import.” He continues to explain that this need is likely to increase even further due to the growing population and the decreasing amount of agricultural land in Malta.

According to Malta Enterprise Chairman, Alan Camilleri, “Through its accession to the EU in 2004, Malta gained access to the single market, and also benefited from the removal of various barriers to trade. Consequently, a portion of the trade that Malta carried out with non-European countries was diverted to EU Member States.” This diversion of trade - mainly importation - towards EU member states, was further facilitated by Malta’s entry into the euro area in 2008, which removed exchange rate differences and made transactions between Malta and other EU Member States easier and cheaper. Data gathered by the National Statistics Office also reveals that machinery and transportation equipment made up the largest part of total imports with a total of over €5 billion worth of equipment imported between 2004 and the first quarter of 2010. According to these statistics, the second strongest importation sector is ‘food and livestock’ with over €1.8 billion worth of imports being registered over the same period. The third largest sector when it comes to importation is manufactured goods, followed by mineral fuels, lubricants and related materials.

In fact, statistics also show that exports from Malta to the EU lag behind imports, with a modest increase of 10 per cent worth of exports when comparing 2004 with last year. In fact, the increase in exports registered in the months immediately following Malta’s accession to the EU, have remained relatively stable, with the only contraction being registered in 2008. The strongest growth in the export market was registered in 2005, when the value of exports reached over €1 billion for the first time, with an increase of over 49 per cent over 2004.

“The strongest growth in the export market was registered in 2005, when the value of exports reached over €1 billion for the first time, with an increase of over 49 per cent over 2004.”

According to Mr Camilleri, Malta’s main trading partners are not expected to change significantly in the near future, although the expansion of the European Union and the importance of emerging markets such as the BRIC countries (Brazil, Russia, India and China) might have an impact on trade directions. However, he also points out that Malta cannot rely indefinitely on its traditional sectors, stating that the Maltese Government has “undertaken a path of diversification in order to reduce the economy’s vulnerability to external shocks. This diversification process has already been crucial to limit the overall negative impact of the financial turmoil in Malta,” he explains.

According to statistics, the strongest export sector was also machinery and transport equipment with over €3 billion worth of goods exported between 2004 and the first quarter of 2010. The second largest export sector was miscellaneous manufactured goods, followed by chemicals and related products. Further analysis of the main trade trends between Malta and the EU have shown that Malta’s top export markets are the United Kingdom, France, Germany, Italy, Belgium and The Netherlands, with the UK receiving around 19 per cent of total exports to the EU since Malta’s accession.

encouraged more trade to develop with these markets,” he explains.

Malta’s main import partners do not offer many surprises, with Italy, the United Kingdom, France and Germany all amongst the top five. In this respect, Italy enjoys the largest share with over 37 per cent of imports coming from this country between 2004 and 2010.

As Mr Camilleri points out, the UK, France, Germany and Italy have always been the main trading partners of Malta, with local entrepreneurs now being very familiar with these markets, which are viewed as secure. “The insight gained throughout the years as well as the business relationships which have developed are amongst the factors which have

Sectors such as financial services, creative industries, high-value manufacturing, education, tourism, health and Gozo as an eco-island, are amongst those sectors that present new opportunities. “These are the sectors most likely to flourish and contribute with their good performance towards the success of the economy,” Mr Camilleri concludes.

BUSINESS AGENDA | july – sept 2010

ECB RETAINS LOW INTEREST RATES ‘Maltese economy is on the way to recovery’ The European Central Bank has left its main interest rate unchanged at one per cent in a bid to restore investor confidence in the debt-ridden euro area, but it is still pumping liquidity into the euro zone. BUSINESS AGENDA takes a look at the main trends and discusses what developments are likely to take place in the near future. The European Central Bank has recently announced that it will be keeping its main interest rates unchanged at 1 per cent, a rate which was established just over a year ago, in May 2009. The decision is expected to have been motivated by the aim of restoring investor confidence and credibility within financial markets and the European public. The decision did not come as a surprise and was widely expected and left interest rates within the euro zone at a record low, reflecting the area’s low growth and inflation prospects. According to Joseph F X Zahra, a leading local economist, the ECB’s decision to maintain low interest rates has been a major contributor to sustained private economic activity, even during a depressed market environment. “Private investment in the euro zone recovered after a brief slowdown, and low interest rates prevailed also in Malta as a euro area country,” Mr Zahra observes. “But what forces banks to pass on to their clients the lower interest rates is competition in the credit market. We have seen, over these recent years, increased competition between banks which has challenged the duopoly that persisted in the Maltese credit market for many years.” According to Mr Zahra, the Maltese economy is on the way to recovery, even though many had predicted that Malta will enter the recession later than the other countries during 2010. “In Novem-

“The aim was far more fundamental than stimulating aggregate demand - it was to prevent a complete meltdown of the financial system and the catastrophic effects this would have had on the real economy.” ber last year I had forecast that Malta will be out of recession in the first months of 2010 as its economy is very much dependent on the economies of the large European economies, which were already on the road to recovery, albeit a fragile growth trajectory.” Mr Zahra also believes that interest rates in the euro zone will remain low for some time. “This is even more relevant today when the major European and euro area countries, have embarked on a determined deficit-cutting policy which could have damaging effects on consumer confidence and consumption, and which will also be deflationary.” He believes that keeping interest rates low will support private investment and explains that “the combined effect of deficit-cutting measures and low interest rates will contribute to a much needed shrinkage of Government spending and an opportunity for growth in the private sector.” Another well-known and respected Maltese economist, Gordon Cordina, believes that the

actions of the ECB are also closely related to the need to provide liquidity to banks on a massive scale, but as cheaply as possible. “The aim was far more fundamental than stimulating aggregate demand - it was to prevent a complete meltdown of the financial system and the catastrophic effects this would have had on the real economy,” he says. However, Mr Cordina also points out that there is a general feeling that the provision of this easy liquidity is being far too generous with banks, and that this could be inflationary in the long run. He draws attention to the fact that “there is concern over the way in which the ECB is to retreat from an easy monetary stance. One would not want to spark off a liquidity crisis, especially given the weakness of certain banks in the euro area.” In fact, attention has been focused on the ECB’s extensive programme to pump liquidity into the euro zone’s banking system. The three-month loans offered by the ECB reached €131.9 billion, which were allocated to 71 different banks across the euro zone, but this

amount was lower than forecast. Another 78 banks bid for over €111 billion worth of six-day loans. The latest three-month and sixday loans were introduced to form part of the ECB’s liquidity support programme, which was blown off course by the euro zone’s debt crisis and attention has now turned

to how the ECB will mange its exit strategy from the programme, amidst growing pressure for an extension to the repayment deadline from banks. and without having a detrimental effect on the euro zone’s financial stability.

BUSINESS AGENDA | JUly – sept 2010

BUSINESS AGENDA | july – sept 2010

Tourism

THE VOLCANIC ASH DISRUPTIONS: Sending the economy into a nose dive? The Eyjafjallajökull eruption grounded thousands of flights across Europe, with a powerful ripple effect on the tourism industry. Mariella scicluna takes a look at the effects of the now infamous eruption. The massive volcanic eruption and the resulting ash clouds that rose over three kilometres into the atmosphere caused serious and widespread concerns over aero-engine safety, resulting in an interruption in global air traffic to an extent not seen since 9/11. It was, in fact, the largest breakdown in European civil aviation since World War II. The closure of large portions of European air space hit the hospitality industry hard, along with global travel, trade and business, demonstrating the integral role which air traffic has gained within the basic functions of society and commerce. The impact has not only severely affected travellers and destinations, but also exporters, those reliant on imported products, as well as general production and productivity. According to a report issued by Airbus, the effects of air traffic

closure were first felt on 15 April, when the plume of ash started shifting southwards towards central Europe, resulting in a decline of 27.1 per cent of flights compared with the previous week. Air traffic continued to progressively decline during the following days as the ash cloud continued to move over continental Europe, with cancellations reaching their peak at 80 per cent on 18 April. The report continues to reveal that for the seven day period between the 15 to the 21, more than 100,000 fewer flights crossed over European air space when compared to the previous week, resulting in a 53 per cent fall and affecting an estimated seven million passengers. Flights resumed nearing normal levels on 22 April with over 27,000 flights to and from European airports, yet airlines had backlogged into the subsequent week due to

the high demands of cancelled and the then current itineraries. The estimated losses to the hospitality industry reached a massive €1 billion and the Hotels, Restaurants and Cafes in Europe Association (HOTREC) declared that the losses caused by cancellations and no-shows far outweighed any benefits that could have been gained from stranded travellers who stayed longer than planned in their hotels. In fact, according to a survey conducted by HOTREC, hotels across Europe were faced with millions of cancellations and no-shows, causing occupancy and revenue levels to drop by 10 to 30 per cent and, in some cases, even more. The survey also revealed that HOTREC member associations also share the view that the hospitality industry suffered substantially.

Figures which are already available through the report show that in Prague, the loss on accommodation only stood at a massive €12 million. In Greece, cancellations and no-shows resulted in losses of approximately €20 million while the assessment in Italy showed a loss of around €180 million as a consequence of approximately 1.8 million cancellations in just four days. Only a few countries accounted very limited benefits for certain segments of the hotel market, namely airport hotels and city hotels which accommodated stranded travellers. In the Maltese case scenario, the volcanic ash disruptions resulted in a drop of one per cent in tourist arrivals when compared to last year, according to NSO tourist data for the month of April. German and British tourist arrivals were the worst affected with drops of 33 per cent and six per cent respectively, while incoming tourism form Italy actually registered an increase. On the other hand, total nights increased by five per cent, as inbound tourists stranded in Malta extended their stay which helped to ease the impact on the Maltese

tourism sector. The increase in total nights was mainly due to private accommodation, whereas guest nights in collective accommodation decreased by one per cent. The President of the Malta Hotels and Restaurants Association (MHRA), George Micallef, explained that “the impact of this extraordinary situation affected hotels considerably due to the high amount of cancellations and no-shows of guests, particularly due to the no fly restrictions imposed on Malta’s core markets, namely the UK, Germany, Holland, France and Scandinavia. Even restaurants have reported a loss of business due to cancellation of groups.” Moreover, given that the hotel industry did not benefit much from stranded tourists, due to the ‘relief flights’ organised by Air Malta, MHRA had advised its members to introduce some flexibility in their policies, namely not to charge cancellation fees for no shows and also to retain the contracted rates for any extension of stays. Mr. George Micallef also stated that “the actual impact of the volcanic ash crisis cannot be quantified in financial terms only as no-shows and cancellations cannot be quantified on their own... other variables need to be taken in consideration.” As a counter reaction to this unusual event, the European Parliament had also debated the problems caused by the volcanic ash cloud. MEP Dominique Vlasto (EPP, France) called for coordination at European level of national measures to help all tourism enterprises, which were hit hard by this unexpected crisis. The European Commission together with the Spanish Presidency and Eurocontrol, also proposed a co-ordinated European approach to allow for the gradual reopening of the European airspace while it remains under constant supervision and ensuring safety. The Commission wants to see Pan-European mobility strategies put in place for future major disruptions. It favours focusing efforts on ensuring that if a mode of transport cannot deliver, other transportation modes can quickly replace them in the interest of passengers and avoiding a similar scenario for the hospitality industry. Further to the transport ministers meeting on 4th May, the Commission will work to take forward the immediate and structural actions to respond to the repercussions of the volcanic ash cloud crisis.

BUSINESS AGENDA | JUly – sept 2010

BUSINESS AGENDA | july – sept 2010

A CALL FOR ACTION: DELIVERING THE BENEFITS OF THE SINGLE MARKET In a recent report adopted almost unanimously by the European Parliament, MEP LOUIS GRECH states that the re-launch of the European Single Market must have at its centre the wellbeing of its consumers and citizens. He speaks to the BUSINESS AGENDA about the main findings and recommendations of his ‘Delivering a Single Market to Consumers and Citizens’ report. Speaking about the main issues dealt with in the widely acclaimed report on ‘Delivering a Single Market to Consumers and Citizens’ MEP Grech goes straight to the heart of the matter and states that “this report is a call for action. I am not interested in simply paying lip service to consumers, citizens and SMEs, nor using buzzwords and making empty proposals which ultimately lead to nowhere.” Mr Grech goes on to explain that “the crux of this report is that the Single Market is not an end in itself, but serves as a tool for consumers and citizens in the achievement of their social and economic progress within the Union. The Single Market is there to serve consumers, citizens and SMEs, and not the other way around.” He continues to say that he believes that the European consumer and citizen are the nerve centre of the functioning of a healthy Single Market and, along with businesses, play a significant role in the re-launch of the Single Market. The detailed and innovative report was adopted with an almost unanimous vote last May. Mr Grech had been appointed rapporteur for an own initiative European Parliamentary report that centres around the planned re-launch of the European Single Market, after EU Commission President Barroso had entrusted renowned economist, Mario Monti, with the task of drawing up a report on the topic. The report, entitled 'Delivering a Single Market to Consumers and Citizens', served as the European Parliament's natural response to the project laid out by Barroso. In it, Mr Grech draws attention to the fact that the single market is essential in achieving the goal of a highly competitive social market economy in the context of the EU 2020 Strategy's. However, Mr Grech clearly states that “I strongly believe that it is neither wise nor practical to solely build all strategies around the 2020 Agenda and thus I call for action well ahead of the 2020 deadline.” While the report may certainly be a clear call for immediate and decisive action, it also highlights the fact that the re-launch of the Single Market will not be easy. Research has shown

that the citizen's perception and understanding of the Single Market is either low, non-existent, confused or negative. “In the consumer’s eyes, the Single Market is often seen as a system that is imbued with political horsetrading and vested rights, rather than one that addresses the needs of citizens, consumers and SMEs,” Mr Grech explains. “Such dissatisfaction has been reinforced by the recent economic downturn. In my report, I highlight the fact that the European integration process is not an irreversible process and that the continued existence of the internal market, especially following the financial crisis, should not be taken for granted,” he continues. One essential factor that the report also dwells upon is the fact that the Single Market is key to ensuring that the European integration process is safeguarded. Mr Grech explains that this made it imperative to recognise that the traditional definition of the Single Market - as being solely tied to the economic sphere - needed updating. “A new, holistic and common approach should be applied to the market... one which fully integrates citizens’, consumers' and SMEs' concerns, by giving them a central role in all legislative initiatives in relation to the functioning of the Single Market,” he elaborates. “The Single Market cannot be seen in isolation from other policy areas, particularly health, social and consumer protection, labour law and the environment.” In fact, the Report stresses the need for the creation of a truly ‘green’, single market that recognises that the Internet, e-commerce, research and development, knowledge and innovation must play pivotal roles in the European Market’s future shaping. According to the report, another aspect of the Single Market that is proving to be problematic lies in the fact that the implementation of regulation remains uneven. Mr Grech explains that this is because market networks are not sufficiently interlinked, mainly caused by legal fragmentation across the board. Consequently, businesses and citizens

encounter difficulties in cross border activities, whether related to goods or services. But legal fragmentation is not the only spoke in the wheels when it comes to delivering the benefits of the Single Market to consumers. The infamous ‘red tape’ and bureaucracy that are part and parcel of many EU services is also present within the operations of the Single Market. Mr Grech points out that he also calls for the introduction of an EU wide patent to drive innovation, the removal of obstacles preventing SMEs from accessing public procurement funds so as to boost competitiveness and the introduction of a European private company, so as to guarantee the right of establishment. Mr Grech’s report clearly outlines a possible way forward in delivering the Single Market to citizens and Consumers, proposing a four-stage approach to the challenge. “First and foremost, a ‘health check’ of the current situation must be carried out,” he explains. “This should be followed by a consolidation process, tying up loose ends, so to speak. The next step involves the further improvement of the Single Market, which should finally be followed by the development and implementation of a longer term vision,” he continues. According to the report this process would culminate into a new 'Single Market Act' that would include both legislative and non-legislative initiatives to ensure the integration of consumer protection in all EU policies, the further development of the Services of General (Economic) Interest and the promotion of a low carbon single market. The report also calls for the creation of a Union-wide collective redress mechanism and should be in place by 2012, giving only approximately two years for the overhaul to be carried out. If the deadline is to be met, the European Commission, the European Parliament and national governments need to muster the will and get the ball rolling sooner rather than later. It will undoubtedly be a difficult task, but one that will reap dividends for consumers and the business community alike.

Comments on the Delivering a Single Market to Consumers and Citizens Report: “... a real wakeup call” and “a really important contribution to the next five years of the Commission's work on the Single Market.” - Malcolm Harbour, MEP (Chairman of IMCO Committee)

“I found the proposal in the report for the identification and drawing up of the Top 20 sources for dissatisfaction and frustration, in relation to the Single Market that are experienced by citizens every day, particularly interesting. I therefore support such approach and have instructed my services to act on this proposal.” - Michel Barnier (EU Commissioner for the Internal Market and Services):

“Clear and comprehensive...” - John Dalli (EU Commissioner for Health and Consumer Policy)

“My report goes hand in hand with the Grech Report.” “It has also been extremely helpful as a contribution to my own work on the Single Market.” - Prof. Mario Monti (Ex EU Commissioner and economist)

BUSINESS AGENDA | JUly – sept 2010

BUSINESS AGENDA | july – sept 2010

BUSINESS AGENDA | JUly – sept 2010

interview

“THE BUSINESS ENVIRONMENT IS NOT SME-FRIENDLY ENOUGH”

“It is a self evident truth that Europe cannot compete with some of our competitors in terms of labour costs. Trying to compete with for example - our Asian competitors in terms of cost alone, is a non viable strategy for Europe and it has certainly not been championed by the Commission at any stage.” the current EU funding structure is accessible enough to the business community? Improving SMEs access to EU funds is part of our strategy. Some EU programmes are clearly targeting SMEs. I am thinking for example of the Competitiveness and Innovation Framework Programme where SMEs are a cross-cutting issue. But SMEs should be encouraged to take part in all EU programmes opened to companies. We are aware that participating in European programmes can be a difficult task for small businesses. Therefore we are engaging in special efforts to help them. Just to give an example, in the 7th Framework Programme for Research and Development there is the target to allocate 15 per cent of the budget to SMEs and, more importantly, several actions are taken to reach this goal. Efforts are made to simplify the participation procedures, select topics of interests for SMEs, organise awareness campaigns and offer advice and support.

DR JOANNA DRAKE, the newly appointed Director for the Promotion of Competitiveness of SMEs within the European Commission, speaks to CLAIRE AZZOPARDI about the main issues being faced by Europe’s SMEs and the Commission’s plans to bring about a smarter, more sustainable and inclusive economy. You have recently taken up the post of Director for the Promotion of SMEs Competitiveness - What legacy have you inherited and what strategey have you developed to ensure that you continue to build upon the work that had been carried out by your predecessors? Coming from the smallest Member State in the EU, "Thinking small first" (our mission statement) comes naturally to me. This is the legacy I have inherited in this post and this is what I intend to carry forward into mainstream initiatives in the future. From where I sit, I have a wonderful opportunity to be able to ensure that this mission is everyday transformed into real and direct benefits for 23 million SMEs in the EU. My mission in particular is to keep on encouraging both the institutional set up of the EU and more importantly the national and regional

authorities of all 27 EU Member States to think and act in the interests of their main job and growth generators, namely SMEs.

Are there any particular areas/policies/situations that you think are hindering the competitiveness of Europeans vis-a-vis their competitors on the global level? I would say the "usual suspects": the problematic access to finance and to international markets, the difficulty to innovate and to bring the results of innovation to the market, the lack of entrepreneurial attitude, the managerial and technical skills and, on top of these, the administrative and regulatory burden. In short, the business environment is not SME-friendly enough. For this reason the "Small Business Act" for Europe (SBA) , launched in 2008, addresses the overall policy approach and aims first of all to fully

implement the Think Small First principle in the policy making process at European and national level. We will be able to design rules which do not impact them in a disproportionate way, only if we take SMEs' needs into account from the very beginning.

What action does the European Commission plan to take to ensure that Europe's SMEs are given the required support to make a quick and successful recovery, and once again compete on a level playing field, both within and outside of the EU? The Commission is strongly committed to implementing the ten guiding principles of the Small Business Act as they address all the problems mentioned above and which hamper SMEs growth and competitiveness. Supporting the entrepreneurship culture, designing SME-friendly rules, facilitating SMEs access to

finance and to markets, turning environmental challenges into opportunities and promoting innovation are the main elements of this approach. Many concrete actions have been taken to implement these principles but we need to go further. By the end of this year we will propose a new set of actions in line with "Europe 2020", the new EU ten-year strategy setting priorities for smart, sustainable and inclusive economy, and explain how the Commission will

monitor progress in Member States. Among others, we will focus on measures to simplify the administrative and regulatory environment, to promote the internationalisation of SMEs, to include SMEs in the digital agenda and to involve more SMEs in the "green" markets.

The business community widely agrees that funding plays an essential role in ensuring that SMEs can attain and maintain a good level of competitiveness. Do you think that

The European support networks such as the Enterprise Europe Network play a crucial role in this regard. Another measure which is worth mentioning, even though not directly linked to funding, is the Erasmus for Young Entrepreneurs programme, which allows new entrepreneurs and new SME owners to exchange experiences with entrepreneurs from another member state. This exchange of experiences and knowhow will certainly help the objective of increasing competitiveness.

The European Union has often been 'criticised' for losing its competitiveness. Do you think this is in fact the case, or perhaps it is a situation limited to certain sectors and industries? What are the European Commission's policies and plans in this respect? It is a self evident truth that Europe cannot compete with some of our competitors in terms of labour costs. Trying to compete with - for example - our Asian competitors in terms of cost alone, is a non viable strategy for Europe and it has certainly not been championed by the Commission at any stage. The key to a sustainable and competitive Europe lays elsewhere. It is based in paying to our strengths: innovation, creativity and design as the keys to a high value and sustainable European economy. This applies to all sectors; even though some of them, such as the ones you mention, have had more difficulties in embracing the innovation challenge. Yet even within them we can find poles of excellence such as the new generation of intelligent textiles being currently developed by some companies and the greater incorporation of industrial design into our manufacturing products, just

to mention two examples. And supporting innovation, particularly in SMEs, is an area where the Commission has spent vast amounts of efforts and funds in the last number of years. The main EU Research and Development support programme for European companies (FP7) has a

budget of €58 billion for the period, 2007-2013.

A recent impact assessment carried out by the Malta Business Bureau on the Maternity Leave Directive shows that the proposal to change the mandatory leave period

to 20 weeks could cost the Maltese economy up to €12.4 million per annum, most of which would have to be borne by businesses, at the cost of their competitiveness. What is your opinion on this? Establishing a right balance between work and private life is a legitimate objective and should be seen as an improvement of working conditions. New rules often imply some adaptation costs for businesses, the challenge is to avoid disproportionate burden on the smaller ones. Harmonisation of rules plays an important role too as this helps to place all European players at the same level encouraging fair competition in the internal market.

Do you have any particular message that you would like to convey to European SME's particularly those back in Malta? You are the backbone of the European economy. As such you have a responsibility to innovate, grow, internationalise and help nurture an entrepreneurial mindset in Europe. The EU, Member States' and other authorities will do their utmost to help you thrive, but you must also give your contribution to keep strengthening this legacy and help our economies face future challenges.

BUSINESS AGENDA | july – sept 2010

BUSINESS AGENDA | JUly – sept 2010

Business News MBB Update MEETING WITH PERMANENT REPRESENTATIVE OF MALTA TO THE EU, AMBASSADOR CACHIA-CARUANA - 5th March On the 5th March, outgoing MBB President Mr. George Micallef and CEO Mr. Joe Tanti attended a meeting with Ambassador Cachia-Caruana at the EU Secretariat within the Office of the Prime Minister. Discussions during the meeting encompassed a number of topical issues relevant to MBB’s work. This was the second in pre-agreed series of meetings, resulting from the pledge MBB made with Prime Minister Lawrence Gonzi, to sustain efforts towards improving the two-way consultation process between public authorities and the private sector, in particular by providing stronger backing to Government-led consultation initiatives on EU pipeline aquis. The MBB discussed a number of issues with Ambassador Cachia-

Caruana namely how the Brussels office can be of support on enhanced lobbying with MEPs in committees where there is no Maltese Representation within the context of the new ordinary legislative procedure introduced through the Lisbon Treaty and also had a followup discussion on the best ways to monitor and influence the ongoing legislative processes. A follow up meeting also took place in Brussels on the 27th April, which served to introduce the MBB’s newly elected President Mr. John A. Huber. During the meeting, Mr. Huber, was accompanied by Mr. Joe Tanti and Mr. Omar Cutajar, who had an exchange of views with the Ambassador on the topic of impact assessments.

MEUSAC – EU FUNDING TRAINING WITH MARIA RAUCH – CORINTHIA SAN GoRG - 26th APRIL On the 26th April Ms. Mariella Scicluna, Executive at the MBB attended a Training session on EU Funding with Ms. Maria Rauch, which was organised by MEUSAC at the Corinthia San George. The intensive and interactive one-day training session on the practicalities of EU funding for NGOs was, entitled ‘Getting Through European Funding'. Ms. Maria Rauch is an independent international consultant with extensive experience in EU funding, with particular focus on the fields of Local Development, Employment and Vocational Training. She has advised several organisations including the European Commis-

sion (DG Employment and Social Affairs, DG Education and Culture and DG Information Society) and the Portuguese Labour Ministry. She has delivered training on EU funding in several countries including Portugal, Spain, Germany and Slovakia. Prior to consultancy, she spent 8 years in the Portuguese Labour Ministry, where she was projects coordinator in DGEFP (General Directorate on Employment and Vocational Training). She was also President of the Vocational Training Centre for Electronics (CINEL). Maria also spent 5 years as a training director in a private Portuguese company and has also published extensively.

CONFERENCE – MHRA QUARTER REVIEW RESULTS - 18TH MARCH Mr. Joe Tanti, attended a press conference held on the 18th March at Dolmen Hotel, where the MHRA revealed that the decline in tourism came to cost the industry around €54 million in revenue and €29 million in profit. MHRA president George Micallef said there were signs that the recovery had begun, but cautioned that the situation would not be easy.

He refrained from making any predictions for this year since the sector was still very fragile. According to the BOV/MHRA hotel survey for the fourth quarter of 2009, presented at the event the last year, was very bad for tourism but positive signs started to emerge in the later months. “The decline in tourist arrivals

started in the second half of 2008 and persisted throughout 2009,” Mr. Raphael Aloisio, partner in Deloitte, who conducted the survey said. There was a drop in the decline towards the middle of last year, and some positive signs could be seen in some of the markets towards the last quarter.

BUSINESS BREAKFAST ON ‘MANAGING ICT INVESTMENTS IN CHALLENGING TIMES’ - 20th April On the 20th April, the MBB in collaboration with the IT Business Section of the Malta Chamber, organised a Business Breakfast event to discuss ‘Managing ICT Investments in Challenging Times’. Mr Herbert Rastbichler who is the Managing Director and Vice President for Enterprise Business in Central and Eastern Europe (CEE), addressed the audience at the seminar and stated his view that “ICT enables better business and the perception that investment in ICT is a cost, has throughout the years changed significantly.” The event was also addressed by a panel of specialists in the field of ICT including Mr. Rastbichler, Mr. Andreas Wais (Director Enterprise Services European Emerging Markets for HP), Mr. Claudio Grech (Chairman of the Malta Information Technology Agency) and Mr Keith Fearne (Chairman, Malta Chamber’s IT Business Section). In his presentation, Mr. Rastbichler discussed the changing and increased role that ICT is playing in ensuring that businesses improve efficiency and competitiveness – no matter their size or area of operation. “In the wake of the global economic downturn, the main aim of business is to ensure competitiveness and we have perceived a clear shift in the way ICT is perceived in this regard – from being seen as cost, now ICT is often seen as a major business-enabler,” he said. Mr. Rastbichler continued to explain that in the today’s technological world, businesses are faced with numerous challenges – at present these are namely the economic slowdown and its effect on demand, information explosion and aging applications, all of which demand that business entities and entire

industries respond to these challenges with speed and agility. “Experience has shown that available ICT applications and solutions can in fact provide a more efficient way of operating, enabling a more cost effective methods of operations thus enabling businesses to be more competitive within an industry. In this respect, it must be kept in mind that the willingness and ability to be flexible and to allow room for innovation, is absolutely essential,” he pointed out. “On some occasions, the process of change and adaptation will mean that a business needs to set aside time for a critical – yet constructive – analysis of the way in which it is operating. It is only then that the potential use of ICT applications for greater efficiency and cost effectiveness can be identified and adopted.” In the panel discussion that followed the main presentations made during the seminar, all members of the panel agreed with the points raised by Mr. Rastbichler. Mr Keith Fearne, who acted as moderator, expressed his opinion that despite the challenging economic times, the ICT industry could be pinpointed as one of the few ‘success stories’. “Despite the slowdown, the ICT industry has

managed to maintain its momentum and this is partly due to the significant shift in business mentality, where ICT’s role in achieving efficiency, cost effectiveness and better competitiveness is now being recognised more readily,” he stated. Mr Claudio Grech, Chairman of MITA, also agreed with this and presented the Agency, which he heads, as a prime example of ICT and innovation can reap beneficial results. “We have long advocated investment in systems that give a greater return on investment - in terms of financial gains as well as quality gains. With this mentality and drive, MITA has managed to create and maintain a ‘servicefocus’ and we have also managed to top the European levels of e-Government,” he explained. According to newly appointed MBB president, Mr John A. Huber, “the increasingly important role played by the ICT sector in other economic areas should be given heightened importance. Building on the potential of this industry and seizing the opportunities it presents is essential and the Malta Business Bureau will continue in its efforts to ensure that opportunities for discussion and knowledge transfer are provided to the local business community.”

BUSINESS AGENDA | july – sept 2010

MBB Update

OFFICIAL OPENING OF PUBLIC SECTOR EFFICIENCY 4 PRIVATE SECTOR FOUNDATION FOR HUMAN th EFFECTIVENESS’ BREAKFAST SEMINAR - 18 march RESOURCES DEVELOPMENT OFFICES AT CASA LEONE - 30th april turmoil has led to a situation where Ms. Amanda Sciortino, Executive Speakers at the event included Dr. at the MBB, attended a Breakfast Seminar organised by the Malta Institute of Management, entitled ‘Public Sector Efficiency 4 Private Sector Effectiveness’ , held on the 18th March at the Corinthia San Gorg, St. Julians. The business seminar aimed to present a forum for discussion to review, from various perspectives, the role of an ever changing public sector in the face of new economic challenges. The global economic

our public sector organisations are facing new challenges and tasks while being staffed with people skilled to achieve old ones. Pressures from tax payers and from politicians determined to steer away the economy from collapse, are forcing national budget cuts across various public organisations. Simultaneously the private sector and citizens are becoming increasingly active and vocal, insisting that lower costs are accompanied by more efficient public services.

Edward Warrington (Department of Public Policy – Head of Department Faculty of Economics, Management & Accountancy), and Mr. Victor Galea, (Managing Director, V J Salomone Marketing Ltd). A panel was also present at the event, including Hon. Dr. Chris Said (Parliamentary Secretary for Public Dialogue and Information), Hon. Dr. Helena Dalli (Shadow Minister for Public Service), Mr. Matthew Gatt (CEO- MITA) and Mr. David Spiteri Gingell (Managing Consultant, DSG Consultancy).

BUSINESS MEETS MEPS SECOND EDITION WITH PROF. EDWARD SCICLUNA, MEP - 7th may In the second Business Meets MEPs event, Prof. Edward Scicluna MEP stated that it is better and not necessarily more regulation that will facilitate economic recovery across Europe. Prof. Scicluna was quizzed about numerous issues relating to Europe’s economic recovery during the event, held at the Hotel Phoenicia on the 7th May, and entitled ‘Managing Economic Recovery: Striking the Balance between Regulation and Market Flexibility’. “In response to the global economic crisis, the European Union has turned to the introduction of new and more stringent regulation – I think this is an understandable reaction, but it is essential that the quality of this regulation is given priority. We need better regulation, that does not necessarily mean more regulation,” he stated in response to questions posed by interviewer, DIVE News Portal Editor, Vanessa Macdonald.

be borne by businesses, and ultimately the consumer.” Another issue that was discussed during the event was the EU’s proposal to introduce the new Global Financial Transaction Tax, where the proceeds would be used to set up a fund for any future economic emergencies or bailouts if ever these become a necessity in the future. The current economic crisis being faced by Greece, the EU’s response to its plight and the impact it may have on euro zone Member States was also discussed during the event. According to Prof. Scicluna, “the eco-

nomic situation in Greece will raise a number of questions, both economic and political.” He continued to explain that the Greek crisis has brought the challenges and obligations of being a euro zone member state to the fore, saying that “member states were not left with much of a choice other than to bail Greece out.”

The meeting served as an exchange of views on the con-

Joe Gerada, Chief Executive Officer of the Foundation said that “the Foundation has to look to the future through challenges of globalisation and demographic change, which have to be taken seriously in order to ensure that Malta remains competitive and the standards of living are kept high.” In attendance were leaders from the industry and HR professionals, and during the event the FHRD and Koperattivi Malta signed a co-operation agreement for closer collaboration between the two organisations.

BEST PRACTICES WORKSHOPS FOR TOURISM SMEs - 3rd MAy On Monday 3rd May, MHRA and MBB organised a workshop for small businesses operating within the Hotel and Restaurant sector at Corinthia Palace Hotel in Attard. Mr Aidan Harte - Managing Director of Optimum Results Ireland

MBB PRESENTS REPORT TO MALTESE GOVERNMENT - 15th june

This study was conducted in order to gauge the implications that would emanate from the introduction of the EU legislative proposal regarding the extension of Maternity and Paternity Leave for the Maltese Economy and private business in Malta.

The MBB and FHRD share ‘Casa Leone’ as offices, where the MBB occupies the first floor while FHRD is operating from the ground floor. The official opening of MBB offices was inaugurated by Hon. Tonio Fenech on the 17th February 2010.

He voiced the opinion that the situation has also raised debate on the lack of efficiency of the euro zone’s Stability and Growth Pact. He stated that serious debate and action needs to be held sooner rather than later, if a successful future for the single currency is to be secured.

When discussing the way to economic recovery across Europe, Prof. Scicluna explained that a number of key issues needed to be taken into consideration, including the potentially “enormous compliance costs caused by the adoption of new regulations which would

On the 15th June, the MBB officially presented a detailed Impact Assessment Report on ‘The EU Legislative Proposals concerning the extension of Maternity and Paternity Leave’ to Dr. Chris Said Parliamentary Secretary for Consumers, Fair Competition, Local Councils and Public Dialogue.

Dr. Louis Galea was the guest of honour at the official opening of Casa Leone as the offices of The Foundation for Human Resources Development (FHRD) which took place on the 30th April. The FHRD “is an organisation which supports industry with its people management needs while at the same time is focused on the changing scenario of businesses and its human resources and brings to the forefront those issues that cutting edge for competition,” said Louis Galea during the inauguration. He said that he recalls with satisfaction the days when he was Minister for Social Policy and responsible for the setting up of the Employment and Training Corporation and the Foundation for Human Resources Development in 1990.

tents of the report, and the delegation led by MBB President John A. Huber, consisted of Mr. Joe Tanti, CEO Malta Business Bureau, Ms. Helga Ellul, President Malta Chamber, Mr. George Micallef, President MHRA, Mr. Kevin J. Borg and Ing. Ray Muscat Director Generals Malta Chamber, and Mr. George Schembri, CEO MHRA. The report seeks to provide an estimate of the costs of the possible introduction of more extensive EU legislative proposals in the field of maternity and paternity leave. It clearly shows that the burden on the economy, particularly on Maltese businesses, of the proposed extension of maternity leave will strongly tarnish Malta’s

competitiveness and could be very damaging to local SMEs. The report also demonstrates that the possible economic benefits of these proposed legislative changes on the Maltese economy to be relatively marginal, given that there is already a significant amount of maternity leave being taken up, while the costs tend to increase per week of additional maternity leave granted, in an exponential manner. Furthermore, whereas the benefits could only be estimated with a very high degree of uncertainty, the direct costs in terms of loss of output is statistically quantified. For a copy of the Impact Assessment Report please log on to our website: www.mbb.org.mt

and an expert in the area of SMEs, conducted two workshop sessions. During the day there were two workshops; one for restaurateurs in the morning and another for managers of 3 star hotels in the afternoon.

EUROCHAMBRES EU2020 MEETING - 3rd MAY On the 3rd May, Permanent Delegate of the MBB in Brussels, Mr. Omar Cutajar attended the Europe 2020 Working Meeting of EuroChambres. During the meeting the conclusions of the Spring Council Meeting were elaborated estab-

lishing the implications for EuroChambres. The event was held to gauge the total involvement of the National Chambers of Commerce within their respective National Reform programmes as stated by the 2020 Strategy.

'GO FOR GROWTH’ EVENT AT EUROPEAN PARLIAMENT - 5th MAY Mr. Omar Cutajar, Permanent delegate in Brussels, attended an event at the European Parliament on 5th May. At the event President Thumann presented to MEPs and guests the priorities of the European business community, namely the 'Go for Growth' strategy. The Parliament is the place of debate and of compromise, and European

companies welcome this. But with the Parliament’s growing power and influence comes also growing responsibility. In the months to come, the EP will have to take key decisions with great impact on European companies and the economy as a whole, as stated by President Thumann at the event.

BUSINESS AGENDA | JUly – sept 2010

BUSINESS AGENDA | july – sept 2010

BUSINESS AGENDA | JUly – sept 2010

MBB Update

MHRA QUARTERLY REVIEW – THE RECOVERY CONTInUES - 21st JUNE On Monday 21st June, the MHRA released the BOV MHRA Hotel Survey, which was conducted by Deloitte for the first quarter of 2010. When presenting the results, MHRA President, Mr George Micallef confirmed that: “The recovery trends registered in the second half of 2009 have continued into this year and the tourism industry has continued to show consistent signs that it is steadily managing to claw back some of the lost ground.” Without playing down the significance of the improving trends, Mr Micallef went on to caution against benchmarking our performance solely against the results for 2009, which was one of the worst years in recent history for the tourism industry. The survey results confirm that the 5-star category was the primary beneficiary from the increase in guest nights, which enabled it to claw back approximately 50 per

UPCOMING EVENT – ‘BUSINESS MEETS MEPS’ 3rd SESSION – October The third in a series of events entitled ‘Business Meets MEPs’ organised by the MBB, is set to take place in October. The schedule of regular meetings between Maltese MEPs and the local business community in the shape of an open forum of Q&As and an open-floor debate will see the participation of Hon. Louis Grech MEP, who will be interviewed by a local journalist. These meetings are open to the members of the Malta Chamber of Commerce, Enterprise and Industry and the Malta Hotels and Restaurants Association, and to interested business entities and management staff who would like to have an exchange of views with Hon. Grech on: ‘Relaunch of the Single Market and what it means for business’.

If you would like to attend the event, please register your place on info@mbb.org.mt or call on 21251719.

cent of the drop in occupancy registered in 2009. The 4 and 3 star categories registered comparable occupancy levels to 2009 and failed to make up for the volume losses registered last year. The reported 17.6 per cent increase in tourist expenditure did not result in significant improvements in room rates. Whereas the 3 and 4 star categories registered rate improvements of 10 per cent and 9 per cent respectively, rates in 5 star hotels decreased by 5 per cent. Commenting on the correlation between tourist expenditure and

Average Achieved Room Rate, Mr Raphael Aloisio - Advisory Partner at Deloitte Malta, made the point that: “Although tourist expenditure levels increased significantly, our analysis shows that in line with changing tourist preferences, an increasing percentage of total spend is flowing away from hotels to other operators in the tourism sector. Hotels must clearly take heed of these new realities and find effective ways of realigning their food and beverage operating strategies with the increased propensity for tourists, especially in the 5-star

category, to seek alternative eating venues outside the hotel.” In his concluding remarks Mr Micallef explained that: “Notwithstanding the generally improving trends being registered in the key tourism performance indicators, it is becoming increasingly evident that rate pressure, loss of food and beverage sales and higher energy costs are making it difficult for hoteliers in the 4 and 5 star category to make any immediate significant inroads towards recovering performance levels registered in 2007 and 2008.”

However Mr Micallef remains confident that if all stakeholders continue to pull in the same direction and resist the temptation of ‘dropping’ rates unnecessarily, the industry can look forward to securing more tangible gains, and called upon Government to ensure that the tourism industry is not burdened with any further government induced costs, as this will not only render the tourism industry less competitive, but will also jeopardize the sustainability of the entire industry.

INFORMATION AND COMMUNICATION TECHNOLGIES ACT AS A “BUSINESS ENABLER” At a time when many European economies are focusing their attention on paving the way for economic recovery, Information & Communication Technologies have proven to be one way in which businesses can secure efficiency. The BUSINESS AGENDA speaks to HERBERT RATSTBICHLER, Managing Director, Enterprise Business for Central and Eastern Europe at Hewlett-Packard about the role that ICT plays in securing business success.

BUSINESS AGENDA | july – sept 2010

BUSINESS AGENDA | JUly – sept 2010

AWARENESS In today’s economic reality businesses across all industries and sectors are faced with numerous challenges. The economic crisis that ‘shook’ the world in recent months has had a strong suppressive effect on demand, while competition has continued to grow ever stronger in most sectors. Nevertheless, in a recent conference organised by the Malta Business Bureau, Herbert Rastbichler emphasised his belief that continued investment in ICT should be given priority by the business community. “The key point here is that ICT is a key enabler for business and not a cost factor anymore. Companies who understand this can use ICT to differentiate themselves from the competition, gain more customer insight, can greatly reduce the cost of many processes and therefore will stay ahead of the competition,” he explains. “Many ICT related projects can have a very short Return on Investment if set up and executed well and this means even in delicate economic situations this can provide significant benefits very quickly.” While this reasoning certainly makes sense, many businesses question the timing of such investments, maintaining that it may be wiser to wait for a stronger recovery before making a move to upgrade their current technologies. However, Mr Rastbichler believes that the strong competition that is prevalent on most industries makes complacency and procrastination a risky approach. “As is the norm in any competitive situation those who are smarter, faster and more prepared, win. When the economy picks up, it is critical to be ready and able to outpace the competition, rather than simply start on the process of catching up with those who worked to stay ahead,” he reasons. “The benefits could be huge because readiness for growth, play a significant role when it comes to securing economic recovery and business success and growth.” Mr Rastbichler’s calls for proactivity seem to be in line with the action taken by the Maltese business community. In fact, despite the undeniable negative impact that the economic downturn had on many industries across Europe, the ICT industry in Malta fared relatively well and weathered the storm efficiently. Mr Rastbichler believes that this may be due to the fact that ICT provides support to both businesses and consumers in many areas of a country’s basic infrastructure. “Communication is a very logical and basic human desire, for both individuals as well for companies. For businesses, communication is essential if they are to keep a finger on the pulse of their customers’ needs and wants as well as their suppliers operations,” he explains. He continues to say that the real impact of the economic slowdown on the ICT industry was a small dip of speed of planned investments related to the overall growth of businesses. “Speed of innovation did not, and will not, change, as this is a differentiating factor. Malta itself is weathering the economic storm quite well due to its engagement

in sustainable businesses, that are less dependent on simple production lines.” As the Managing Director of Enterprise Business for Central and Eastern Europe at Hewlett-Packard, Mr Rastbichler can draw on years of experience in one of the world’s most successful ICT companies. Hewlett-Packard has a vast wealth of experience that it can draw from when it comes to ensuring optimum productivity, efficiency and the ability to respond to developing trends in the market, even in a climate of suppressed demand. “At Hewlett-Packard we have managed to secure increased flexibility to decide where and how we spend our money. My advice to businesses, be it a small startup company or a well established enterprise, is always the same understand where you spend your money,” Mr Rastbichler states. Diligence seems to be the name of

“At Hewlett-Packard we have managed to secure increased flexibility to decide where and how we spend our money. My advice to businesses, be it a small startup company or a well established enterprise, is always the same - understand where you spend your money.” the game when it comes to ensuring successful ICT investments and Mr Rastbichler warns businesses to “double-check on every cent you spend, question whether the investment adds any value, whether it allows better and faster customer service. ICT can help to understand all data available within any company but question established routines and processes!” According to Mr Rastbichler, another essential exercise is researching what is available in the market and encouraging change and innovation, before making a decision on where and how to invest in the company’s ICT infrastructure. “Find out if there are alternatives available and create an environment of change so that everybody within the company can contribute with their own ideas.” “And last, but not least – decide quickly and execute well,” he advises. “ICT supports all the business processes and enables quicker execution and more coordination, which results in a much better customer experience, whilst reducing internal work or the duplication of work. Customers appreciate efficiency and are likely to be more loyal to your brand as they prefer to invest in a company that is constantly and consistently innovating and taking the lead within a given market.”

BAS Ltd offers its customers flexible road Excelsior introduces the freight services customized to their needs new al fresco Tiki Grill Offering services in air, land and sea transportation BAS Limited has established a firm footing in the transport of cargo. The company has the advantage of being able to offer specialised and tailored logistics solutions to its local and international customers whilst reliability, flexibility and innovation allows it to deliver services of the highest quality ensuring competitive and satisfied customers. BAS Limited’s road freight services offers its customers transport solutions that are tailored to meet

their requirements, high flexibility to suit the customer’s specific needs, outstanding quality and reliability to ensure that any consignment arrives on time and in good condition, a wide choice of transport equipment giving the flexibility and options the customer might need to meet one’s requests and a broad geographical reach.

vice is a customized deferred door to door service which adds Malta to the Airfreight Plus network. BAS Limited’s offices are at 25, Air Cargo House, Triq Ganni Vassallo, Luqa LQA 1511 and can be contacted on tel: 2558 4800; e-mail info@basmalta.com

BAS Limited, who has always offered its customers a fully integrated logistics solution is now launching yet another economical product – WINGLESS. This ser-

The Grand Hotel Excelsior’s new Tiki Grill which, as its name suggests, serves up a menu that offers 7 sizzling grills including fresh fish, beef rib eye steak, Souvlaki chicken skewers in a traditional Greek marinade, traditional Turkish lamb kebabs, tuna and swordfish steaks marinated with aromatic seasoning and spices with Texas-style new potatoes, Maltese pepperonata with green peppers, tomatoes, olives and capers. The new Tiki Grill is to be found next to the Excelsior’s outdoor pool and the Marxamxett Harbour, for those diners who seek a venue

that favours al fresco menu variety during those long summer evenings. There’s no need to dress up for these nightly occasions. Now that summer has started, the dress code is simply casual in anticipation of some serious wining and dining in the cool of the evening air. As an Excelsior spokesman stated, the dress code for Tiki Grill may be casual but the cuisine and service remains 5-star. Just across from the Tiki Grill next to the marina, the Excelsior’s very own Yacht Club is open for lunch and dinner with pizza and pasta and other light dishes. The Tiki Grill is open from 8pm till late.

For additional information, contact Luisa Allen on 2125 0520; e-mail info@excelsior.com.mt; or visit: www.excelsior.com.mt Looking across the Marsamxett Harbour, al fresco dining at the Excelsior’s new Tiki Grill.

RICHMOND FOUNDATION For Community Mental Health Richmond Foundation, in collaboration with Mira Motor Sales Ltd, have put together a car lottery with the aim of raising funds for the former’s various programmes and services that it provides, promoting mental health amongst Maltese society and supporting persons in the community who experience mental health difficulties. Richmond Foundation is a registered

Non-Governmental Organisation (Charity Registration No VO/0017). The Prize of the lottery is a Chevy Spark car. The draw will take place on 31st July 2010. Tickets can be purchased from various local stationeries at €0.50 for a single ticket, in packets of ten for €5.00 or packets of twenty for €10.00.

For more information please contact Richmond Foundation, 424, St. Joseph High Str. St. Venera, on Tel:2122 4580/2148 2336 or call 24/7 dominic@richmond.org.mt 9984 4012; visit: www.richmond. org.mt /www.chevrolet.com.mt

BUSINESS AGENDA | july – sept 2010

AWARENESS

EU FUNDING OPPORTUNITIES

UNDERSTANDING LIGHT Today, all architects, interior designers and other related design professionals need to know at least the basics about good lighting design. Nothing you learn will have more impact on your design than lighting, because illumination is the “straw that stirs the drink”. With a good lighting design you will give every single object or space its appearance, tone and impression through how you light it. Lighting design needs to be brought in as an integral design

element, along with all the other design components from the beginning. The lighting budget, too, should be comparable to the other main design elements of the project. Lighting is not just an option; it can make or break your project. There are many architects, interior designers and contractors who will say they know all about lighting design but have had little training, the client is often left with poor lighting that works against the overall feeling that is desired.

All the new technologies of the past decade have increased lighting’s importance. Who needed lighting expertise when the only thing available was a ceiling socket and a light bulb? A huge step has been made in fluorescent lighting with energy considerations and construction codes. Another different lighting technology LED (Light Emitting Diode) is now available and present; a viable and greener option. Light is an artistic medium, what people need to understand is how

BUSINESS AGENDA | JUly – sept 2010

you can paint with illumination, by using various techniques to add depth, dimension and drama, while at the same time humanizing your

environments. You have to remember that you are not only lighting art and architecture, but people within spaces as well.

For further information visit Light Design Solutions at Emmanuel Schembri Street, Birkirkara BKR 1810 or call them on 2149 6843. You can also send an email to info@lds.com.mt or visit www.lds.com.mt

GreenPak

Pioneer in the Recycling of Packaging Waste GreenPak, established in 2004 is the pioneer in the recycling of packaging waste under the concept of producer responsibility by the Maltese business community. The scheme was introduced in response to the EU Packaging Directive and subsequent Maltese legislation (LN277 of 2006). This legislation stipulates that producers of packaging waste (i.e any entity introducing packaging into the Maltese market via its business activities) have the legal obligation to recover and recycle said packaging. GreenPak takes over this legal obligation of any company that signs up to its MEPA approved scheme. From its humble beginnings, with only 10 signed-up members, GreenPak has worked tirelessly to achieve outstanding results year after year and along the way, earned the respect of the business community. GreenPak is today endorsed and fully supported by the Malta Chamber of Commerce, Enterprise and Industry and is also a member of the international organisation ProEurope, the umbrella organisation which represents the national recovery schemes of 33 countries. GreenPak has now evolved into a Cooperative Society with the election of its first Management Committee formed by respected business people representing various sectors. The individuals sitting on the committee are Mr Norman Aquilina, Mr Martin Borg, Mr Gejtu Buttigieg, Mr Andrew Cutugno, Mr Pierre Fava, Mr Victor Galea, Mr Edward von Brockdorff and Mr Denis Zammit Cutajar. Ing Mario Schembri was appointed the CEO to run the GreenPak scheme. GreenPak, through its hard work, experience and unity of members has always retained its original objective that of providing legal compliance at the least possible cost. If you are interested in joining GreenPak please contact the GreenPak Team on telephone 2166 0233; e-mail: info@greenpak.com or visit: www.greenpak.com.mt

Eco-Innovation 2010 call is now open An initiative to further market penetration, overcome barriers and turn products and processes into Europe’s Eco-Innovative future. This call supports projects in different sectors, which aim at reducing or preventing environmental impacts, and priorities have been set up according to its impact on the environment. These are divided into: recycling materials, building and construction sector, food and drink, and greening business and ‘smart’ purchasing. Applications for SMEs are particularly encouraged! Projects must be innovative and present clear and substantial benefits in support of Europe’s environmental policies. Deadline for submission of applications is 9th September, 17:00 (Brussels local time). For more information contact the National CIP contact point on info@cipmalta.com or 2149 7970

ERDF Energy Grant Scheme An opportunity for businesses willing to invest in solutions that reduce the impact of energy costs on their business. The enterprise may be awarded 50% refund on their approved projects. Investments may be made in energy saving solutions and alternative energy technologies. Projects may not exceed a total value of €200,000. This incentive will remain effective until 31st December 2013 or until funds are exhausted.

For more information contact Malta Enterprise on energy@maltaenterprise.com or 2542 2020

BUSINESS AGENDA | july – sept 2010

BUSINESS AGENDA | JUly – sept 2010

case study

GOING FROM STRENGTH TO STRENGTH The Island Hotels Group Holdings started out over 20 years ago as a modest operation, but in just over 2 decades it has grown to one of the largest and most successful companies in Malta. CLAIRE AZZOPARDI speaks to WINSTON J ZAHRA, CEO of the Group, about its growth and success. Within the first few minutes of meeting Winston J Zahra, it is evident that he is a very down to earth, practical and open man, with an obvious passion for developing and delivering the very best in quality and service. The son of one of Malta’s leading entrepreneurs, Winston J Zahra was appointed CEO of the family business that had started out just over twenty years ago with a modest, albeit hugely successful, establishment in Malta’s tourism mecca, Bu©ibba. “The three pillars which my father based the company on originally were those of offering an excellent product at good value for money delivered by friendly staff,” Mr Zahra begins as he talks about the early years of Island Hotels Group. “The basis of this model is still very much in place, although we have tweaked how we achieve them over time to ensure that we continue to meet the demands of our clients as those changed over the years.” As Mr Zahra points out, the hospitality industry has become increasingly dynamic and it is absolutely essential that operators within the

Concept images of Óal Fer˙ designed by make architects of the UK

“As a Group we believe that developing in an environmentally sustainable way helps to protect the industry in the long term, and I do not think there has been enough effort in our industry in this area.”

industry keep in touch with what guests are looking for and adjust accordingly. “I believe that the core family values that gel our team together and that guide our decision making process, are ultimately the main reason for the achievements of the whole team over the years,” Mr Zahra says. While IHGH was based on the more traditional family-run business model, it recently made the transition to being a public corporate entity with a very successful performance on the bond and equity market. Mr Zahra explains that the vision to take the company public was there for some time. “It was more a question of when rather than if we would list the equity of the company on the local stock exchange.” He continues to explain that the reasons for this transition were threefold. “Primarily our partner did not share our vision for the growth of the company. He was keen to sell his equity and the sale of his equity on the local stock exchange was on of the options available,” he says. “Secondly, we wanted to transition from the traditional family model to a more corporate model

“I believe that the core family values that gel our team together and that guide our decision making process, are ultimately the main reason for the achievements of the whole team over the years.”

The IHGH Executive Team

and heighten corporate governance within the Group,” he continues. “Thirdly we wanted to open up the opportunities of funding through more effective use of the market.” The Zahra family’s hands-on involvement in the running of the Group was maintained, with Winston Zahra Snr taking over as Chairman, while Mr Zahra retained the role of CEO. However, Mr Zahra explains that the Group has a much more effective board made up of five other non executive directors, a move which has helped add tremendous value to board level discussions and will definitely help the development of the Group in the years ahead. In fact, the Group has a stake in a number of very prestigious operations within the local hospitality industry and has quite recently acquired the Óal Fer˙ site, which had fallen into ruin some years ago. Mr Zahra explains that together with partners Mayfair Overseas, IHGH plan to develop something very different from a design, environmental and business model perspective. “The concept is very different to anything seen locally so far, and

involves the development of less than 20 per cent of the existing site, low lying buildings not exceeding two stories at the highest point, 65 thousand square metres of landscaping and an environmental approach where we aim to get as close as possible to carbon neutrality,” Mr Zahra reveals. While the Óal Fer˙ project is certainly taking up a great deal of the IHGH’s energy, this in no way means that other operations are put on the backburner and the Group has a number of other projects in the pipeline. Mr Zahra says that the Group is also working on plans to rebrand and expand Island Caterers and refurbish the Radisson Blu in St Julian’s. He also reveals that within the next three years, the magnificent Coastline Hotel will be redeveloped and repositioned, following an excellent run of 16 years in operation. “Concurrently we continue to look at other opportunities which continually arise, both on the local and international market,” he says. “The long term plans are to expand the company out of the Island when the time is right for us to do this.”

IHGH’s drive and quality service was also recognised recently when it was nominated as one of fifteen country representatives for the prestigious European Business awards. “The nomination is a credit to the whole team and our nomination was mainly due to the growth of the company over such a short time, the overall business model as well as the strong performance we registered during the recession.” But the European Business Awards are not the only awards that the company has been nominated for. Mr Zahra explains that IHGH has always invested developing environmentally sustainable products, resulting in a United Nations Gold star for environmental initiatives for the Radisson SAS Golden Sands. The Radisson Blu in St. Julian’s had also received international recognition from the International Hotels and Restaurant Association. “As a Group we believe that developing in an environmentally sustainable way helps to protect the industry in the long term, and I do not think there has been enough effort in our industry in this area,” Mr Zahra states. “This situation has improved in recent years with various EU subsidies for environmentally-friendly initiatives being made available, however I think the main area that needs improvement is the education process of what can be done, coupled with continued support on

funding initiatives such as one that have been made available in recent years,” he says. While investing in environmentally friendly initiatives and operational procedures is certainly essential for the sustainability of the hospitality industry, the recent economic crises has given rise to many other concerns that have commanded the attention of all operators. The Maltese tourism industry, like all other across the European Union, were hard hit by dwindling tourist arrivals, but recent performance indicators show a marked improvement when compared to the same period last year. Mr Zahra agrees that while the industry is showing signs of revival, “the hotel industry still has a long way to go for it to be in a situation of financial stability.” He explains that even with significant increases in arrivals this year, hotels will not improve their performance as the additional revenues “are being consumed by the increase in costs, most especially the electricity tariffs. While the summer season definitely looks much stronger, we do have to work much harder though due to the cost base pressures.” In fact, there have been many calls for a stop to ‘government induced costs’ that can heavily impact the competitiveness of the

local hospitality industry. Mr Zahra strongly believes that the current biggest challenge being faced by the tourism and hospitality industry is the constant increase in government induced costs. “Some of which can be avoided with better thought and more efficiency from various public entities,” he states. “Unfortunately we fall below international competitors when it comes to the rates we charge in our hotels. While our cost base is very similar to that of our European counterparts, the rates charged in hotels are still significantly lower.” While this may be the case, Mr Zahra feels that the country is doing well when it comes to promoting itself as a destination, saying that “marketing efforts are much stronger today... there is more direction and a much clearer vision of where we want to position the island.” However, he goes on to say that much more needs to be done on branding the island more clearly and more holistically. “There needs to be a determined effort to create one clear image of our islands in the eyes of people across the markets that we do business with. This not only applies for tourism but for all other industries,” he concludes.

BUSINESS AGENDA | july – sept 2010

BLUE CHAMBER NETWORK TO TACKLE MARITIME ISSUES By Omar Cutajar, Malta Business Bureau’s Permanent Representative in Brussels A new network of Chambers of Commerce that will be focusing on EU maritime issues was recently launched a few weeks ago. The newly inaugurated Blue Chamber Network consists of an informal grouping of several Chambers of Commerce which, due to the economic activities of their membership base or their location in maritime ports, inevitably exercise a key role in the development and implementation of the EU’s integrated maritime policy. The Blue Chamber Network was initially proposed as a joint project of IHK Nord – the Association of Northern German Chambers of Commerce and the UHCCI – the Union of Greek Chambers of Commerce in 2009. The UHCCI President George Kassimatis proposed the creation of a network of maritime policy experts from European Chambers of Commerce at a Presidency meeting of Eurochambres (the European association of national Chambers of Commerce) in February 2009. This proposal came at a very timely moment in the wake of the Commission’s launch of the Integrated Maritime Policy – an exercise spearheaded by former Maltese Commissioner Joe Borg. The Malta Chamber of Commerce, Enterprise and Industry is a founding member of the Blue Chamber Network, with Mr. Stefano Mallia, the vice-President of the

Malta Chamber, coordinating Malta’s participation in the network. As Mr. Mallia explains, “it was of vital interest for Malta not only to participate in such an initiative but also to be there at the very start of the discussions on the objectives, purposes and activities to be pursued by the Blue Chamber Network.” Why a Blue Chamber Network? There are multiple reasons spurring the creation of the Blue Chamber Network. As the Head of the IHK Nord Representation office in Brussels, Dr. Mary Papaschinopoulou explains, “the Blue Chamber Network is an attempt at better structuring and coordinating the European private sector’s response and action to the various ongoing and novel EU legislative and regulatory initiatives affecting directly or indirectly the maritime industry.” A cursory look at the Commission’s Work Programme for 2010/2011 substantially confirms Dr. Papaschinopoulou’s opinion. No less than two regulations dealing with ship and port facilities, a proposal for a recast of the marine equipment directive besides a new EU policy paper on “blue growth” outlining policy support actions for the EU maritime industry are announced in the Commission’s Work Programme. Furthermore, a package on a social maritime agenda complements these regulatory initiatives.

The added value The list of EU legislation and pipeline aquis regulating the maritime industry is substantial. It is therefore self-evident that the relevance of EU maritime policy for business stakeholders, not least Chambers of Commerce is on an incremental momentum. “Local Chambers of Commerce in all major port cities and coastal regions have always been deeply involved in maritime policy issues, since 22 out of 27 EU member-states are connected to the sea and many heavily depend on the maritime sector,” comments Dr. Papaschinopoulou. In the specific case of Malta, the institutional role of the Malta Chamber in providing advice to Government authorities on the economic development of maritime-related industries in particular in the areas of ports infrastructure development, enhanced connectivity to the main commercial sea-routes and market surveillance at the maritime border are long-standing, undisputed contributions in the field of national maritime policy. In this regard, Stefano Mallia reiterates that “as a country and as a Chamber, we have a clear strategic interest in being active in the area of maritime policy with the maritime economy being so critical for the national wellbeing as well as for a large segment of the Malta Chamber’s membership.”

As an informal structure, the Blue Chamber Network provides a lightweight framework endowed with the potential heavyweight credibility and effectiveness to influence the EU decision-making process within the ambit of the ongoing legislative and policy plans further articulating the integrated maritime policy for Europe. Indeed, as Dr. Papaschinopoulou recalls, “the Blue Chamber Network is an innovative Chamber project with the potential to bring added value to its members in terms of maritime know-how, profile and visibility both at the national-level as well as in Brussels in establishing high-level contacts within the EU institutions and work on securing EU funding for any project initiatives facilitating the maritime industry.” To this end, the Blue Chamber Network intends to make the best possible use of its ‘virtual space’ by

sharing information, project ideas and advocacy work being conducted with the EU institutions. The drafting and circulation to key contacts of position papers on maritime issues considered to be of vital common interest will be a top operational priority of the network over the coming months. The ability to pool resources creating a critical mass of broad, yet also specialized knowledge, on maritime issues is the key advantage that the Blue Chamber Network affords to its diverse membership. In her inaugural speech at the launch workshop in March, Commissioner Damanaki did not shy away from commending the collaborative nature of this initiative in the creation of the first-ever cross-cutting European maritime network. In the words of Commission Damanaki, “the Blue Chamber initiative is very promising, as it brings together small and mediumsized enterprises – the backbone of our economy – with a focus on maritime policy.” The same perspective is shared by Mr. Mallia, who recognises the invaluable opportunity that participation in the Blue Chamber Network permits in pro-actively shaping EU maritime policy at an early stage. “As EU members, we need to take advantage of European platforms, and now the Blue Chamber Network allows us to promote maritime policy at an EU-level whilst taking joint action with other European Chamber organizations to safeguard the national perspective, and to inform the EU maritime policy-formulation process with the Maltese business viewpoint.” It is this spirit of foresight that inspired the Malta Chamber to propose the hosting of the second meeting of the Blue Chamber Network in Malta later this autumn, when the work programme of the network is expected to be discussed, elaborated and agreed by the participating partners of the network. It will then be time for the Blue Chamber Network to set sail with a series of maritime-related policy actions and activities.

BUSINESS AGENDA | JUly – sept 2010

BUSINESS AGENDA | july – sept 2010