Business agenda issue 15 by Malta Business Bureau

THIS ISSUE

business An overview of the results of the MBB-MISCO survey on flexible work arrangements in the private sector.

page 15

Issue 15 | july - september 2013

business agenda

NEWSPAPER POST Tourism

The flourishing niche of boutique accommodation in Malta.

page 12

THE Official Business publication of the Malta business Bureau

Making access to finance a priority environment A focus on the potential of adopting water-saving measures in the tourism and hospitality sector.

page 20

interview BUSINESSEUROPE Director General Markus J. Beyrer discusses the challenging tasks which lie ahead, in view of the current economic climate.

page 31

eu affairs A discussion on the proposed EU framework on data protection and how it is expected to increase burdens on SMEs.

page 36

A recent study by the Malta Business Bureau (MBB) looks into the financing options available on the local credit market for SMEs. Moving on from traditional bank financing has been recognised as one of the main challenges encountered by all businesses in the EU, and it appears that Maltese enterprises are no exception. This fact has led the MBB to undertake an assessment study in order to identify market gaps in access to finance and assess the feasibility of new financing instruments available in other EU countries, that can address the credit needs of Maltese business.

MBB President George Vella tells Business Agenda that the results of this study indicate that a lack of diversified financial products is limiting the development of SMEs in Malta. He states that these results have made it clear that Malta needs to diversify its financing options for SMEs, which can also encourage the development of new sectors. The study found that 72 per cent of SMEs that are in the start-up phase are using ‘traditional’ lending products, such as loans and overdrafts, which are not necessarily the best option at this stage. Mr Vella recommends that different funding options should be

made available to enterprises that present a good business proposal, but which cannot put up tangible assets as collateral. Business Agenda also speaks to two local businesspersons about their experiences. Sandra Zammit, CEO of Smoochie Drinks describes

the challenges she encountered in starting up her business, while founder and CEO of leading IT company 6PM, Ivan Bartolo, shares his experience and stresses the benefits of listing the company on the Malta Stock Exchange. See full story on page 5.

Malta’s first female MEPs Last March’s general election saw Louis Grech, Simon Busuttil and Edward Scicluna elected to the national parliament; thus vacating three seats in the European Parliament, which were subsequently filled by Malta’s first female representatives. Following casual elections Marlene Mizzi, Roberta Metsola and Claudette Abela Baldacchino became the country’s first female MEPs, putting an end to criticism that Malta needed female representatives in the European Parliament. Business

Agenda talks to the three new MEPs and gets their perspective on what it means to serve as the first Maltese women in the European Parliament and the full picture on their priorities as MEPs. Marlene Mizzi, who was the first to be elected to fill the seat vacated by the new Finance Minister Edward Scicluna, expresses her hope that they may have opened the door for many future female MEPs, as she believes that they can bring a different or complementary perspec-

tive to some issues. She also discusses her priorities as an MEP, mainly on the Economic and Monetary Affairs committee (ECON). The importance of focusing on providing the best representation possible for Malta, irrespective of gender, is a priority for Roberta Metsola, who was elected to fill the seat vacated by the new Opposition leader Simon Busuttil. She emphasises that her immediate priority will be the discussion of issues that directly affect Malta’s

interests, such as immigration, law enforcement and civil liberties. Claudette Abela Baldacchino believes that women are taking on a more active and prominent role in society in general, as well as in politics and business. She shares that one of her priorities will be striving for the better representation of women in society, and for a better understanding of gender aspects in many of today’s issues. See full story on page 9.

BUSINESS AGENDA | july - september 2013

editorial

Invest EU Funds in Private Enterprise Summer time still finds the MBB busy with the preparatory work in anticipation of the commencement of the EU’s new programming period 2014-2020. This year will bring to a close the EU’s current seven year programming period of EU Funds (2007-2013), whilst a new programming cycle is set to kick in shortly. This process will also see Malta make the transition from a Convergence (Objective 1) region to a new status of ‘Regional Competitiveness and Employment’. Following the European Council’s conclusions back in February, Malta was allocated the total sum of €1,128 billion, of which €776 million fall under Cohesion Policy. There are many lessons to be learnt from the last programming period, and improvements in the project prioritisation of EU funding can certainly be made in view of the upcoming programming period. With this in mind the MBB, in collaboration with Bank of Valletta, published a report entitled: ‘The Allocation of EU Structural Funds in Aid of Private Enterprise’. The aim of this report is to identify where, how and by which means the private sector can play a better, more efficient and absorptive role

in relation to EU Structural Funds’ expenditure, whilst leveraging a positive overall impact on Malta’s economic competitiveness. The report also carries recommendations for a more efficient disbursement and take-up of EU funds by the private sector. EU Structural Funds are an instrument of Cohesion Policy. The main objective of Cohesion Policy is the reduction of regional disparities in the EU. Public sector investment is necessary to create favourable conditions for private sector operations and to improve Malta’s competitiveness. For example, public investment in good infrastructure, accessibility and our human resources, all directly contribute towards increasing the productivity of the private sector. However it is generally accepted, and indeed consistently proven, that private sector investment yields higher rates of economic growth than the public sector. Malta’s private sector investment has followed a downward trend in recent years. This decline may have been the result of the uncertainty that surrounded (and continues to surround) the euro area and the European economy, and runs

concurrently to the private sector investment decline in the EU-27. EU Structural Funds can therefore be harnessed to halt this downward trend in private sector investment by ensuring credit availability for businesses and by encouraging continued private sector investment. In view of all this, the MBB recommends that sufficient Structural Funds are allocated to target areas which best meet the private sector’s investment needs. In the last programming period, around €70 million from a total of €840 million under Cohesion Policy were allocated to private enterprise through schemes administered by intermediary bodies such as Malta Enterprise, the Malta Tourism Authority and the Employment and Training Corporation. Initial estimates in the MBB report suggest that for the 2014-2020 programming period, this should increase to around €180 million-€200 million to be allocated for direct use by the private sector. Access to finance is another potential area for a recommendable use of EU Structural Funds. The JEREMIE loan guarantee scheme as administered by Bank of Valletta

By Joe Tanti, Chief Executive Officer, MBB in recent years has been highly successful and labelled as a bestpractice implementation in Europe by the EC. There is, therefore, every reason to extend this scheme in the new programming period, and possibly introduce other loanbased and equity-based financial instruments. The MBB also fully supports the introduction of a new concept in Malta, better known as ‘global grants’. The majority of EU funds are currently managed directly through state agencies. However, given their flexible structures and understanding of small business needs, non-profit business intermediaries can play a crucial role in further increasing the absorp-

tion of EU funds by managing grant support schemes on a smaller scale. This report has been presented to Government in recent weeks. It is a collection of constructive suggestions on how the private sector believes that it should be fuelled to drive forward Malta’s economic progress. Other regions in the EU have managed to make this leap forward. It is time for us to learn from the success of others and ensure that EU funds are spent wisely, to obtain the highest returns possible. The MBB report can be downloaded from www.mbb.org.mt

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The Malta Business Bureau is a non-profit making organisation acting as the European-Business Advisory and Support Office of the Malta Chamber of Commerce, Enterprise and Industry and the Malta Hotels and Restaurants Association. The MBB has two offices, the Head Office in Malta and the Representation Office in Brussels. Editor: Joe Tanti

Deputy Editor: Chiara Bonello

Editorial Team: Omar Cutajar, Daniel Debono, Mariella Scicluna, Mark Seychell Deputy Advertising Sales Manager: Leigh Pisani Business Agenda is the quarterly publication of the Malta Business Bureau. It is distributed to all members of the Malta Chamber of Commerce, Enterprise and Industry, all the members of the Malta Hotels and Restaurants Association, and to all other leading businesses by Mailbox Distribution Services, part of Mailbox Group. Business Agenda is also distributed by the Malta Business Bureau to leading European and business institutions in Brussels.

BUSINESS AGENDA | july - september 2013

cover story

Access to Finance – A priority for SMEs

As Jo Caruana discovers following a recent MBB study, Malta’s current lack of financing options could be discouraging SMEs from starting up, thus potentially limiting this vital business sector. Few can deny that Small and Medium Enterprises (SMEs) are the very backbone of the Maltese economy. They employ about two-thirds of the private sector workforce and contribute to more than half of the country’s value-added services. As a result, it makes sense to encourage the set-up and development of businesses in this sector. Yet, according to several research studies conducted by the European Commission, access to credit is one of the main challenges encountered by all businesses in the EU – irrespective of size, business sector and product market. Maltese enterprises are no exception. Due to this, the Malta Business Bureau (MBB) has prioritised the issue of access to finance locally, with the aim of enhancing the ability of Maltese businesses to meet their financing needs, while also allowing them to better understand the evolving EU policy on this subject. It was with this understanding that the MBB, in conjunction with Bank of Valletta (BOV), undertook an assessment study to identify

market gaps in access to finance and the feasibility of new financing instruments in the EU, as well as to address the credit needs of Maltese business. The study, which was carried out by Ernst & Young, was construed to assess the existing market gaps for Malta-based firms to obtain financing beyond the ‘traditional’ bank loan and overdraft facilities. “The results of this survey, which we completed earlier this year, highlighted how the lack of diversified financial products is limiting the development of SMEs in Malta,” explains George Vella, MBB President.

Increasing the range of existing financing options is also important to support the development of new sectors such as those that are heavily reliant on research and development, creativity and innovation,” he says. The study shows that the key problem enterprises are facing is that there is truly a limited range of financing options available. As a result, 72 per cent of SMEs in the start-up phase are currently using ‘traditional’ lending products such as loans and overdrafts when, as Mr Vella explains, these are not necessarily the best solutions for companies at that early stage.

Sandra Zammit, Smoochie Drinks CEO

George Vella, MBB President

“In fact, the survey shows that 30 per cent of local enterprises find it difficult to raise the finance required to further their development. It was in light of this obstacle that the MBB embarked upon this study to begin with.

“Different funding options need to be found for enterprises that cannot put up tangible assets as collateral, but which have a good business proposal,” he stresses, going on to explain which forms of business start-up financing are missing locally.

ment. Also, the European Investment Fund’s JEREMIE scheme, administered locally by BOV, needs to be widened to include seed loans and equity guarantees, over and above the loan guarantees currently available,” he says.

“Now, with the results clear, Malta needs to diversify its financing options for SMEs in order to generate further economic development and encourage their growth.

“For a small economy like ours, Venture Capital (VC) could provide a means of strengthening and complementing current efforts at attracting foreign direct invest-

Additionally, Mr Vella believes that increasing the range of existing financing options would better address the credit needs of local enterprises.

“To this end, exploring the potential for VC instruments can also serve as another financing option,” he continues, adding that VC is private equity administered through a fund generally provided to startups with high risk and high potential returns. “I really do believe that greater private investment which breeds success will create the domino effect of further incentivising local and foreign direct investment. This would certainly augur well for the country as a whole with added liquidity being pumped into the economy,” he adds. Echoing these sentiments, CEO of Smoochie Drinks, Sandra Zammit, explains that financing is just one of the challenges of getting your business start-up to succeed. “When you have a business idea, especially if it is an innovative one, it often feels as though you’re the only person who can imagine it succeeding. “When I started out I was 40 with four young children and not enough funding – some people thought I was crazy! Back then, the only way to make my dreams come true – and to create the only really healthy fruit drink in Malta – was to go to the bank with a business plan and obtain a loan with our own house as collateral. Without that collateral, my dream would have been stopped right there. But, we all believed in the idea so much – my husband, children and I – so we decided to go for it.” Looking back on her own business journey, Mrs Zammit considers herself lucky that she was able to obtain a grant through the Ministry for Rural Affairs and the Environment for the ‘innovative packaging of agricultural products’, which helped her to fund the company. “It didn’t happen the first time around for me, but it did on the second and third,” she says. “Funding is always a challenge and very

BUSINESS AGENDA | july - september 2013

cover story time-consuming to secure, but it was worth it in the end.” As for helping business start-ups, Mrs Zammit believes this needs to be reassessed in Malta. “If I go to the bank and ask for a €50,000 loan for a car, I would probably get it – despite the fact the car could be a liability,” she says. “But if I were to ask for a €100,000 loan to purchase equipment for my business and perhaps employ people, I would be asked to put my house up as collateral – and what if I didn’t have a house? Would the whole business idea go down the drain? “With that in mind we need more schemes – such as the one where the Government acts as guarantee – to encourage more people into business, whatever their position. “The banks, Government, business community, chambers and stakeholders should perhaps contribute towards one large pot to help good ideas come true. These in turn will generate employment and more business. Of course some of these will succeed while others fail, but this is normal. What’s important is to monitor them and provide the necessary guidance for them to flourish.” Meanwhile, founder and CEO of leading IT company 6PM, Ivan Bartolo, has a similar take on the importance of offering a variety of funding options to start-ups. “Setting up a business is no walk in the park,” he says. “And financing is one of the many challenges. So far in Malta there are two popular financial instruments available: commercial loans and overdrafts. These both require significant personal and tangible guarantees, which makes financing a huge challenge.” Mr Bartolo believes that what worked for 6PM was the decision he took to make it a public company. “In my experience, this has only had positive outcomes,” he says. “The Initial Public Offering (IPO) in 2007 enabled us to carry out a Rights Issue in 2011, which in turn enabled us to raise cash when we really needed it. This also reduced 6PM's exposure with the banks, as well as our personal and tangible guarantees – which again gave us the necessary peace of mind to truly concentrate on the business and to turn it around as we did. “So often the additional pressures and fears derived from a lack of financing consume the energy that is required to grow any business and to enable anyone's entrepreneurial skills to truly emerge.” Expanding on that, Mr Bartolo says that he really believes more local funding options are a must. “VC companies and Business Angels (BA) share risks and rewards,” he says. “It’s my recommendation that Malta should set up VC and BA bodies to offer seedand-working capital funds, as well as to provide business skills and make it mandatory that new entrepreneurs utilise these skills.

“Being a silent partner is not good enough. I would love to see a new type of bank in Malta – a bank that loans skills instead of money. This will surely add more value to many that have the money but no know how.” Additionally, Mr Bartolo suggests the Government creates a tax credit scheme for organisations that are willing to put forward their own cash and invest it through VC for promising entrepreneurs. “I honestly believe that entrepreneurs do not have all the skills and, at times, do compromise quality or success by trying to do everything

themselves to keep costs as low as possible. Hence, the ‘skills bank’ I suggested above would be a great mechanism to move things forward; skills can provide more value than money. “Finally, I would encourage business leaders to consider the public listing arena, as this has had a very positive impact on us at 6PM. It has made us more disciplined, accountable and has challenged us to the limit. I wish more businesses would do the same.”

Ivan Bartolo, 6PM CEO

BUSINESS AGENDA | july - september 2013

European Parliament

Meeting Malta’s new MEPs The recent general election saw three of Malta’s MEPs take up new roles within the national parliament, making space for three new faces in the European Parliament. Chiara Bonello speaks to Malta’s first female MEPs Marlene Mizzi, Roberta Metsola and Claudette Abela Baldacchino, about the role of women in politics and their main challenges as MEPs. “I hope to have opened the door for many future female MEPs” – Marlene Mizzi

“I am pleased to have been elected as the first Maltese female MEP and hope to have opened the door for many future female MEPs. It was indeed unfortunate that thus far, Malta was the only member state without female representation, but I believe this was due to a number of factors, such as our electoral system. In fact I was one of four candidates with the highest number one preference, which means the electorate voted for a woman but the vote transfer system decided otherwise. I hope that female MEPs will help Malta, as they can give a different or complementary perspective to certain issues from that given by their male counterparts. Women are, I believe, faced with more challenges than men, as society still expects them to shoulder the bulk of family duties, making it more difficult for them to

be successful in other spheres, including politics. Yet, this mentality is slowly changing. On the other hand, most women are able to successfully juggle personal and professional commitments which will help them in their careers and to understand the commitments and problems faced by others. There are various issues I intend to prioritise as an MEP, although my work in the Economic and Monetary Affairs committee (ECON), of which I am Vice Chair, will be of utmost importance to me. Other issues I intend to work on very closely are those of animal welfare and education. Although I believe that the only thing in which women are not equal to men is in the number of opportunities given during the course of our career, I do not believe mandatory quotas are the solution. I believe meritocracy should be the

sole consideration when deciding whether one gets an appointment or not. Any discrimination modifying this is wrong. Mandatory quotas and relative sanctions for not complying, as are being suggested, might result in a box ticking exercise and token women. This is a disservice to our gender and to those who believe in our capabilities. I adjusted to my new role as MEP much quicker than I thought... although I must say it is not the party people imagine it to be. It involves frequent travel, long hours, interminable meetings and many reports to digest.

which kept me going. Ultimately the work in the committees is very interesting and combined with the exhilarating international political environment it gives me the energy to go on."

“Focus should be on the best representation possible for Malta” – Roberta Metsola

Thus achieving a good work-life balance is easier said than done. I do believe that most times I have managed to strike this balance, although there were times I thought I would break in two! Without a doubt it was the support of my family – particularly my husband –

“With the election of Claudette, Marlene and myself as MEPs, the unenviable label of being the only EU member state without female representatives was finally erased, and now discussions should focus on what is needed in order for Malta to have the best representation possible, irrespective of gender. Upon being elected, my immediate priority was ensuring that Malta was as best represented as possible on the European Parliament committees that discuss issues that directly affect Malta's interests. I will sit on committees that tackle issues such as immigration, law enforcement, civil liberties, consumer protection and the functioning of the single market – all dossiers on which it is crucial that Malta's voice be heard. The current legislature ends in May 2014, so I need to make sure I manage to do as much as possible in the next 12 months. I have already been appointed one of the shadow rapporteurs on the Con-

BUSINESS AGENDA | july - september 2013

European Parliament sumer Programme, tabled amendments on unaccompanied minors, got involved in negotiations that could affect the online gaming industry and made a number of speeches in the plenary on immigration, asylum, law enforcement tools and the foreign policy set-up of the European Union. With only six MEPS from Malta it is essential that we overcome partisan considerations on issues of national interest and pull the same rope. I may be part of one of the smallest national delegations, but I will work to ensure that our voice is heard. I am often asked whether politics is the place for a mother – and I believe the answer is yes. It is perhaps harder to balance commitments and requires some forward planning and organisation, but despite the obvious practical difficulties and an excellent calendar application – my answer is invariably yes! Although being away from the family is not always easy, I am determined to be a role model for my children and show them that if they believe in something and work for it, they can achieve anything! My husband and I manage to balance work and family responsibilities – although I recognise that not every job allows this balance – however there are a number of concrete initiatives the European Parliament offers to make it easier for families."

More women are rising to the highest positions – Claudette Abela Baldacchino

“Today more and more women are rising to the highest positions in the centre of global power, not only in politics, but also in business-related roles and in the social sphere. The role of women in politics, as in other areas of modern society, is becoming more prominent as was reflected by the recent MEP election results. As one of the first Maltese women in the European Parliament, I have the opportunity to strive for better representation of women in society, and for a better understanding of gender aspects in many of today’s issues.

Malta’s lack of female representation so far was partly down to certain realities which are particular to the island, not least the fact that we have the smallest delegation in the European Parliament, consisting of only six MEPs. This in itself is a limiting factor. One would be wrong, however, to assume that Maltese women have not been playing an important role in the European sphere. I myself, together with other colleagues, have served for a number of years on the Committee of the Regions. Others have an active role within

the Economic and Social Committee, and yet others within various other European institutions. Let us also not forget that Malta's permanent representative is a woman. In my maiden speech in the EP I stressed that the creation of a social Europe is the only way out of the trying times Europe has found itself in. This is the area I have pledged to focus my energies on as an MEP, and the positive feedback received so far was very encouraging. Strengthening gender equality requires first and foremost a change in mentality

which often requires supportive measures to enhance the position of women, such as the recent EU directive regulating compulsory female quotas among non-executive directors of companies listed on stock exchanges and related measures. At the same time, it is also important to acknowledge that we can’t bring about gender equality in practice simply through legislative/ administrative measures. Nonetheless, wherever possible, the European Union should try to make this support clear, if only by pio-

neering in its statements, because of its leading role in a Europe of equal opportunities. Finding the right work-life balance is not a gender issue, but something each and every one of us must strive for. Being an MEP is no walk in the park, and it is not always easy to achieve the necessary work-life balance, however, like all my colleagues I do my best even in this regard."

BUSINESS AGENDA | july - september 2013

tourism

Boutique Chic With travellers seeking ever more personal experiences, Jo Caruana explores the nuances of the boutique hotel industry and looks at why this is quickly becoming a vital hospitality niche for Malta. The boutique hotel sector is emerging as a key area of growth for 2013.

Palazzo Vittoriosa in Vittoriosa

Xara Palace Relais & Chateau in Mdina

Spurred on by travellers who are turning their backs on the traditional ‘pigeon hole’ approach to travel – boutique establishments are leading the way for guests keen to experience the true personality of the city or country they are visiting. As a result, these jetsetters are drawn to places with a more authentic approach – indigenous food, accommodation with a touch of individuality (such as local art or antique pieces of furniture) and a personal approach that ensures people don’t just feel like a number. And it seems that, around the world, this model is gaining ground. A recent survey by hotel-industry. co.uk found that independent and boutique hotels are driving profitability across the supply chain. In fact, a massive 69 per cent and 32 per cent of hotel suppliers identified profitability in the independent and boutique sectors respectively – a number that would make some chain hotels stop in their tracks and rethink their methods. Stating his belief in the boutique sector, Tourism Minister Karmenu Vella told Business Agenda that “this segment relates to a growing band of discerning travellers who seek unique, quality experiences in smaller, distinct accommodation establishments in which an element of exclusivity and personal detail is offered. “The concept departs from the traditional premise that high quality accommodation offers lie solely within the realm of huge internationally branded properties,” he says. “And as tourism supply and demand evolve more into lifestylerelated concepts, the demand for such products and services will undoubtedly increase.” Asked whether the boutique hotel industry is important for Malta, Minister Vella explains that he believes the islands need to move in line with developing streams of international tourism demands if they are to remain at the forefront as a tourism destination. “There is the famous maxim that there are three types of businesses: those which make things happen, those which watch things happen and those which wonder what happened,” Minister Vella quips. “As an industry and a destination we need to always fall within the first category if our successes are to be sustained.” Meanwhile the Minister explains that the Malta Tourism Authority and the Ministry of Tour-

ism have embarked on a scheme that focuses specifically on the luxury and heritage market. Of course Malta is already home to several successful boutique hotels, among them the Xara Palace Relais & Chateaux in Mdina. “There is definitely potential for the boutique industry to grow,” says Nicola Paris, the hotel’s director. “The fact that more guests arriving in Malta are interested in our rich, colourful heritage and culture, and want to experience the authentic atmosphere of living in a village core, is key. Many of them want a personal and individual service, and to be welcomed in a home-awayfrom-home environment. “People are now willing to pay more for that attention to detail, for some-

thing unconventional and different. These guests expect the hotel to be an experience in itself. People who travel a lot don’t necessarily want to be in a big hotel. In our case they want to see the look and experience the feel of Mdina: discreetly elegant and a luxe sanctuary.” “Malta is special and the boutique industry truly celebrates that. After all how many places in the world are there where one can go back 5,000 years in the morning, follow the path of the Knights in the afternoon and dine under the stars by the sea at night –all in one day! We have a lot to be proud of.” Also eager to see Malta’s boutique industry develop is Remco Slik, owner of Palazzo Vittoriosa in Vittoriosa.

“People visiting our hotel are looking for impeccable, personal and genuine service with lots of attention to detail,” he says. “They seek out the highest quality in food and service, and want to know that we can deliver on what was promised. They are also on the hunt for a distinct location: a historical environment away from the concrete jungle; it’s the real Malta they want.” “Boutique is not just in the name, but in the service,” he says. “The guests in this sector have a higherthan-average interest in culture, heritage, arts, history and business. These are all sectors that Malta is promoting, and which it could promote even more. This part of the market isn’t developed, so there is definitely potential for further growth.” Therefore Mr Slik would

like to see several improvements take place at a national level. “It’s not about money but action, as well as a legal framework that is the result of a clear agenda for the country. We need a holistic approach, with the integration of a vision for tourism including planning, public transport, hunting, culture and the arts (including V18, of course), as well as the financial industry and tax planning. “Currently all of these issues are being tackled individually but, in reality, they form part of the same issue: that of how to organise our country better and make it a better place to work, live and spend a holiday in. There are some bold decisions to be taken, but I believe they will be worth it,” Mr Slik adds.

BUSINESS AGENDA | july - september 2013

business

BUSINESS AGENDA | july - september 2013

business

How flexible are we? MARIELLA SCICLUNA sheds light on the findings of a survey carried out among businesses on the current uptake of flexible work arrangements. The European Union has recognised the importance of flexibility and security within the labour market, and is promoting these incentives as part of its Europe 2020 Agenda. Studies show that enterprises adopting flexible work arrangements not only experience a healthier work environment, but also higher levels of productivity.

while 41.9 per cent claim that such measures help motivate employees. Another major benefit, which 63.5 per cent of companies associate with effective flexible work arrangements, is the increased possibility of retaining trained and valued employees. A whopping 91.1 per cent of respondents agreed

evident problem was implementation of uniform measures across the company, as 48.5 per cent believe this could be problematic. This results in a fragmented approach of having to act on a case-by-case basis. 17.6 per cent of respondents claimed that there were no major difficulties in implementing such

68.9%

Earlier this year the Malta Business Bureau (MBB), with the support of MISCO International, carried out a survey on ‘Flexible Work and Family Friendly Measures’ among businesses. The target respondents were human resources professionals or decision makers in companies. The survey’s objective was to analyse the current take-up, to discern what obstacles companies are facing in implementing these measures and what is required to increase their activity in this regard. This survey also assessed the internal restructuring that would need to be carried out to create an optimal environment for such measures to be effective.

that implementing such measures leads to increased loyalty to the organisation. Other motivating results include that 27 per cent of companies associate flexibility at the workplace as ‘an investment for better company operations’; 21.6 per cent believe ‘it is a necessary change’; while another 20.3 per cent consider it as ‘having overall great benefits for the company’.

It revealed that 66.2 per cent of Maltese companies believe that flexible work and family-friendly measures present an opportunity to shift towards a better work-life balance,

Besides identifying the main advantages for companies and the economy, respondents were also asked to highlight the main difficulties in implementing these policies. An

believe it is very/somewhat likely that flexible work measures would be implemented in the next five years. flexible arrangements, while 26.5 per cent claimed that they experienced no other difficulty in the implementation process. Furthermore, 11.8 per cent highlighted resistance from top management and 10.3 per cent from managers/ supervisors respectively. Companies were asked to identify which categories of employees are currently being offered flexibility measures. More than half the respondents claimed that these are available to all members of staff. Females were among those most likely to be offered flexible

work conditions (25 per cent) and employees with young children/ newborns (23.5 per cent). It is very encouraging to note that respondents generally disagreed with the perception that such measures can only be implemented in the lower hierarchical levels of the organisation. In fact, the survey shows that 60.3 per cent of companies adopt flexible work policies for all employees, including management personnel. On the other hand, only 5.9 per cent of respondents provide flex-

ible work arrangements to employees caring for elderly parents. One interpretation of the lack of correlation between flexible working measures and caring for the elderly is that discussions on a national level generally address the segment of society that includes parents caring for children. On this note, it is worth considering the demographic changes taking place. The Maltese population is ageing due to a higher life expectancy and a slower birth rate. Only six companies out of the 74 participants do not currently implement any type of flexible work and family-friendly measures at the workplace. Some declared that they found resistance from senior management, whilst others mentioned that they were unable to apply the measures for all employees and thus preferred to avoid internal dissent. Respondents were also asked about the likelihood of implementing any or any further flexible work measures in the next five years. A somewhat promising 68.9 per cent believed it was very/somewhat likely that such initiatives would be implemented. However in order to be able to continue providing and improve flexibility at the workplace for employees, respondents have pointed out two inter-organisational changes. The first is a stronger commitment from senior management/directors (36.5 per cent) and the second is the creation of a support structure for managers and supervisors (33.8 per cent). Moreover 96 per cent agreed that managers require more training on flexible work and familyfriendly measures. For companies to reap the benefits of these policies, they should be more receptive to innovative practices and move on from relying on traditional measures such as reduced hours and tele-working mechanisms.

BUSINESS AGENDA | july - september 2013

business update

Melita’s focus on the business market – Chief Operating Officer Ludolf Rasterhoff

The residential market has been Melita’s focus for many years, but over the past year the company has been preparing to move into the business segment. Melita Chief Operating Officer Ludolf Rasterhoff speaks to Business Agenda about the company’s strengths and the decision which led to this move. “Our focus in recent years has been to provide the best home entertainment and telecommunications services to the residential market. Today, we are clearly leading this sector, and our customers are increasingly talking to us about other corporate and business requirements. We are taking this move very seriously and a great deal of investment and preparation has been put into this project. We believe that we can provide better quality and lower prices to businesses, just as we did in the residential market,” Mr Rasterhoff explains. The drop in mobile call rates registered in the local market in recent years was mainly down to Melita’s expansion in mobile communications, a fact which was even recognised by the European Commission, he points out. It is the company’s aim to emulate this model of offering lower-priced telecommunications services through investment to the business segment. The move into the business market has been in the pipeline for around a year, and in preparation Melita set up two departments, one for small and medium enterprises and another for the larger businesses. “These have their own

dedicated account managers and a support team, as we believe that people with a great deal of experience and technical knowledge are crucial when it comes to fulfilling business needs and entering a new segment.” Mr Rasterhoff says that an increasing amount of businesses have switched to Melita in recent months, even joking that the company is setting the new standard in the segment. “I believe businesses are paying too much,” he says, adding that he thinks Melita can do the same in the business market as it did in the residential market, pushing prices down further, while fulfilling business demands at the same time. In fact Melita offers several packages, combining broadband with other different services. When developing a business offering, Melita considers that not all business owners have the same needs. In fact Melita makes that distinction internally, he explains, adding that the business market is very exciting and will add value for Melita’s customers. The company has come so far; from a cable TV operator at the

“ The fact that Melita has increased its market share in internet, telephony and mobile while retaining a leading market share in TV, only serves to show that customers prefer to choose Melita. This is the best sign that we are on the right track.”

Ludolf Rasterhoff Melita’s technical and co-location centre in Madliena

BUSINESS AGENDA | july - september 2013

business update beginning, to a company which today offers converged voice, data and video services. Meanwhile, the company recognised the importance of other factors too, such as customer experience, which has seen a marked improvement in quality of service, he says. “The fact that Melita has increased its market share in internet, telephony and mobile while retaining a leading market share in TV, only serves to show that customers prefer to choose Melita. This is the best sign that we are on the right track,” Mr Rasterhoff adds. A nationwide broadband speed of up to 100 Megabits per second, and now speeds that could reach up to 250 Megabits per second in certain areas, is a unique offering that only Melita can provide. The decisions to build a direct connection to a Tier 1 provider in Milan and to invest in DOCSIS 3.0 were taken because we had seen that things were moving towards the internet as a delivery platform. Connectivity is becoming increasingly important, also for businesses, with more devices being connected to the internet – not only PCs and servers, but also tablets, smartphones, TVs and gaming devices. Good broadband connectivity is particularly relevant for companies in the gaming and financial industries, he says, adding that Melita has continued to invest in this sector to offer the

“ We recently invested in a new state-of-the-art co-location facility – the newest and most modern on the island. Combined with our connectivity, I believe it makes a very appealing prospect for gaming and financial companies, as well as Maltese businesses.” best service in terms of quality and speed. Entering the mobile market was another crucial decision, he says, and today a fourth of all mobile minutes come from Melita's network; a truly remarkable achievement in just four years.

is involved in,” he says. Melita’s headcount, directly and indirectly, amounts to almost 450 people. Melita has worked very hard to improve its internal processes with a special focus on training and customer relationships.

Co-location services will be the next step for Melita, Mr Rasterhoff divulges, as storing data becomes increasingly important for businesses. “We recently invested in a new state-of-the-art co-location facility – the newest and most modern on the island. Combined with our connectivity, I believe it makes a very appealing prospect for gaming and financial companies, as well as Maltese businesses.”

In fact all new employees attend a three-week training course and continuous personal development is given to all existing employees, he explains, adding that the company has just recently witnessed an employee who first joined the customer care centre about six years ago, progressed into Melita’s IT department, and has now achieved a first class in his Masters degree in IT which was sponsored by the company.

“Melita has made giant leaps in the last few years and this is a result of the hard work that the Melita team puts into delivering better quality of service across the four business segments that the company

The company today employs 65 per cent more people than it did in 2007 and every department includes employees who had an experience working in the company’s customer care department. The truth

Melita’s link to Tier 1 operator ‘Level 3’ in Milan improves connectivity performance for business with better latency and even lower packet loss results. This is particularly relevant for businesses which operate their business online, or ‘in the cloud’.

is that no matter what sector our employees move to within the company, they take their customer care skills and knowledge with them. This means that the customer care mentality sinks further into the

organisation. It’s all about putting the customer first, especially when delivering on customers’ expectations in the business market.

Melita recently launched the fastest internet speeds in Malta The fastest internet speeds on the island, up to 250 Megabits per second, recently became available thanks to Melita, which more than doubled the speeds it had been offering so far. Speaking during a visit to the Melita Head Office by Parliamentary Secretary for Competitiveness and Economic Growth, Edward Zammit Lewis, Melita Chief Executive Andrei Torriani said that this highspeed service would roll out in specific areas where demand was high. It is already available at Midi and Fort Cambridge, and will be introduced to other locations in the near future. Mr Torriani said that Malta was following international trends, which show that more people were using the internet through different devices. Furthermore, targets set by the European Union as part of the Digital Agenda are to be achieved by 2020 but thanks to Melita’s investment, Malta has managed to achieve two of the three goals, many years ahead of time, he said. During the visit Dr Zammit Lewis met with Melita management as well as with some

of the company’s 450 employees, including those from the Customer Care department, which was recently improved to ensure a better service. Since 2007 Melita has invested €75 million, an investment which is set to increase by €60 million over the coming five years, in order to further strengthen its infrastructure. As a result of this investment the company has increased its staff by 65 per cent. Dr Zammit Lewis said that Melita was the perfect example of ongoing investment, starting out as a cable operator and expanding into different sectors, today offering a range of telecommunications services, including mobile telephony and broadband services. This investment also led to tangible improvements to the quality of services offered to the Maltese people, and lower prices. He said the sector was developing at a rapid pace, driven mainly by technological developments, which require a dynamic regulatory framework to accommodate emerging realities.

Melita chairman, Joseph A. Gasan said that since the company’s establishment back in 1991, it has remained at the forefront of development of telecommunications services in our country, which led to Malta today enjoying a strong infrastructure which can meet the needs of foreign companies operating in Malta, among others in

the areas of financial services and e-gaming. Mr Torriani also explained how while many EU member states have high-quality internet only in the major cities, Malta enjoys speeds of 100 Megabits per second throughout the country.

Dr Zammit Lewis pointed out that telecommunications have a critical role in strengthening the digital economy and reducing the digital divide. He reaffirmed the Government’s commitment to supporting the industry in its ongoing development.

BUSINESS AGENDA | july - september 2013

business update

FESTA FRIDAYS AT Go to work MÉRIDIEN LE in style this summer with King Shoe Shop! City-lovers are now awaiting a fashionable nature experience. This season is bursting with pastel colours; wedges, high heels, slingback and pumps… you are sure to find something that suits your style. All those who, when it comes to blouses, think of just black or white should think twice – latest fashion gurus are adding colour to the mix and so are Tamaris!

This season’s colours look particularly good on tanned skin, so come down to King Shoe Shop and get your fashion fix for the summer! Visit www.kingshoeshop.net to view the full collection or one of our shops in Sliema – Tel: 2133 3777; Valletta – Tel: 2122 4804; San Gwann – Tel: 2137 8433; Baystreet – Tel: 2372 0010; or Gozo – Tel: 2156 9423.

Avanzia Taxand wins ITR National Tax Firm 2013 award Avanzia Taxand has again received the prestigious National Tax Firm award by the International Tax Review (ITR) during the 9th Annual European Tax Awards held at the Dorchester Hotel in London. Avanzia Taxand was represented in London by Managing Director Walter Cutajar and Mary Anne Inguanez who accepted the award on behalf of the firm. The event was also attended by Europe’s leading tax executives and advisors.

Avanzia Taxand was recognised by ITR – a global publication – for the high quality integrated tax advice that the firm provided to a vast array of international clients. Over the years, Avanzia Taxand has built a strong reputation for providing practical tax advice that addresses the strategic concerns of its clients. On receiving the award, Walter Cutajar, Managing Director of Avanzia Taxand, said: "it is with great satisfaction that we accept

Embrace the Maltese way of living at il-Pjazza outdoor restaurant. For the third consecutive year, Le Méridien St Julians Hotel & Spa invites its summer clientèle to relax in a pleasant set-up inspired by the festa atmosphere that takes over our island all summer long. On Fridays, this original seasonal venue re-creates the concept of the island's popular village feasts, for a unique and authentic culinary experience.

Fridays at il-Pjazza proudly wear the local colours. Customers are presented with never-ending homemade dips and appetisers. As main courses, an array of Maltese dishes is prepared before the guests' eyes, with live cooking stations exuding mouth-watering scents. It is indeed the perfect opportunity to (re)discover timeless typical dishes such as tarja moqlija, stuffat tal-bebbux, fenek tradizzjonali, prinjolata, imqaret and so many more! Folkloric musical entertainment completes the amazing summer vibe of this Festa Friday. For the quality and the quantity of the items on offer, prices are very reasonable and certainly worth it: €27 per person (food only) or €35 per person including half a bottle of wine, water and coffee. Children aged

this award once again, especially in view of the thorough and rigorous assessment process that ITR employs to determine the winner. The recognition given to Avanzia Taxand for its tax advisory services is the result of a dedicated and professional team that strives, year in year out, to maintain a high level of service and professional advice. Such an award will also help to enhance Taxand’s reputation as a global player with local expertise in the field of international taxation.” Taxand has over 400 tax partners and over 2,000 advisors in nearly 50 countries with a fee income in excess of €400 million. Taxand professionals collaborate and share

between 0 and 12 years eat free whilst teenagers up to 16 years pay half the advertised price. Throughout summer and every Friday, ilPjazza unlocks the colourful ways of wining and dining in Malta. Definitely a must-try that will impress friends and family alike. Bookings

are strongly recommended to avoid disappointment.

knowledge, capitalising on the collective expertise to provide clients with high quality, tailored advice that helps relieve the pressures

associated with making complex tax decisions. As independent advisors, Taxand ensures that clients adhere to best practice and to tax law.

Enquiries and bookings on tel: 2311 0000. Information and menu: www.lemeridienmalta.com/ ilpjazza

BUSINESS AGENDA | july - september 2013

environment

Tourists as conscientious consumers of water The Malta Business Bureau’s EU Life+ Investing in Water Project has recently announced how it will help hotels introduce water-saving measures that tourists can adopt during their stay in Malta. Project Manager Geoffrey Saliba discusses these measures.

Summer has started, bringing with it the arrival of many tourists. Over the coming months we will receive twice, or more, as many tourists as there are residents on the Maltese islands. In keeping with our hospitable reputation, the local tourism industry will welcome them with open arms and spare no measure to ensure their satisfaction. Tourists, however, need one of Malta's scarcest resources – water. With only around 40m3 of fresh water per capita, Malta ranks among the world's top ten countries for water scarcity. The islands simply do not have enough natural fresh water to meet the demand, which forces Malta to rely on reverse osmosis desalination of seawater. Reverse osmosis, how-

“ Tourists, however, need one of Malta's scarcest resources – water.” ever, is energy intensive. In order to produce around 50 per cent of our tap water, five per cent of the country's electricity is consumed. Natural water is so scarce, and the alternative desalinated seawater is so energy intensive, that it is important to use it as efficiently as possible. Maltese residents tend to be fairly water conscious, as is reflected in the amount of water consumed per capita, an amount significantly lower than almost all other EU member states. Yet given

the severity of water scarcity, perhaps tourists too can contribute to saving water while on holiday. The EU LIFE+ Investing in Water Project has carried out water audits in over 80 businesses and hotels to date. We have also planned to help hotels offer tourists a choice when it comes to participating in water savings programmes. The signs, in English, French, Italian and German, suggest that guests wishing to save water and re-use their towels may simply place

BUSINESS AGENDA | july - september 2013

environment “ Signs have also been produced, in both English and Maltese, for business and hotel employee areas. These signs offer water-saving tips which employees could adopt on the work place. You'd be forgiven for thinking that water saving by employees can only be small scale; but in truth if all employees in Malta and Gozo were to save just one litre of water per working day, in a year around 42,000,000 litres of water would be saved. That's enough water to run another large four-star hotel. ” their towels on the rack or rail, and those who do not require their bed linen to be replaced are invited to place the sign on the bed. The signs also inform guests that a 15-minute shower uses up to 105 litres of water, while a five-minute shower uses only 35 litres. 9,000 such signs are now being distributed free of charge to hotels that are willing to take advantage of the offer. Apart from potentially saving water for hotels, the signs also offer another advantage. The MTA's ECO-Certification scheme recognises hotels which offer their guests the option of reusing towels and bed linen. Such hotels meet award criteria for the scheme. With today's increasingly environmentally aware tourists, having such a certificate could add to a hotel's appeal. The MTA has acknowledged that any hotels making use of the project's water saving signs will meet the relevant award criteria for the scheme. We are not stopping there. Signs have also been produced, in both English and Maltese, for business and hotel employee areas. These signs offer water-saving tips which employees could adopt on the work place. You'd be forgiven for thinking that water saving by employees can only be small scale; but in truth if all employees in Malta and Gozo were to save just one litre of water per working day, in a year around 42,000,000 litres of water would be saved. That's enough water to run another large four-star hotel. The project partners would be happy to provide your enterprise with these signs for hotel rooms, or business and hotel employee areas – contact Geoffrey Saliba on gsaliba@mbb.org.mt or on tel: 2125 1719. For a more detailed explanation visit www.investinginwater.org The EU LIFE+ Investing in Water Project receives 50 per cent co-financing under the European Community’s LIFE funding programme, with the Ministry responsible for the environment as the main co-financier, and further co-financing and sponsorship from Easydry Malta, APS Bank, Island Hotels Group and MSV LIFE.

BUSINESS AGENDA | july - september 2013

Business News MBB Update

8th - 12th April –

18th April –

MBB hosts European Commission official as part of the Enterprise Experience Programme

MBB intervention during the ‘Active Ageing through Lifelong Learning’ conference in Brussels MBB CEO Joe Tanti participated in an Active Ageing conference in Brussels, which showcased that the business case for active age management is clear and evidence shows that many employers are already taking or developing positive approaches to active age management. Mr Tanti made an intervention presenting a best-practice from Malta. He made reference to Simonds Farsons Cisk, which has a workforce with an average age of over 40, and a great number of

employees who have been with the company for over 30 years.

which may be more common in mass manufacturing.

In this respect, the company has a policy of organising multi-skilling programmes to make employees more competent, and to eventually also benefit in financial terms. These programmes enable the company to have a more flexible workforce in the operation of its machinery and equipment. Importantly, it also helps reduce the incident of ‘Repetitive Strain Injury’,

Mr Tanti maintained that “the company encourages senior and the most experienced employees to mentor newer and younger employees. A number of retired employees are also invited to act as guides at various company sites to accompany tours and visits. This elicits much pride and also keeps former valuable employees engaged with the company.”

Mr Tanti’s visit was sponsored by BUSINESSEUROPE.

25th April – The MBB hosted Antonella Correra, a European Commission Policy Officer in the Tourism and Cultural Instruments Unit, for a week in Malta, as part of the Enterprise Experience Programme (EEP). She was the third European Commission official to be hosted by MBB following two successful experiences last year. The coordination of the visit was also supported by the MHRA.

Ms Correra described her overall experience as highly positive. She stated, “I had the privilege of speaking with professionals who face every day the challenges of this complex, yet vital sector for Malta.”

Newly elected MEPs address MBB business seminar

“The Maltese tourism industry,” she continued, “is an important model for the whole sector in Europe; therefore the lessons I have learnt from this visit will be very useful for implementing the EU Strategy for Tourism.”

9th may –

MBB recalls Europe 2020 Targets on Europe Day As part of the Europe Day commemorations, the MBB celebrated Malta’s presence in Europe by urging Government and local authorities to prioritise meeting Malta’s 2020 targets. The most recent qualitative studies by the MBB show that the overall business experience since joining the EU can only be described as positive. In fact, since joining the EU, Malta has nearly doubled its imports and exports over the previous decade. “It is clear that Malta’s economy has benefited since becoming an EU member state. This is not sur-

prising as Europe is one of the world’s economic, social and environmental leaders,” said MBB CEO Joe Tanti. “It is critical that Malta’s economic momentum is maintained. Key to this is reaching Malta’s economic, social and environmental targets under the EU 2020 strategy,” he continued. In the run up to the 2013 General Election, the MBB presented a set of recommendations to both political parties, outlining areas for improvement and recommendations to facilitate Malta’s reaching the 2020 targets. The recommendations may be accessed at: www. mbb.org.mt

The three newly elected MEPs, Marlene Mizzi, Roberta Metsola and Claudette Abela Baldacchino, have pledged to work closely with the business community during the time they serve as Members of the European Parliament. The new MEPs, who were elected only the day before the seminar through a casual election, participated in a panel debate during the concluding session of a business seminar entitled 'Understanding the EU decision-making process: Tips and traps of EU lobbying'. This event was organised by the MBB and the European Parliament Information Office for the Council and Business Section Members of Malta Chamber and MHRA.

The MEPs replied to questions put by MBB CEO Joe Tanti. Ms Mizzi said, "I will be a business person in a political context, so I will always be ready to support and work in favour of the business community." She also declared that she intends to replace former MEP Edward Scicluna in the European Parliament's Economic and Monetary Affairs. Dr Metsola said she would like to join the Civil Liberties committee, which works in the fields of migration and asylum, among others, and added that she would also like to follow a number of dossiers in the Legal Affairs committee such as the data protection regulation and the common European sales law. Ms Abela Baldacchino spoke

about her intention to focus particularly on the European Social Agenda. The event was addressed by MBB President George Vella, who outlined MBB’s vision to play a stronger role in EU lobbying. Dr Peter Agius, Head of the European Parliament Information Office in Malta, gave an insight into the practical workings of the European institutions, and Ben Butters, EU Affairs Director of Eurochambres, spoke about the lobbying efforts in Brussels by business representation groups.

BUSINESS AGENDA | july - september 2013

MBB UPDATE 14th june –

Business seminar on the Single Accounting Directive The Single Accounting Directive that the European Parliament approved on Wednesday 12th June was the subject of a debate between MEPs and members of the business community and the accounting profession.

27th may –

environmental sustainability on top of MBB agenda in meeting with Minister Leo Brincat The MBB highlighted its willingness to support local businesses to increase their environmental sustainability, in a meeting with Minister Leo Brincat. The MBB delegation consisted of MBB President George Vella, MBB CEO Joe Tanti, and the MBB’s EU LIFE+ Investing in Water Project Manager Geoffrey Saliba. The MBB explained that it is willing to implement programmes where awareness-raising is coupled with hands-on consultation for enterprises. The aim of such programmes would be to help enterprises adopt environmental best practice.

Such a programme is already being implemented through the MBB’s ongoing EU LIFE+ Investing in Water Project. This has already resulted in a decrease in water consumption by enterprise of an estimated 16 million litres of water per annum – expected to increase considerably by the project’s end in March 2014. During the meeting MBB President George Vella drew attention to the importance of complementing awareness and consultation with increased availability of funding for environmental sustainability projects.

5th – 6th June –

Apprenticeship and traineeship schemes with ESF support MBB CEO Joe Tanti participated in a European conference that marked an important milestone in the roadmap towards establishing the European Alliance for Apprenticeships. This was a highly interactive event that provided information and working sessions on apprenticeship and traineeship schemes throughout the EU, which also included a consideration of how European funding can be used to develop new schemes or improve existing ones. The conference provided an opportunity to refine the commitments of actions and pledges from key stakeholders. The conference was hosted by László Andor, Commissioner for Employment, Social Affairs and Inclusion. It included panel debates and workshops on various subjects, including EU priorities to support youth transition to the labour market; the key challenges and barriers to implement apprenticeship and traineeship schemes; sources of funding to finance such schemes and their quality assurance; and changing the mind-sets to make them more attractive. Mr Tanti’s visit was sponsored by the European Commission.

The Accounting Directive is set to reduce business costs by simplifying accounting obligations for small and medium businesses. The event, entitled 'The Single Accounting Directive: Simplification, Striking the Right Balance', was co-organised by the European Parliament Information Office (EPIO) in Malta, the Malta Business Bureau and the Malta Institute of Accountants (MIA).

During the seminar, MEP Roberta Metsola participated via a videocall from Brussels. As a member of the Internal Market committee in the European Parliament, Dr Metsola spoke in particular about the ‘think small first’ principle of this Directive. She also noted that the simplification of accounting rules for SMEs in the EU will allow businesses to collectively save up to €1.7 billion per year. A detailed presentation on the Directive was then delivered by Mark Abela, Technical Director MIA. This was followed by an interesting panel debate that was moderated by the EPIO Head, Peter Agius. Paul Bugeja of Corinthia

Hotels, represented the MHRA, and Claudine Cassar of Alert Group, represented the Malta Chamber during this debate. The accounting professionals were represented by Paul Giglio and Bernard G. Scicluna respectively. In his welcoming address, MBB President George Vella, stated that “the Single Accounting Directive is no doubt a step forward for our SME community, as it simplifies its accounting and reporting requirements. This certainly is an encouraging step, and one can hope that the Directive's objective – to reduce administrative burdens – is remembered in future legislative proposals."

BUSINESS AGENDA | july - september 2013

business update

Your unique event at Valletta Waterfront

www.visitmalta.com The Valletta Waterfront is an award-winning destination. Eighteenth century warehouses, with their iconic coloured doors, stretch along the water’s edge against a backdrop of historic fortifications. Located centrally within walking distance from Valletta and a 15 minute drive from the airport, the Valletta Waterfront offers the perfect backdrop for a wide variety of events with flexible indoor and outdoor options. The variety of locations allows us to host diverse types of events – from intimate receptions to gala dinners, press conferences to art exhibitions and more. The Promenade: An expansive 275-metre strolling promenade, a favourite site for promotional launches and cultural events, offers the perfect staging for corporate and private events.

Magazino Hall: Renowned for its versatility, Magazino Hall proudly displays its historical features from a glorious past. Built in 1727 to store oil for street lamps, it was later incorporated in the island’s first power station. Once inside, there is an impressive arched ceiling and the yellow limestone glistens with the cast of soft lighting. An adjoining outdoor courtyard is convenient for use as a breakout area or as a stand-alone venue. The venue can accommodate 500 persons comfortably. Old Power House: The original building was built during the construction of Floriana’s fortifications in the 1700s. This building has taken many turns in history, before being transformed and operated as Malta’s first electricity production plant. It offers a fascinating layering of spaces and reflects the multiplicity of activities forming part of Malta’s Grand

Magazino Hall

Sagrestia Vault

marquée offers protective cover for up to 1,430 persons in a uniquely magical location. The Sagrestia Vault: Located directly on the Valletta Waterfront is a hidden treasure unknown to most – the Sagrestia Vault. Annexed to the 17th century vault is a small but beautifully detailed chapel dedicated to the Flight of the Holy Family to Egypt. In combination with the Sagrestia Vault, the chapel can be utilised as a receiving area. It is truly a little gem on the Valletta Waterfront.

Harbour over the centuries. The rustic structure with high ceilings displays an interesting contrast between the old and the new. Under the Stars: The possibilities are endless – the open-air venue is an artistic blank canvas with the Grand Harbour as a backdrop on

one side and the Valletta Waterfront buildings on the other. Whether it is for a wedding or a concert, the location is breathtaking. This venue lends itself to the typical Mediterranean al fresco lifestyle. Under the Marquée: Located on the Valletta Waterfront quays, the

Parking for coaches, minibuses and private cars is readily available for all venues. For further details or to view any of the venues contact Anna Maria Cardona Schranz on tel: 2567 3114 or amcardonaschranz@ vallettacruiseport.com

BUSINESS AGENDA | july - september 2013

mbb update 23rd April –

3rd may –

MBB presents Assessment study MBB presents Access on ‘Market Gaps in Access to to Finance report to Finance’ to Government MCESD An MBB delegation, led by President George Vella, presented the report on ‘Market Gaps in Access to Finance’ to the Minister for Small Business Chris Cardona and the Minister for Tourism Karmenu Vella.

The MBB was invited by the Malta Council for Economic and Social Development (MCESD) to deliver a presentation on the findings and recommendations of the 'Market Gaps in Access to Finance' report to the social partners.

Different funding solutions need to be found for enterprises which cannot put up tangible assets as collateral but that have a good business proposal. Mr Vella explained that “the lack of diversified financial products is limiting the development of SMEs. It was in light of this obstacle that the MBB embarked upon this study.” He continued that “Malta needs to diversify the financing options for SMEs to generate further economic development through the growth of SMEs. Increasing the range of existing financing options is also important to support the development of new sectors such as those that are heavily reliant on research and development, creativity and innovation.”

This meeting generated a healthy discussion between the stakeholders. MCESD Chairman

Increasing the range of existing financing options would better address the credit needs of local enterprises. To this end, exploring the potential for Venture Capital (VC) instruments can also serve as another financing option for local businesses. “For a small economy like Malta, VC can provide a means of strengthening and complementing current efforts at attracting foreign direct investment,” Mr Vella asserted.

100 SMEs, ranging in size and development stage from seed phase to internationalisation took part in this survey, carried out by Ernst & Young. This is the second in a series of joint assessment studies undertaken by the MBB and BOV following last year’s impact assessment on a Common Consolidated Corporate Tax Base (CCCTB).

21st may –

MBB and BOV organise business seminar on Access to Finance The MBB and BOV organised a business seminar on ‘Improving the Access to Finance for SMEs’, to discuss the findings of this study with the Maltese business community, and also for an exchange of views between public officials, stakeholders and entrepreneurs, on how EU funds in the new programming period 20142020 can be utilised better to address this issue. Ernst & Young, authors of the report, gave a detailed presentation of the study. A presentation was also delivered by Jonathan Vassallo, Director General of the Planning and Priorities Coordination Department (PPCD), on the challenges and opportunities ahead for access to finance in the new EU funding programming period for 2014-2020. A panel debate followed with the participation of George Vella, MBB President; Albert Frendo, Chief Officer Credit Bank of Valletta; and entrepreneurs Ivan Bartolo, 6PM, and Sandra Zammit, Smoochies. The seminar was moderated by Vanessa MacDonald. The seminar was also addressed by the Parliamentary Secretary for EU Funds Dr Ian Borg. He reaffirmed that it

is Government’s commitment to consult and work together with various stakeholders. In fact, he invited the Malta Business Bureau to explore ways and means, and make suggestions on

how it can serve as a partner to the administration in the planning and actual implementation of the initiatives and projects that will be identified in the next operational programmes.

John Bencini acknowledged the importance of the subject matter for the business community and coordinated a follow-up meeting to extend the discussion. This took place later in the presence of the Minister of Finance, the Governor of the Central Bank and the Chairman of the Malta Financial Services Authority.

BUSINESS AGENDA | july - september 2013

mbb update 7th June –

MBB President addresses a BUSINESSEUROPE workshop Following the publication of a Green Paper on the long-term financing of the European economy, BUSINESSEUROPE organised a workshop to discuss how to cope with factors of negative impact on banks’ ability to lend, and how to develop alternatives to traditional bank finance, in particular for SMEs. MBB President George Vella was invited to participate in a panel debate during this workshop, presenting the case of Malta emanating from the findings of the ‘Market Gaps in Access to Finance’ report, which put forward recommendations that can be implemented locally, but which can also potentially be reproduced in other EU member states. Mr Vella elaborated on the findings of the MBB report, calling on the European Commission to structure new innovative financing products in conjunction with

MBB Executive participates in MIM Working Parents Forum 2013 the European Investment Bank. “The incoming EU programming period for the period 20142020 should be characterised by greater focus on impact intensiveness of cohesion-funded projects with significant attention devoted to SME development and support throughout their lifecycle. In this regard, financial engi-

20th september –

Business seminar on Online Gambling in the Internal Market

In view of the upcoming event in September, Business Agenda discussed with Stefano Mallia, President of European Economic and Social Committee (EESC) Study Group on On-Line Gaming, the prospects of this important industry for Malta. “There is no doubt that Malta has been very successful in developing the On-Line Gaming sector. It has done this through the setting up of a very business friendly framework. This has been backed up with the setting up of a serious regulator in the form of the Lotteries and Gaming Authority (LGA). Add to this the other excellent attributes that we can offer as

Charles A. Zahra has been appointed as a Director on the Board of the Malta Business Bureau. He replaces John A. Huber, who has served on the Board for the past three years, two of which as President. George Vella welcomed Mr Zahra’s appointment to the Board, who will now join the other Directors, including Anton Borg, Charles Brincat, George Micallef and Mario Spiteri. Mr Vella, on behalf of the MBB also thanked Mr Huber for his invaluable contribution to the organisation both during his tenure as President as well as after that, when he actively kept committed to supporting the Bureau as a Director.

upcoming events

The MBB and the European Parliament Information Office shall be organising a business seminar to discuss the importance that this subject matter is being given at a European level. It will see the participation of MEPs, national authorities, various stakeholders and service providers.

New member appointed on MBB Board

a country (English speaking, safe environment, great weather) and sure enough we have put together a winning formula,” stated Mr Mallia. In view of the various exchanges at the EESC on the On-line Gaming industry and the debate taking place in the European Parliament, Mr Mallia noted that “it is clear that there is a drive by a number of member states (e.g. France, Spain, Holland) to attack our model with the aim of clawing back lost business. Unfair and often misinformed criticism is being levelled at the Maltese set-up. As a country we need to be aware of this and use all avenues at all levels to protect our success from unfair attacks. On the other hand we must fully acknowledge that there are certain risks to consumers linked to the gaming activity and therefore all precautions need to be put in place and operators flaunting the law must be penalised without hesitation,” Mr Mallia concluded.

neering instruments will become more important instruments in the delivery of the EU cohesion policy which is also undergoing a transformation in being increasingly aligned as a practical support tool for enabling the attainment of the Europe2020 Strategy targets,” Mr Vella said.

MBB Executive Mariella Scicluna participated in a panel discussion at the Working Parents Forum organised by the Malta Institute of Management. The forum discussed how working parents can balance parental and career responsibilities, while looking into various measures implemented in the public and private sectors. Ms Scicluna made particular reference to the MBB ‘Supporting Human Resources in Family-Friendly Training’ (SHIFT) Project, and gave an overview of the lessons learnt from training experiences in Denmark and Germany. Key note speakers included Hon. Helena Dalli, Hon. Marthese Portelli and Sandra Pollock, Director, Open Mind Coaching and National Chair, Women in Management UK.

BUSINESS AGENDA | july - september 2013

interview

“European economic recovery will not be possible without the growth of the manufacturing industry”

– Markus J. Beyrer

BUSINESSEUROPE is a confederation of 41 associations from 35 countries in Europe. DANIEL DEBONO speaks to Director General MARKUS J. BEYRER about his views on the current economic challenges and prospects for the future. Whilst going through one of the most delicate economic times since the post-war period, a great deal is expected from pan-European organisations, to deliver for the benefit of their members. BUSINESSEUROPE is an established business organisation based in Brussels, which takes an active role in lobbying with EU institutions. Its positions on various sensitive issues, ranging from business competitiveness to labour market policy, are respected and well-regarded. A few months since taking over the post of Director General at BUSINESSEUROPE, Markus J Beyrer faces the challenging task of strengthening the organisation’s validity in the heart of Europe. Mr Beyrer’s immediate concern has been that four years since the onset of the economic crisis, Europe has not been able to return to a path of sustained growth. He believes “EU member states urgently need to commit themselves to significant measures to restore business confidence, increase competitiveness, kick-start growth and create new jobs.” He says “I want to make sure the competitiveness of European companies is high on the EU’s agenda, that their voice is better heard, and that what we, as BUSINESSEUROPE, are doing in Brussels is better known in our member federations.” Mr Beyrer is concerned that businesses cannot flourish sufficiently while operating in a market characterised by economic recession. In this respect, he notes that “further effort is required on fiscal consolidation to help reduce overall tax burdens by focusing primarily on reductions in current public expenditure and protecting investment, not tax rises.” The long-term risk of youth unemployment Youth unemployment across a number of member states remains a huge concern and could potentially result in a medium to longterm threat for many value-added industries in Europe. In view of this, Mr Beyrer argues that Europe needs economic growth to create jobs. “Policies targeted at increasing youth employment need to reflect economic realities. In addition, it is not only the young people themselves, but even businesses, that suffer as they strive to meet their labour needs across the skills spectrum. This can hamper a company’s productivity and long-term

BUSINESS AGENDA | july - september 2013

interview growth prospects, as well as its innovative capacity.” He continues, “we believe that labour market reforms and education reforms need to go hand in hand to help overcome the structurally high levels of youth unemployment.” BUSINESSEUROPE has been very active on this front. A few weeks ago, together with other European social partners, it presented the ‘Framework of Actions for Youth Employment’. The Youth Guarantee Scheme also has a role to play, particularly in those countries with the highest youth unemployment rates. “I would like to highlight that it is growth that will sustain job creation and the youth guarantee should be seen in the context of an initial active labour market policy to help those in the worst affected countries,” Mr Beyrer affirms.

“But this renaissance of industry is fairly recent and, in my view, still incomplete. Despite the fact that the European Union is still the largest industrial producer in the world, industrial production is still 10 per cent lower than it was before the financial crisis. More than three million industrial jobs have been lost. The decline in Europe’s manufacturing represents a major problem and it is time to restore our industrial base,” he remarks. He adds that “recent years have shown that European countries with a strong industrial base recovered faster from the crisis. It is of paramount importance that industrial competitiveness be at the centre of EU’s policymaking to put Europe back on a growth path and to improve its attractiveness as a destination of industrial investment.”

The future of the euro One of the biggest challenges Europe faces is the retention of the Euro as the single currency. A year ago, the European Council sent a strong signal that Europe was committed to safeguarding the euro and recreating growth. And the European Central Bank did everything necessary to convince the markets of Europe’s determination, paving the way to the present recovery. BUSINESSEUROPE’s position has always been very clear. A stable euro is key to the success of European businesses and the future prosperity of Europe. He reiterates that “stronger policy coordination can be achieved immediately if European Heads of State and Governments adopt in full the European Commission’s (EC) ‘Country Specific Recommendations’ and show that they take

them seriously by increasing the pace of structural reforms, in particular to increase labour market flexibility, enhance product market competition and reduce the regulatory burden on businesses.” Mr Beyrer affirms that BUSINESSEUROPE also supports the introduction of ‘Convergence and Competitiveness Instruments’, provided the proposals strike the right balance between solidarity and responsibility by increasing incentives for structural reforms, and do not lead to an increase in the overall tax burden in the EU or the Euro Area. Burdensome obligations and regulations In conclusion, Mr Beyrer makes reference to the burdens on European SMEs in view of evolving EU rules and regulatory obligations,

Europe in a competitive global market Europe’s recovery cannot be dealt with in isolation. It remains a key player among a number of other established and emerging economies. It is facing stiff competition in its pursuit of a solid and consistent growth path. In this respect Mr Beyrer concurs with those who argue that “global economic growth is not driven mainly by developed countries anymore. Emerging economies play an increasingly important role; they are Europe’s partners but also strong competitors, even in high value-added products.” Mr Beyrer continues “we must understand that Europe’s return to a sustained growth and job creation depends on its competitiveness in the world. During the crisis many European companies remained strong and are looking to expand into global markets. But even the most innovative, well-run company can’t compete internationally for long in an uncompetitive regulatory environment. This, coupled with continuing uncertainties about the future of their investments, undermined business confidence.” He says, “BUSINESSEUROPE wants to see the EU economy rapidly return to sustainable growth and employment, therefore we must reverse this trend. If we prioritise well, competitiveness will really drive our policy agenda and Europe will not be left behind in the global economic recovery. This is something I want to work towards, with the help of all BUSINESSEUROPE members.” A manufacturing industrial core in Europe According to Mr Beyrer, creating an industrial manufacturing core, which surrounds itself with high value-added services, is a key economic solution for Europe. But what more needs to be done to move towards industrial competitiveness in Europe? Mr Beyrer notes how “across the European political landscape, we hear more calls to strengthen Europe’s industrial base and make it more competitive. Rightly so; because European economic recovery would not be possible without growth in the manufacturing industry.”

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particularly related to the energy and environmental agenda. In this respect he notes that “European companies – especially SMEs and Maltese entrepreneurs – are inevitably suffering the negative effects of ‘gold plating’, ‘red tape’ and ‘green tape’. BUSINESSEUROPE keeps urging the EC to set out simple, harmonised rules and to check that they are not subsequently complicated at a national level. It also urges the EC to move towards a technology-driven and competitiveness-friendly approach to fighting climate change, improving energy efficiency and simultaneously protecting the environment.

BUSINESS AGENDA | july - september 2013

malta sailing academy hp

BUSINESS AGENDA | july - september 2013

enterprise

MALTA ENTERPRISE ASSISTANCE TO ACCESS FINANCE Malta Enterprise offers a helping hand, in the form of various schemes and incentives, to businesses that are trying to secure funding. Business Agenda looks into what’s on offer. Accessing finance can be a cumbersome task for many enterprises wishing to embark on new or expansion projects. Conscious of the difficulties entrepreneurs have to face to overcome such hurdles at times, Malta Enterprise offers a number of schemes aimed at helping businesses or industries secure the funding they require.

in industries such as manufacturing, ICT, environmental solutions and eco-innovation, biotechnology, R&D and other innovative or high value-adding activities, which may be given a grant of up to €15,000 to help them part-finance certain costs incurred during the settingup phase. Malta Enterprise also offers a wide range of fiscal assistance, that likewise seeks to help enterprises invest to develop and grow their operations, including among others Investment Aid tax credits to support new investments and job creation, as well as tax credits to support R&D and innovation.

Such schemes include Micro Guarantee, which provides eligible enterprises with a guarantee to help them secure new loans of up to €100,000 from commercial banks participating in the scheme. The latter then provide loans on favourable conditions, and the beneficiaries of the scheme are required to provide only 10 per cent (or less) of the value of an eligible loan as collateral. Micro Guarantee is aimed at small enterprises that employ less than 20 workers – including start-up ventures – which are assisted in order to access funds required for the acquisition of tangible investments, intangible assets and working capital linked to such acquisitions. Malta Enterprise also offers a number of schemes specifically targeted at helping enterprises within the manufacturing industry, such as Soft Loans, Loan Guarantees and Loan Interest Rate Subsidies. These incentives help eligible enterprises to finance new investments or expansion projects, thereby assisting them in their development and growth. The Soft Loans incentive provides loans at low interest rates for partfinancing investments in eligible expenditure. Soft Loans granted by Malta Enterprise usually cover 33 per cent of an approved project, but in any case may not exceed 75 per cent of the cost of plant, machinery and equipment. Loan Guarantees facilitate access to finance by assisting enterprises in the acquisition of capital assets that will lead to a more effective and efficient production and supply of service/s. The main objective of this incentive is to support new investment projects undertaken by enterprises engaged in manufacturing. The Loan Interest Rate Subsidies incentive is an access to finance tool that aims to help increase the competitiveness and innovative capacity of enterprises, by sup-

Through Business First – the one-stop-shop operated by Malta Enterprise which gathers more than 50 Government services for businesses under one roof – enterprises may get professional guidance on the schemes or incentives they can avail themselves of. porting the acquisition of tangible and intangible capital assets that lead to a more effective and efficient production and supply of service.

enterprises involved in manufacturing, ICT, biotechnology, R&D and other innovative or high value-adding activities to help them set up and develop collaborative networks.

€60,000 to support eligible costs, would enable enterprises to share and transfer resources, knowledge and technology, thereby improving their competitiveness.

Additionally, Malta Enterprise also provides financial assistance to

Such networks, which may be granted up to a maximum of

Other financial assistance is also available for innovative start-ups

Further information may be obtained by visiting www.maltaenterprise.com or by contacting Business First on tel: 144 or email: info@businessfirst.com.mt

BUSINESS AGENDA | july - september 2013

eu affairs

EU data protection reform

must deliver for both businesses and consumers By Omar Cutajar, MBB’s Permanent Delegate in Brussels The European Commission’s proposal for a reform of the EU framework on data protection and the introduction of new regulations, replacing what are considered to be obsolete rules dating back to 1995, are currently being debated by the Council of Ministers and the European Parliament. The existing data protection directive of 1995 was already listed as one of the top ten most burdensome legislative acts for SMEs. The proposed new regulation promises to be all the none lighter for companies from an administrative angle. Moreover, the draft regulation is expected to generate a series of new and heavy requirements for enterprises, largely replacing the current obligations that it eradicates with new provisions which are equally difficult and costly to comply with. These concerns are extremely pertinent since the proposed regulation affects any business in any sector, even outside the EU, which processes data of EU citizens.

SME EXEMPTION Those who regard the proposals as especially burdensome for SMEs have been asking for the adoption of the original text presented by the European Commission; in

“ Many would welcome a significant reduction in the administrative burden the new proposals would place on businesses.” which companies employing 250 people or less were exempt from designating a Data Protection Officer for their company. A particular burden for SMEs is the administrative and monetary cost of training and employing a Data Protection Officer, particularly as the time and resources attributed to such a task could easily be used to greater benefit for the growth and expansion of the company.

SANCTIONS Many would welcome a significant reduction in the administrative burden the new proposals would place on businesses. This includes changes in the sanctions, in both the content and the proposed implementation procedure. Most importantly is that the new regulation takes a ‘one-size-fitsall’ approach to sanctions, failing to discriminate between the type or severity of violations, which creates obvious problems especially in the case of first or unintentional

non-compliances. The proposal also fails to specify that only the lead Data Protection Authority (DPA) may impose sanctions; and only one per infringement, and only applying to legal entities at a national or an EU, not a global, level. Furthermore the regulation does not state that the DPA alone may decide whether a sanction is appropriate and at what level it is enforceable, nor does it make provisions for a warning or reprimand system, or for the consideration of mitigating factors in case of non-compliance. Arguably, such unclear and undefined rules will fail to dissuade companies from infringing data protection rules and as a result will not achieve their desired aim and will also hurt businesses unnecessarily when enforced.

EMPLOYMENT CONSENT Another major problem with the new data protection rules is the lack of possibilities when it comes

to providing consent in the case of employment relationships, causing significant impracticalities for employers when processing their own employees’ data. It is particularly important that the transfer of data is not made more difficult, as

this would greatly hinder the development of the digital Single Market in Europe. The new rules appear to primarily negatively affect businesses, whilst the real focus of any new proposals should be on the prevention of dangerous, discriminatory and undesirable uses of data, and mitigating the risks of data processing.

NOTIFICATION PROCEDURE The new data protection regulation also includes widening the scope of data protection laws to ensure that any business which stores personal data as part of its everyday operations will have to disclose details of data security breaches. Although intended to provide greater protection and information for consumers, most businesses, especially SMEs, would not be able to provide the required notifications within the 24-hour time period allowed. The amount of notifications may also needlessly damage consumer confidence and lead to a decline in the development of the online data marketplace.

CUSTOMER PROFILING Profiling of consumers is described in the proposal as a negative marketing method, but can actually be beneficial to consumers and businesses alike, making advertising and the targeting of offers more efficient and effective. ‘Good’ use of data has significantly increased over the past five years, enabling businesses to expand their market

BUSINESS AGENDA | july - september 2013

eu affairs “ The European Commission has reassured those concerned about the proposals that explicit consent by the data subject will not be mandatory for data to be processed, and that the monitoring of publicly accessible areas will be possible without an assessment of the monitoring operations as a pre-requisite.” access and consumers to become more aware of the goods and services available to them. This is especially beneficial in terms of increasing online sales in which the customer is more able to make an informed decision using knowledge of all products on the market. It is therefore important that all relevant stakeholders work to defend the ability of companies to make ‘good’ use of data and not allow the new regulations to damage a growing online retail market.

THE IMPACT ON BUSINESSES From a business perspective, the existence of too many strict rules on data protection will have a negative impact on the European digital economy; in particular by adding administrative burdens on companies (especially SMEs), without a proportionate advantage for consumers. Much innovation is taking place on the ‘good’ use of data (healthcare, traffic management, energy efficiency) and must not be jeopardised because of a regulation which does not strike the right balance between data protection and free data flow in the digital single market. The European Commission has reassured those concerned about the proposals that explicit consent by the data subject will not be mandatory for data to be processed, and that the monitoring of publicly accessible areas will be possible without an assessment of the monitoring operations as a pre-requisite. There will also be a ‘right to be forgotten’, which means that clients who express their explicit consent to have their data removed will be able to do so. Some elements of the new proposals on data protection have also gained widespread support; the ‘one-stop-shop’ principle for example, would mean that a company will only have one processing authority (DPA) where processing will take place, regardless of the number of member states the company is active in. Certain elements of administrative burden from prior legislation on data protection have also been eliminated, such as the notification obligations for companies and the simplification of the binding corporate rules (BRC) process (now validated by only one DPA). Overall, the harmonisation of data protection rules and enforcement bodies should reduce the administrative burden for companies and provide better legal certainty for everyone. It is therefore important that they achieve these aims

and do not fail to improve upon the existing regulation in the area of data protection.

BUSINESS AGENDA | july - september 2013

USING DIVERSIFICATION TO GENERATE RETURNS Diversification can reduce the downside risk in a portfolio, but it can also improve the prospects for generating attractive performance. By expanding the investment universe beyond simple asset classes and strategies it is possible to widen the range of potential sources of return and benefit from exposure to both directional and non-directional risk. A portfolio takes directional risk if it has exposure to the movements of markets, and it takes non-directional risk if it has exposure to other factors, such as the relative returns between two instruments or strategies that depend less on market direction to generate returns. For example, an index-tracker that replicates returns in the UK equity market will contribute directional risk exposure to a portfolio. By contrast, a portfolio may hold a long position in US equities and a short position in European equities; the combination of these holdings means that the portfolio has exposure to the performance of US stocks relative to European stocks. This is an example of a nondirectional risk, as the portfolio is exposed to the relative difference between the two holdings, rather than the absolute change in the value of either investment. By combining directional and nondirectional risk exposure in a portfolio, it is possible to maintain positive, attractive returns through a range of market conditions. In rising markets, directional risk exposure can contribute strong returns to a portfolio, supported by returns from non-directional risk exposure. In falling markets, non-directional risk exposure can continue to generate performance, potentially offsetting losses from directional exposure. To achieve exposure to both directional and non-directional risk, a portfolio must have access to a broad set of potential investments and be flexible enough to take advantage of opportunities as they arise. With regard to directional risk, there are substantial opportunities available across global markets and asset classes, and an approach that enables unrestricted investment to the most attractive investments at any given time can optimise the available returns from a portfolio.

The Vilhena Broad Opportunities Fund invests permanently 85 per cent or more of its assets in units of the Class B1 Euro Shares Class of the Insight Broad Opportunities Fund, which is a subfund of Absolute Insight Funds p.l.c., which also qualifies as a UCITS and is incorporated under the laws of Ireland. The value of the investment may fall as well as rise and any initial charges may lower the amount invested and the amount received upon redemptions. Investments should be based on the full details of the Prospectus and the Key Investor Information Document which may be obtained from VFM, Bank of Valletta plc Branches/Investment Centres and other Licensed Financial Intermediaries. VFM is licensed by the MFSA. The Vilhena Funds SICAV plc is licensed by the MFSA and qualifies as a UCITS. Issued by VFM, TG Complex, Suite 2, Level 3, Triq il-Birrerija, L-ImrieË&#x2122;el, Birkirkara BKR 3000 Malta. Tel: (356) 2122 7311, Fax: (356) 2275 5661, Email: infovfm@bov.com, Website: www.vfm.com.mt. Source: VFM

With regard to non-directional risk, there are multiple opportunities for investors to generate additional returns. These include investment in absolute return strategies which aim to generate positive returns through a range of market conditions; relative trades such as the long holding in US equities and short holding in European equities described above; and strategies using derivatives that aim to exploit market conditions in the short term. Managing both directional and nondirectional risk exposures therefore requires a flexible portfolio structure and a transparent invest-

ment process that enables control through careful risk management at several levels. The balance of directional and less directional strategies will vary depending on a managerâ&#x20AC;&#x2122;s assessment of market conditions, but both require the use of different risk management techniques which then need to be brought together to ensure that the portfolioâ&#x20AC;&#x2122;s overall risk attribution is sufficiently diversified. Managed by Valletta Fund Management Limited ("VFM") The Vilhena Broad Opportunities Fund provides access to a broad range of asset classes and strategies, lead-

ing to returns derived from exposure to both directional and nondirectional risk through the Insight Broad Opportunities Fund. The Insight Broad Opportunities Fund ("Feeder Fund") combines these core principles of flexibility, transparency and control to create a successful diversified growth strategy. The Feeder Fund invests in a broad range of asset classes and strategies, leading to returns derived from exposure to both directional and non-directional risk.

Matthew Merritt

Head - Multi Asset Strategy Insight Investment Management (Global) Limited

BUSINESS AGENDA | july - september 2013