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vers Shakers
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W CEO OF TH E MALTA CHAMBE R, D R MARTH E SE PO RTE L L I
A Business
Environment for Movers and Shakers
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mbarking on a new business venture typically requires a passionate commitment to a vision and a significant capital outlay. Many people who are not in business believe that being in business is about getting rich quickly and having a cushy life thereafter. But most entrepreneurs work very hard round the clock, and even when their business is successful, they tend to reinvest most of their earnings into their business. Another common misconception about entrepreneurs is that they are risk lovers who are constantly taking gambles. Business is about taking risks, but typically it is about taking calculated risks. There is also a big difference between risk and uncertainty. Businesses hate uncertainty because it hampers their ability to take calculated risks. As a matter of fact one’s attitude towards risk is an important aspect particularly when it comes to banking and financing. However, the question that often arises is whether banks are adopting a systemic approach rather than a risk-based approach. In recent years, we have witnessed a banking sector that has become highly regulated across the globe. This drive for increased regulation has been spurred primarily by money laundering concerns that are deeply routed in international politics and the need to curb illicit trafficking and tax evasion. Banks are adopting a systemic handling of AML risks that is seeing banks refuse to do business with whole sectors of the economy rather than individual companies. Business risk is different – whilst it will always be and should always be a pertinent consideration for banks, business risk should be typically based on a case by case assessment as opposed to the more systematic handling of AML. This is particularly more important in the case of movers and shakers. Movers and shakers are typically operating in new economic niches and emerging markets. They often face significant challenges financing their business ventures, particularly during the startup and scaling up stages of their business. Malta has no venture capital market and banks have traditionally been rather risk averse, particularly when considering projects whose collateral is not brick and mortar. Regulatory pressures related to AML have made banks even more risk averse as they have now become highly sensitised to the potential risk of a business being used as a vehicle for money laundering. But banks approach to this has so far been systemic rather than risk-based. So where does this leave movers and shakers?
institutions are a Movers and shakers key Lending player in the movers and are always in search shakers ecosystem. They need a risk-based approach for this change – they towhenadoptevaluating business risk. Business risk requires smarter respond to change in use of the information available a timely manner, they on a business. It also requires a understanding of the sector reinvent themselves good in which a business operates, best and exploit such change practices in that sector, growth and the regulatory to an opportunity. prospects, framework of the sector itself. Many non-traditional sectors, such as gaming and medical cannabis, are in fact highly regulated. The regulatory environment of industries provides important operational safeguards that banks would do well to factor into their risk assessment. Another important player in the movers and shakers ecosystem is the Malta Development Bank. The Malta Development Bank supports private sector development by offering financing facilities for viable operations that the financing market is unwilling or unable to accommodate. It does this through innovative financing schemes, credit enhancement as well as venture capital. The Malta Development Bank is currently consulting with The Malta Chamber on a number of new financing instruments that it intends to launch in the coming weeks so as to ensure that the needs of the industry and business are met. We are living in a fast-paced world. The customer wants things faster and easier. Movers and shakers are always in search for this change – they respond to change in a timely manner, they reinvent themselves and exploit such change to an opportunity. They are the true representation of entrepreneurship and this is why the system must support them. M+S
