The Malta Business Observer, 30th April 2020

NEWS Issue 109

| April 30, 2020

Distributed with Times of Malta

Private sector firms call for roadmap to easing of restrictions

e tourism industry could sustain losses of anything between €1.4 billion and €2 billion, with recovery in the sector not expected to start till the end of this year, according to some stakeholders. see pages 8, 9 >

Rebecca Anastasi Private sector firms, across a gamut of industries, have called for the Government to reveal plans for the easing of restrictions which have been imposed as a result of COVID-19, while the Economy Minister said that a proposal is currently being discussed with the Health Authority, though he did not commit to a date as to when this would be announced.

“Discussions are now shifting on the transition from the current scenario into a restart phase where we re-stimulate parts of the domestic economy,” Silvio Schembri, Minister for the Economy, Investment and Small Businesses said in comments to The Malta Business Observer.

“A proposal was put forward to the Health Authority which includes various measures that suggest lifting restrictions on a number of sectors gradually. At the same time, I also understand that this will come with a risk attached, and, therefore, the health authorities will need to calculate this risk and take decisions based on this risk. Gradually lifting restrictions on certain sectors of our economy will mean

BUSINESS OPINION

Air Malta’s Chief Executive Officer, Capt. Clifford Chetcuti, argues that courageous decisions will have to be taken in the face of adversity and a changed postCOVID-19 scenario. see page 11 >

that some businesses will be able to operate again and, hence, this would help ease the current stalemate,” he explained.

Mr Schembri’s comments might offer some comfort – albeit limited – to businesses ap-

pealing to the Government to end the uncertainty and provide the community with a roadmap for the lifting of the restrictions which have been recently put into place to mitigate the health crisis.

Martin Mercieca, the Chief Executive Officer of Class Optical Ltd, an 80-strong firm in the optical sector operating a manufacturing lab, a wholesale distribution netcontinued on page 3

BUSINESS

e Chairman of the Malta Development Bank (MDB), Prof. Josef Bonnici, outlines the benefits of the entity’s COVID-19 Guarantee Scheme (CGS) to local businesses. see pages 12, 13 >

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Proposal for easing of lockdown measures still being discussed with Health Authority continued from page 1 work, seven retail outlets, as well as a medical section, said guidance from the Government was needed.

In this regard, he said it would be useful if the authorities announced a schedule for the ease of lockdown, similar to what has already been done in other countries.

“It might be good to have some dates, so that we can have some type of indication, even if these are then extended,” he said. However, in the meantime, “2020 has to be written off,” he asserted, explaining that the firm saw a 40 per cent drop in business in midMarch, going down to 60 to 65 per cent by mid-April, but has, so far, managed to retain all its staff, though employees are working a 30-hour week.

Indeed, his biggest concern was how long the situation was going to last. “If this persists till June, then we’ll be in crisis management mode till then and we can try to weather the storm”. Cashflow remains a key issue, as do utility and rental payments, with the company’s objective being “to keep everyone in employment. But, with every passing day, week or month, things get more awkward and hard decisions will need to be made,” he said.

Echoing these concerns, but commenting on a more general basis, David Pace, Head of Advisory at KPMG, said that most companies are currently struggling with three key questions:

“how long will this disruption last; how deep will the impact be on my revenue and cash flow; and, finally, how will the economy recover,” he said.

Indeed, Mr Pace, who is responsible for the auditing firm’s response to the pandemic, said that, apart from measures helping with liquidity management, firms would benefit from “an additional level of communication

by Government and key stakeholders on plans and measures, thus providing more clarity in these ambiguous times.”

In this regard, the difficulties being faced were clearly explained

by Patrick Cutajar, the Managing Director of IT service provider, Eyetech Ltd, who said that, while the firm has not made any of its 27 staff redundant, if nothing changes, it will barely make it till mid-July, pointing out that daily enquiries for services based on jobs calls per day were down by between 75 to 80 per cent.

Asked if it would be useful if the Government gave a timeline for the easing of restrictions, he said that it would help “100 per cent”, asserting that “what hinders business is the unknown, since that business cannot plan ahead.” However, he underlined that knowing when the measures are lifted is not enough but said that companies need to know the conditions under which they can operate. “The what and the how are issues which also need to be addressed,” he explained.

“It might be good to have some dates, so that we can have some type of indication, even if these are then extended." – Martin Mercieca, Class Optical Ltd CEO Asked what the future holds if this level of uncertainty persists, and the same level of restrictions are in place, he said that “by the end of May, at the latest the end of June, we would have to put everyone on unpaid leave (since the Government’s measures for now do not support our industry and we are not under Annex A nor Annex B in the wage supplement provision).” The business would also need to apply for the COVID19 Guarantee Scheme provided by the Malta Development Bank, Mr Cutajar explained.

Struggles also persist in the retail sector. Christine Pace from Dorkins Ltd, a franchisee of international brands in Malta including Dorothy Perkins, Topshop, and Wallis – employing approximately 80 people – also called for a schedule to be announced, together with the conditions under which retailers would be able to trade under. However, she also said she understood the Government’s hesitation over publishing a timeline too soon, in case

“people start to think that this is over,” she asserted.

“Should the health authorities give us the go ahead to open, business will still be very slow at the beginning whilst our running costs will go back to being as high as they were before,” she said. Indeed, looking ahead, she said it was imperative that the salary grants are maintained, even after the soft lockdown is lifted, and recommended Government intervention in the case of rents, which should be suspended or renegotiated.

Mark Vella, the Managing Director at Powerhouse Ltd, an audiovisual and events management firm, has also said that he was not able to plan ahead in the current circumstances, but he said that although it would be useful to have a plan revealing the lifting of measures, he doubted “if it is possible to do” since the situation “is very difficult to predict.”

Overall, he thought “the Government is doing very well, but, when compared to some of the

countries in Europe, we are far from being the best, but we can survive. However, I do understand that the Government is being cautious because this is such an unknown situation.

To be honest, I am taking this day by day, as this is unknown to me as well, and that is the worst thing for any one in business – that we are not able to plan ahead.”

The Managing Director said he has also written the year off saying that “the events and expo industry was the first to be globally hit by COVID-19 and will be the last industry to get out of it.” Worryingly, he estimated that recovery would only slowly start in the spring of 2021, with the industry not returning to its pre-pandemic buoyancy before the autumn of 2023.

The firm has seen sales decimated up until October 2020, Mr Vella said, while events which were scheduled for November of this year are also shifting to 2021. As a result, the company has put its staff on reduced hours, though how long it can survive in these circumstances depends on whether the firm will receive the €800 Government wage supplement – something which is not at all certain, Mr Vella continued, since an issue with the NACE codes has meant he has not yet received confirmation and neither have most companies in the event and expo industry, he said, concluding.

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New Malta Chamber study set to confirm 23,000 redundancies forecast Ray Bugeja A study conducted among employers over the past days is set to confirm the figure of 23,000 redundancies estimated by a previous study conducted by the Malta Chamber of Commerce, Enterprise and Industry.

A Chamber of Commerce study, held before the Government announced its support package, had put the projected redundancies at 45,000 but the figure dropped to about 23,000 workers when a second survey was held.

As calls from various quarters continue for more assistance to companies in difficulty, the Malta Chamber has just completed a third survey, among employers.

The data is still being analysed but its President, Perit David Xuereb, said that, though it is still too early to confirm, “the trend shows that this projected figure [of 23,000 redundancies] is likely to persist”.

In the meantime, a spokesman for the Ministry of Education and Employment said the number of redundancies registered between 24th February and 5th April this year amounted to 739 workers. Of these, 568 were fulltimers while 171 were parttimers, with 41 having already found another job .

Indeed, Jobsplus figures show that 1,659 people (1,476 of them Maltese) were registering for work in the last week of February, rising to 2,491, including

2,092 Maltese nationals, in the week ending 3rd April.

The Employment Ministry spokesman said Jobsplus is intensifying efforts to assist people who lost their jobs as well as companies affected by this pandemic.

Registration for employment has been simplified and individuals can register online through Jobsplus’ website while also receiving

personalised advisory services over the phone, he said.

In comments to The Malta Business Observer, The Malta Chamber of Commerce, Enterprise and Industry reiterated its proposal for a series of actions that would expand assistance to companies, based on their registered loss of activity rather than their specific sector of operation.

The Malta Chamber, moreover, called for deferments on all forms of taxation, including income tax, VAT and excise duties to help liquidity. It also proposed that rental fees payable to Malta Industrial Parks are waived and those to the Lands Authority suspended, with such suspensions applicable to sub-leases. In the case of commercial rents, the Malta Chamber sug-

gested an equitable system between landlord and tenant stipulating that, during the crisis, the rent is reduced by a predetermined percentage and, if not paid, it becomes payable in full.

It further stated that the banking system should ensure that liquidity reaches businesses while keepcontinued on page 6

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Jobsplus figures show redundancies steadily increasing continued from page 5 ing the cost of borrowing low.

Banks should not unnecessarily withhold loans for projects as most companies are operating with a few weeks of liquidity, so timeliness with providing liquidity is of the essence, the Malta Chamber pointed out.

Moreover, it recommended the setting up of a fund to enable intervention in capital markets through asset purchase programmes providing necessary stability, and urged the Government to enact legislation relaxing the rules of insolvency, thus allowing business owners to focus on salvaging their enterprises without fear of eventually being accused of wrongful trading. The Companies Act, it said, needs to be amended to render

liquidations as efficient, quick and painless as possible, to limit liability on creditor claims directly related to COVID-19, and to give directors of such companies every fair opportunity for a second chance.

Special assistance should also be given to proactive companies investing in their future viability in a post-COVID-19 world, the Malta Chamber said.

In its latest report on Malta, Fitch rating agency said it expects the labour market to deteriorate markedly this year, with the unemployment rate set to rise to 6.1 per cent from 3.4 per cent in 2019, before edging down to 5.1 per cent in 2021. This, it noted, would match the 2013 level but would still be below the highest (6.9 per cent) posted during the global financial crisis in 2009.

“We see upside risks to these projections given that the accommodation and food services industries employ a large share of foreign labour,” the entity remarked.

Moreover, a recent survey by the Malta Employers’ Association found that 9 per cent of respondents resorted to redundancies, eight out of every 10 of them saying the rate so far is less than 25 per cent.

However, less than a fourth of those who answered the questionnaire said they will not increase the number of workers made redundant if the crisis persists beyond the end of May. Almost a third said redundancies will increase beyond 31st May and 45 per cent are undecided.

Of those who envisage more redundancies, 36 per cent fall in

Annex A, 21 per cent in Annex B and 43 per cent are not eligible for any support under neither of the two schemes.

Significantly, the study established that fewer than a fifth – 18 per cent – of the companies surveyed found the support schemes to have been effective.

The employers’ organisation stated, among other things, that the Government needs to extend the benefits of Annex A to other companies that may be in dire need of assistance, irrespective of sector.

In this regard, the latest figures published by Malta Enterprise in relation to the Government scheme supporting businesses and self-employed people impacted by the COVID-19 show that 18,204 applications (under both Annex A and Annex B) for a wage supplement have been received by

the time of publication of the data.

The bulk, 13,037, came from the self-employed and 4,372 were submitted by companies. The number of employees covered by the applications stood at 82,988 (71,122 fulltime and 11,866 part-time), with the bulk of them – 78,668 – in Malta and the rest in Gozo.

Of the 15,532 applications submitted for the full wage supplement (€800/€500 per month), 4,869 – covering 9,925 full-time employees and 1,870 in part-time employment – were approved.

The supplements paid amount to just under €10.5 million so far.

Applications received for the partial wage supplement (€160) totalled 2,627, of which 668 were approved, involving 1,936 fulltimers and 301 part-timers, and the amount disbursed has reached €480,296.

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GDP to drop by over 5 per cent this year Ray Bugeja Economic growth is expected to drop by 5.4 per cent this year and then grow by 3.9 per cent in 2021, Finance Minister Edward Scicluna told social partners yesterday, as reported in the local media.

The official forecast decline in GDP this year is close to the 5 per cent prediction made by former Central Bank Deputy Governor Alfred Mifsud in comments to The Malta Business Observer.

However, the figure he mentions in terms of the expected growth next year is higher than the Minister’s. Mr Mifsud put the figure at 6 per cent.

“My best estimates would be for a GDP drop of around 5 per cent this year and 6 per cent growth next year (on a lower base of the 2020 drop, so, basically, we go back to 2019 figures), whereas a prolonged crisis could see a 10 per cent drop this year and a very mild recovery next year,” he said.

What we know so far, he pointed out, is that the economy received a big shock in March and April, when it was practically frozen to protect against the health risks of the pandemic.

“The extent of the damage depends on the duration of the economic freeze and the length of the recovery period once the unfreezing process begins.

There are no easy answers to these questions and, therefore, most economic modellers are

making various scenarios, ranging from a quick return to normality, to a prolonged process stretching well into 2021, hoping no second wave pandemic returns after the unfreezing process, which, by necessity, has to be very gradual. I have seen no models including a second wave and, presumably, the figures in such an event would be scary,” the economist asserted.

Since the Maltese economy is very much dependent on international tourism and personal consumption of services – both very highly impacted sectors – Mr Mifsud admitted he would tend to be rather pessimistic about a quick recovery.

Moreover tourism recovery, he was quick to remark, does not quite depend on us but also on the situation in source markets.

In the case of personal consumption, like catering, personal care, pet services and so on, the uncertainty surrounding the economic recovery will force consumers to be very prudent with how they spend their money, holding them back, even if there will be full clearance by the health authorities, he explained.

In the meantime Francis J. Vassallo, a former Governor of the Central Bank, thinks it will be a long and painful recovery. “I prefer to be cautious and safe rather than optimistic but live a lie,” he said.

The recovery, he warned, did not just depend on Malta but on

other countries and, therefore, one should be careful when speaking about an early exit. He certainly does not agree with those speaking of getting back to normal by December 2019.

It is imperative that one takes a macro and not a micro perspective, Mr Vassallo insisted.

There are various factors to be borne in mind, including people’s purchasing power, rising unemployment and how the authorities deal with the situation.

For example, rushing to print money, he warned, could lead to inflation.

One needs to be cautious and disciplined, Mr Vassallo asserted, recalling what had happened after the Great Depression.

Looking ahead economist Gordon Cordina said that, at this stage, he would like to focus on the fact that the development of the COVID-19 outbreak at the global level is indicating that, even as economic and social activity is gradually reactivated, firms and workers will have to operate under changed ‘business-as-usual’ conditions.

Such an approach, he continued, would allow for increased medical safety and would allow firms to adapt to different ways of working, as well as marketing and selling, while reaping cost and environmental efficiencies in the process.

“Business success will, in the future, depend on the ability to rapidly adapt to these conditions, rather than to stay in a hi-

“ere are no easy answers to these questions and, therefore, most economic modellers are making various scenarios, ranging from a quick return to normality, to a prolonged process stretching well into 2021.” – Alfred Mifsud, former Central Bank Deputy Governor bernation mode under a probably false expectation of life someday returning to what it used to be,” Dr Cordina pointed out.

And, while the Central Bank of Malta preferred not to comment on the subject when approached

by The Malta Business Observer, in its latest Economic Update, it reported that business conditions and sentiment indicators for March had already started to reflect some of the impact of the pandemic on the economy.

On the basis of preliminary calculations, when making its economic projections for 20202022, based on information available until 28th February 2020, the Central Bank estimated that containment measures imposed by the Government until the 15th March would lower GDP growth by about 3.5 percentage points, when compared with

the baseline projections. In turn, this would adversely affect the fiscal balance by about 0.8 percentage points.

Furthermore, the International Monetary Fund projected that Malta’s GDP would contract by 2.8 per cent this year, and growth will jump to seven per cent in 2021. This drew some reactions from certain quarters, including the Malta Chamber of Commerce, Enterprise and Industry, whose President, David Xuereb, said the IMF underestimated the negative impact of COVID-19.

Indeed, Fitch estimated higher losses, saying Malta’s GDP will shrink by 5.9 per cent in 2020, and grow by 3.6 per cent in 2021, while Moody’s said it expects the Maltese economy to contract by 3.8 per cent of GDP this year but to return to a full year of growth of 3.2 per cent of GDP in 2021.

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Recovery in tourism not set to start before end 2020, stakeholders say Ray Bugeja The tourism industry could sustain losses of anything between €1.4 billion and €2 billion, according to some operators and observers, basing their estimates on last year’s earnings and projected increases, with recovery in the sector not expected to start till, at least, the end of this year, The Malta Business Observer has learnt.

Tony Zahra, President of the Malta Hotels and Restaurants Association, said that the indications, prior to the COVID-19 outbreak, were that 2020 figures would be three to four per cent higher than those for 2019, which registered an expenditure by incoming tourists of €2.2 billion according to figures released by the National Statistics Office.

“We had a record January and February, and some arrivals in March, so we had, let’s say, two and a half months of activity, out of 12 months. On a straight-line basis, income stood at, more or less, €400 million, between January and March 2020. I expect Malta to have some tourism income between July and December, which I estimate will be another €400 million. In total, this would leave a loss of more than €1.4 billion. This is not a scientific study, it is just simple backof-the-envelope calculation, but I would say a very good estimate,” Mr Zahra argued.

The MHRA President pointed out that, although no borders have been opened yet, a group of countries, spearheaded by Greece and including Italy, Malta, Spain and Croatia, are lobbying Brussels so that summer 2020 is not written off completely. Indeed, the MHRA, he said, wants Malta to be among the first to receive tourists from abroad once flights resume. To this end, he said that, if a reliable 10-minute test for COVID-19 is introduced, travellers will then be able to be tested before checking in for their flights.

The figures quoted by Mr Zahra reflect those of a statistician with close ties to the tourism industry, but who preferred to remain anonymous.

He noted that, while according to official figures the total expenditure by tourists between January and December 2019 amounted to €2.2 billion, when one subtracts the amount spent on air travel and what are tech-

nically known as ‘leakages’ – capital or income that escapes an economy or a system – the loss would be between €1.8 billion and €2 billion for 2020.

However, Raphael Aloisio, Leader Financial Advisory at Deloitte, who conducts the quarterly surveys for the MHRA, advocated a more cautious approach, calling any estimate on the amounts in losses a “guesstimate.”

Yet, Mr Aloisio also said that tourism will, indeed, take longer than a number of other sectors to recover. The recovery will not only depend on when Malta International Airport opens but also on when other key outbound airports are operational again and what travel restrictions different countries will place on their travelling nationals. “On the basis of the limited information available, I would ‘guess’ a 12-month plus recovery period from when our airports open for an acceptable commercial level of flights,” he explained.

How resilient are hotels to withstand the COVID-19 onslaught?

Hotel operators, Mr Aloisio said, have massive sums of money in-

vested in properties and, generally, have strong balance sheets as well as acceptable levels of gearing. In theory, Mr Aloisio continued, as long as the tourist lockdown does not drag on for too long, most hotels should be able to rebound fairly quickly.

Industry losses are also linked to how long the situation persists, with some tourism stakeholders underlining that recovery will be slow. According to Corinthia Group Chairman Alfred Pisani, this will be the case, since Malta is not connected to the continent and its home market is very small.

Therefore, there can only be meaningful occupancies when a vaccine is available, he said.

Mr Pisani admitted that, going by his Group’s plans, he is assuming almost no income or, at best, very limited income for the rest of the year. He predicts a very slow recovery for restaurants and no possibility of any meaningful business for the hotels. Indeed, he does not anticipate any return to normality before 2021.

And, there will also be changes post-pandemic, Mr Pisani said, advocating for a focus on quality,

“Malta as a destination, should adopt this opportunity to reposition itself on a qualitative level, rather than on the basis of mass marketing.” - Alfred Pisani, Corinthia Group Chairman rather than numbers, and saying that “Malta as a destination, should adopt this opportunity to reposition itself on a qualitative level, rather than on the basis of mass marketing.”

Concurring with many of these points, Neville Zammit, an economist and business analyst in the tourism industry, has “conservatively” estimated that tourism would scale back to 40 per cent of 2019 levels this year, principally based on the strong initial two months and the fact that, although unlikely, a Q4 recovery still remains a possibility.

Part of the recovery, Mr Zammit said, will be an element of local pent-up demand once restrictions are lifted, though this would still be just a fraction of

the spending activity usually associated with the seasonal Q2 and Q3 influx of tourists. Moreover, as the lifting of restrictions could trigger a second wave of the virus, a certain degree of fear would linger and one also had to consider the effects of increased unemployment and wage cuts on discretionary spending, Mr Zammit explained.

Assuming no resurgence of viruses, he predicted that 2022, at the earliest, could approach the 2019 level in terms of tourist arrivals on the back of a full 12month booking period unscathed by any dreaded coronavirus news.

In reaction to the concerns expressed by private stakeholders, Tourism Minister Julia Farrugia

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Portelli acknowledged that the financial losses are likely to be “substantial” but said it is not easy to quantify such losses by the sector at the moment. Indeed, for Ms Farrugia Portelli, making such an estimate is premature, considering the uncertainties. “There is no doubt, however, that 2020 will feature a substantial downturn over 2019 results,” she admitted. Yet, she underlined the Government’s commitment to minimising the impact through various fiscal and monetary initiatives.

In the circumstances, the Minister said, it is logical to work on the assumption of a stepped approach towards re-opening the tourism industry. She feels that Malta can enjoy a cutting edge on other countries, if it positions itself as having the best practice, even in tourism.

She underlined the importance of the sector, noting MTA estimates indicate that tourism has a direct GDP impact of about 12 per cent, rising to 25 per cent if its full economic impact magnified by its multipliers is taken into account.

Ms Farrugia Portelli added that the identification of crisis-re-

“If Malta and other countries get a clean bill of health, we can work on bilateral agreements to start opening up slowly.”- Julia Farrugia Portelli, Tourism Minister sistant source markets and segments is crucial in the formulation of Malta’s recuperating tourism strategy. To this end, the MTA is already working with its partners to identify markets and segments that will give Malta the highest initial recovery response.

“If Malta and other countries get a clean bill of health, we can work on bilateral agreements to start opening up slowly,” she noted.

The indications, the Minister continued, are that the first travellers post COVID-19 are expected to be healthy, independent, adventurous and active people in the 21 to 35 years age bracket, followed by those in the 36 to 55 years age group, coming mainly from a

medium to higher socio-economic background and employed in areas of industry less affected by the pandemic.

The tourists will typically travel in couples or in small groups of family or friends, will prefer short haul destinations close to home with direct flight connections, and will choose destinations perceived to have handled the pandemic very well and to offer the highest standards in hygiene and service.

There will also be a strong motivation towards outdoor activity, sports and al fresco dining, Ms Farrugia Portelli said.

The industry niches that MTA will primarily be focusing on as the situation continues to im-

prove include city breaks, short breaks and luxury holidays, as well as family holidays and English language learning.

Furthermore, reflecting the comments of private enterprise, the Minister affirmed it was imperative that internal tourism is kickstarted. To this end, her Ministry and the Malta Tourism Authority are working with the health authorities on protocols for the re-opening of certain service providers.

Overall, marketing efforts, the Minister added, will focus on the online media, and advertising and PR activities will be conveying the message that Malta and Gozo offer a rewarding and enriching holiday experience, while giving best value for both money as well as precious holiday time. Indeed, Malta has just launched an international awareness campaign in 14 languages themed ‘Dream Malta now, visit later’.

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11 e Malta Business Observer is Malta’s leading business newspaper distributed with Times of Malta every month.

EDITORIAL

In for the long haul 2020 was a rude wake-up call, with COVID-19 pushing us to question the very fundamentals of our economies, our businesses and our societies. Indeed, up until the end of 2019, the rallying call amongst industry leaders, local firms and Malta’s foremost entrepreneurs was for sustainability, with some steeling themselves for a potential sudden burst in the economy’s buoyancy as a result of environmental pressures, the lack of human resources and increasing competition.

Instead, the unpredictable happened and, today, the landscape has been irrevocably altered by the pandemic. Businesses have been left floundering, trying to find solutions which would allow them to operate in unprecedented circumstances, while the Government has attempted to buffer the economy from the worst effects of slumping demand, limited operations and the resulting gaps in liquidity.

Of course, Malta is not alone in meeting these challenges. Writing in the international press, Nouriel Roubini, professor of economics at New York University’s Stern School of Business – an expert who has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank – said the world is headed for a “greater depression” which will sweep the entire global economy into a “decade of despair.” For Mr Roubini, the seeds were sown long before the pandemic hit communities, with high public and private-sector debt levels,

demographic trends and the growing risk of deflation factors which have contributed to a perfect storm.

Yet, locally, for years, we’ve been told that Malta’s economic buoyancy of the past seven years has ushered in a period of prosperity unrivalled in the nation’s history. Thousands of column inches were dedicated to the Government’s heralding of a new dawn, with experimental industries flourishing, as the more traditional ones saw an unbridled upswing and Malta’s financial prospects looked brighter than sunlight.

Even in this edition of The Malta Business Observer, the Finance Minister, Prof. Edward Scicluna, reassures us that Malta’s low debt-toGDP ratio – below the EU threshold of 60 per cent – as well as the island’s high economic and employment growth rates will shield us from the worst of the economic repercussions. Indeed, he underlines, that the “consecutive annual surpluses have enabled the Government to afford providing one of the best financial packages in Europe to support families, businesses, the self-employed and employees.”

But, is it the best? As our cover story shows, some local businesses are sceptical, with many treading water and anxious about what the future may hold, pushing them to call for the Government to reveal plans for the ease of lockdown. They are right to be anxious. After all, despite hopes that the situation might get better by June, particularly if the rate of infec-

Executive Editor Rebecca Anastasi

tion remains low, there is no guarantee and, until there is a vaccine, we will have to cope with periods of intermittent lockdown for the foreseeable future. This is the new normal.

Of particular worry is that much-heralded rate of employment. While, as we show in this edition, the number of redundancies registered with Jobsplus between the 24th of February and the 5th of April was 739, this may not accurately reflect the trauma being experienced by companies, and their workers. Indeed, the Malta Chamber of Commerce, Enterprise and Industry has reiterated its prediction that these numbers will increase, standing by its recent redundancy forecast which put the number at 23,000 employees being laid off as a result of the pandemic, if the situation persists.

Without a doubt, the business community needs the Government to tackle these issues and to look into all the sectors which have been severely impacted – not only those operating within tourism, retail or entertainment – and pledge changes which will help them in the long-term. In short, the business community needs guidance. For while the authorities’ management of the health crisis is exceptional – and credit must go to the steady hand shown by Health Minister Chris Fearne and Superintendent of Public Health, Prof. Charmain Gauci – if things don’t change, we might be left with an economic crisis which will far eclipse the health emergency.

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BUSINESS OPINION

Standing together to navigate the storm

Capt. Clifford Chetcuti In my over 30 years’ experience in the aviation industry, I have been witness to some devastating events that hit the travel and tourism sector particularly hard. Two Gulf Wars, 9/11, SARS, the closure of borders around the state of Qatar are but a few, but none have had the global catastrophic effects the COVID-19 pandemic is creating.

Throughout all those prior events, airports remained open and aircraft continued to fly.

This time around, options to generate revenue are limited, to say the least, as governments have imposed heavy restrictions with borders closing as of February and travel directives chang-

ing on an hourly basis. Consequentially, ticket sales have ground to a halt and, currently, Air Malta is operating at less than 10 per cent of its full capacity. The challenges these dynamic regulations imposed on our commercial, operational and regulatory teams exasperated the demands on adapting the airline’s strategy, which shifted from growth to survival.

Despite all this, and in the face of adversity, Air Malta is playing a pivotal role in providing our islands a critical link to the supply chain and a much-needed means to bring family members and loved ones back home.

The airline’s ‘Lifeline’ schedule of flights is continuing. Since the start of its limited timetable, Air Malta has operated more than 75 return flights, repatriated over 900 passengers and transported well over 200 tons of urgent medical supplies, mail and cargo. We continue to make sure that we maintain a seamless connectivity to the Maltese islands and limit the disruption to supply chains during this very challenging period. In the coming weeks, we will also be organising several

freighter services for the Government of Malta in order to transport in excess of 800 tons of medical equipment and supplies.

Moreover, Air Malta embarked on a thorough cost cutting exercise that comprises the re-negotiation of contracts including aircraft leases and the review of communication costs, and started negotiations with various other suppliers.

The airline is in discussions with unions with a view to enter an agreement that sees the airline and its team standing together to navigate through this storm. The airline’s interest is to ensure that its long-term viability is safeguarded and that operations are not compromised, whilst protecting the livelihood of its workforce.

In order to reaffirm its commitment towards its loyal customers, Air Malta has revisited its flight ticket policies by offering enhanced flexibility and added value in the form of travel vouchers that range from future credits to an extra 30 per cent of the value of the fare purchased. The options offered do not replace, but are an alternative to, a cash refund, and are intended to ensure the ongoing partnership

that protects its customers who had their flights cancelled due to COVID-19 and cannot benefit from an immediate re-routing.

All this whilst also ensuring the short-term financial stability and operation of all the stakeholders in the travel distribution chain including Air Malta.

As an island state on the periphery of Europe, air connectivity is vital for the Maltese islands in the absence of any land connections. Air Malta is thus both critical and a catalyst to the Maltese economic and social recovery as well as its development.

It was the national airline that spearheaded the development of Malta’s vibrant tourism industry and opened new and diverse tourism markets which have managed to put the Maltese archipelago on the international tourism map. The connectivity that Air Malta offers to major airports is not only important for tourism stakeholders but also for the local manufacturing, gaming and financial services industries.

Air Malta is foreseeing a different aviation business post-COVID-19.

A new reality and a changed avia-

tion industry will be created. The airline is evaluating the impact of potential changes and various possible scenarios that might develop, including the introduction of passenger screening at airports; leaving an empty middle seat onboard aircraft; and changing inflight catering, as well as other options.

These changes will have consequences for the operating model of all airlines. Introducing such procedures would depend on new regulatory measures that might be imposed by health and airport authorities, in addition to other commercial considerations.

Courageous decisions will have to be taken in the face of this adversity and a changed postCOVID-19 scenario. However, I am confident that with sheer determination, and the hard work of Air Malta’s skilled team and industry expertise, the airline will overcome this challenge by becoming more agile and by continuing to play a pivotal role to the Maltese islands’ economic and social wellbeing for the years to come.

Together we stand.

Capt. Clifford Chetcuti is Air Malta’s Chief Executive Officer.

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BUSINESS

MDB’s COVID-19 Guarantee Scheme offers easy and affordable access to financing – Chairman The CGS is a comprehensive package of support, and in my view, it cannot be dissected to identify those components, which are more, or less, favourable. In its totality, the CGS comprises enhanced access to otherwise-unavailable credit; a moratorium on repayments of both capital and interest; a very significant reduction in interest rates; and a significant reduction in collateral requirements. This scheme is meant to aid local businesses on two levels: first, the enhanced access to bank liquidity, together with the lower collateral requirements, make it easier for business to access financing.

Secondly, the moratorium on repayments and the lower interest rate make the repayments much more affordable for businesses. It is the synergy of access to financing and the affordability of financing that make the CGS such a powerful and helpful instrument for local businesses.

The Chairman of the Malta Development Bank (MDB), Prof Josef Bonnici, outlines the benefits of the entity’s COVID-19 Guarantee Scheme (CGS) to local businesses, and how the programme aims to provide enhanced access to capital in an affordable format, by providing credit risk mitigation and capital relief through Malta’s commercial banks, enabling them to provide liquidity to local businesses.

What is the aim of the COVID-19 Guarantee Scheme (CGS) and how was it put into place?

Malta is a small and open economy. This openness means that we are highly dependent on the economic well-being of our trading partners. The lion’s share of our tourism originates from Western European countries, while most of our trade is with our EU partners and a large portion of the expatriate community, resident in Malta, originates from our European neighbours.

Moreover, many items critical to our quality of life - food, furnishings, clothing, educational materials, medicines and medical supplies – also originate from Europe. This means that, when COVID-19 hit Europe, we were very exposed to the risk of the pandemic spreading to Malta, and likewise, to the spreading economic shocks. For the past weeks, most of our population has lived in partial lockdown, and huge portions of our economy have been suspended.

Thankfully, we are now increasingly talking about removing some restrictions in view of the apparent receding threat of the pandemic,

CHAIRMAN OF THE MALTA DEVELOPMENT BANK (MDB), PROF JOSEF BONNICI

“At MDB, we want to provide credit risk mitigation and capital relief in order to support commercial banks in unlocking credit to Malta’s businesses at favourable terms.” but the economic shock in Europe will not recede at the touch of a button, and our economy needs to rely on an infrastructure of support in order to re-emerge. Financial inter-

mediation is a critical element of this support infrastructure. With so much economic activity disrupted by the pandemic, a flexible supply of credit is crucial for our recovery.

This is the economic logic underlying the COVID-19 Guarantee Scheme. At MDB, we want to provide credit risk mitigation and capital relief in order to support commercial banks in unlocking credit to Malta’s businesses at favourable terms.

The CGS is part of the wider package of Government’s COVID19 Response Support Programme. A Guarantee Fund of €350 million has been allocated

by Government to the MDB in order to develop, administer and implement the guarantee scheme through the intermediation of the local commercial banks. The Government guarantee provided under the scheme will provide the necessary reassurance and capital relief to the commercial banks which will enable them to mobilise over €777 million of new working capital loans to businesses at favourable terms.

In your view, which aspects of the scheme are the most helpful to local businesses?

How does the MDB plan on liaising with the accredited bank/s in order to ease the process?

From the very start, the MDB was in consultation with Malta’s commercial banks when deciding the features and operation of the CGS. We are now going ahead with the accreditation process for commercial banks so that they can participate in the CGS. The list of accredited commercial banks can be viewed on the MDB website.

Are there any companies which would not be eligible for this scheme?

The rules of the CGS effectively make all companies and self-employed people in Malta eligible for the scheme, with different limits on the maximum loan amounts that can be applied for. Small and medium-sized enterprises (SMEs) can apply for a loan up to a limit of €4 million, while larger enterprises can apply for loans up to €8 million, and even these limits can be extended on a case by case basis subject to appropriate justification.

Are there plans to increase the number of accredited banks?

The scheme is open to all banks operating in Malta. The MDB’s objective is to magnify the outreach of its promotional role by collaborating with all commercial banks so that they can diversify the financing options to SMEs. The MDB is proceeding with the accreditation of more

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commercial banks and we encourage all banks to meet MDB’s criteria in order to support Malta’s economy in this difficult time.

What is the process through which an entity can become a financial intermediary of the CGS, and how long does the process take?

Any licensed bank can apply to become a financial intermediary of the CGS, and the MDB is not setting any limits on the number of accredited banks. The accreditation mainly involves a due diligence process and the signing of a risk sharing agreement as well as a service level agreement that both govern the relationship between the MDB and the commercial bank, including responsibilities of both parties and operational modalities on the implementation.

How is the MDB going to guarantee the favourable terms, as discussed with commercial banks, are being implemented?

The MDB is relying on accredited commercial banks to

“rough the risk sharing agreement mentioned earlier, we, furthermore, ensure that the commercial bank’s benefits pass to its business customers.” commit to the conditions and regulations of the scheme and to implement the mechanism in accordance with these regulations. We believe that, using the norms of moral suasion, the accredited commercial banks will implement the scheme in good faith and consistently with the MDB’s guidelines. Through the risk sharing agreement mentioned earlier, we, furthermore, ensure that the commer-

cial bank’s benefits pass to its business customers, thereby charging lower interest rates than it did before the pandemic and the CGS. Does the MDB plan on any other schemes in the future to aid companies in the wake of COVID-19?

On 21 April, we announced that the MDB has been appointed by Government as the entity responsible for the implementation of the recently-announced Interest Rate Subsidy.

This scheme is an additional measure to be implemented by MDB that will further soften the terms of working capital loans

extended by banks under the CGS. The MDB will endeavour to intervene to mitigate the effects of economic shocks and market failures in order to support the Maltese economy. In such times of crises, the role of the MDB is further amplified as it acts as a counter-cyclical state instrument.

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BUSINESS OPINION

Managing the economy in a time of crisis Prof. Edward Scicluna Minister for Finance and Financial Services

PROF. EDWARD SCICLUNA, MINISTER FOR FINANCE AND FINANCIAL SERVICES

e exceptional economic and fiscal performance of the Maltese economy is expected to enable us to recover quickly.

The outbreak of the coronavirus pandemic in early 2020 brought about unprecedented stresses to the global economy. The unrelenting speed at which the virus spread resulted in unanticipated strains on global health care systems. Economic activity was hit hard as lockdowns started being imposed in various countries to limit the spread. Governments around the world responded to the global pandemic by loosening monetary policy while providing fiscal stimulus to reduce the adverse economic impact.

In Malta, the outbreak of the pandemic was relatively contained when compared to other European countries. The comprehensive and strict containment and mitigation public health measures taken by the Government to limit the spread of COVID-19, have been a catalyst in containing the outbreak of COVID-19 in Malta. Indeed, the World Health Organisation called Malta a model country, when it comes to dealing with the COVID-19 crisis.

Nevertheless, such stringent measures did not come without a cost. The closure of the Malta International Airport and the partial-lockdown which were imposed to safeguard the health of Maltese and Gozitan citizens, and to limit the spread of COVID19, have significantly affected sectors related to tourism and leisure activities including the wholesale and retail trade sectors; the transportation and storage industries; as well as the accommodation and food service activities sectors. Cognisant of this adverse impact, we, as a Government, started directing all our efforts to deliver a second Budget for 2020. The supplementary Budget was composed of various financial packages which would ease liquidity pressures on businesses and supplement households’ incomes.

We could afford to immediately launch an additional Budget for 2020 as a result of the Maltese economy’s solid starting position. From the start of our very first legislature, we as a Government, prioritised the reform

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in public finances. We worked hard to contain expenditures and increase the tax base to boost revenues without increasing taxes. We wanted to ease the debt burden on families and build a yearly fiscal buffer to be used in unexpected adverse circumstances. We wanted to be prudent and save for a rainy day.

Indeed, from 2016 onwards, we succeeded in registering a yearly fiscal surplus and lowering the debt-to-GDP ratio below the EU threshold of 60 per cent and close to 40 per cent in 2019.

Simultaneously, Malta was recording amongst the highest economic and employment growth rates in the EU, each consecutive year. Last year, Malta also recorded the third largest increase in the employment rate for those aged 20 to 64 from all the EU member states.

The exceptional economic and fiscal performance of the Maltese economy is expected to enable us to recover quickly. Indeed in its latest credit rating report, Fitch stated that, although Malta is likely to emerge from this crisis with a higher level of public debt, a recent track record of sound fiscal performance, including consecutive fiscal surpluses between 2016 and 2019, means it is better prepared than some of its peers to face the challenges in consolidating public finances over the medium-term. Similarly, Malta’s track record of strong economic growth, its elevated wealth levels that support shock resilience, an affordable debt burden and a reliable domestic funding base, led Moody’s to affirm Malta’s rating at A2 with a stable outlook, amid the current global COVID19 pandemic.

The IMF is also expecting the Maltese economy to recover strongly from the effects of COVID-19. Indeed, in its World Economic Outlook for 2020, the IMF expects Malta to record the least negative economic growth rate amongst the countries it assessed.

But, perhaps, the most important factor is that these consecutive annual surpluses have enabled the Government to afford providing one of the best financial packages in Europe to support families, businesses, the self-employed and employees.

Indeed, as a Government, we are allocating an extra cash flow of around €2 billion, which is equivalent to just over 15 per cent of the Gross Domestic Product (GDP) in 2019. This would include a financial aid package to provide liquidity to businesses at such difficult times.

A significant portion of this sum is being spent on guarantees and tax deferrals to ease liquidity pressures faced by

As a result of these measures, total expenditure is expected to increase in excess of €500 million this year as the Government is sparing no expense in supporting families and businesses at such difficult times. businesses. The COVID-19 Guarantee Scheme (CGS) has established a Guarantee Fund of €350 million for the purpose of guaranteeing loans granted by commercial banks to meet new working capital requirements of businesses facing cashflow disruptions. This means that the guarantee fund of €350 million can be leveraged up by the participating banks to a potential maximum portfolio of €777 million to support businesses. In addition, the Government will be subsidising a significant portion, and, in some cases nearly all, of the interest payments due on such loans for two years. This measure is expected to cost the Government nearly €40 million.

In the meantime, tax deferrals, which constitute a two-month tax break for businesses on income tax, VAT, social security contributions and customs and excise duties, are estimated to cost the Government close to €200 million. These deferrals may be extended if the need arises.

Another measure, which will be easing the negative cash flow impact that the outbreak of COVID-19 is having on the

companies’ and individuals’ liquidity, is the implementation of a Directive to regulate the Moratorium on Credit Facilities in Exceptional Circumstances. The directive has enabled companies and individuals to benefit from a moratorium on all capital loan repayments and interest due for a period of six months.

The €2 billion financial package also covers the schemes and initiatives intended to safeguard jobs, support families financially and cushion the impact of a reduction in income on employees. The most important measure by any account is the wage supplement of €800 monthly given to full-timers and the self-employed. In combination with the topping-up provided by employers, this measure ensures that employers will retain their staff. Grants are being given to parents caring for children and who cannot telework and to those with disabilities who work but opt to stay home. A special unemployment benefit is being provided to employees who have had their fulltime employment terminated while a subsidy on home loans is

MINISTER FOR FINANCE AND FINANCIAL SERVICES, PROF. EDWARD SCICLUNA also being given for those out of work. We are also supporting people with chronic conditions who cannot attend work, providing a lump sum to employers with staff on quarantine leave as well as COVID-19 sick leave.

Moreover, an additional €150 million is being allocated to the health sector to ensure that it has all the means necessary to combat this global pandemic and safeguard the health of all citizens.

As a result of these measures, total expenditure is expected to increase in excess of €500 million this year as the Government is sparing no expense in supporting families and businesses at such difficult times.

We are now directing our efforts to implement the second phase of our comprehensive fi-

nancial support plan, that of providing a recovery package to kick-start the recovery of Malta’s economic growth and the creation of jobs.

Nevertheless, we are also being responsible and ensuring that, while providing the necessary financial assistance, we do not lose control over the national debt as this determines how quickly the economy recovers, allowing us to be prepared for other unpredictable events in the future. We are, therefore, providing support responsibly so that when the global pandemic is over, the country would be able to move forward unshackled with austerity measures expected of countries that come out of this crisis overburdened by both public and private debt.

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CASE STUDY

“We must use this time wisely and plan ahead” – Home Affairs Minister The Minister for Home Affairs, National Security and Law Enforcement, Byron Camilleri, explains how law enforcement has had to adapt to the new realities created by the COVID-19 pandemic and explains what future reforms will be taking place.

How is law enforcement helping to battle the spread of COVID-19?

While life, for some, is at a standstill, frontline workers – from police patrols to soldiers delivering groceries, and firefighters decontaminating vehicles and buildings – are facing a new normal. They all reflect the different ways in which law enforcement has stepped in to help combat the spread of COVID-19.

While this might not be their traditional role, law enforcement officers have stepped out of their daily routine in times of crisis to help out wherever it was needed.

Every effort helps.

Before the outbreak of COVID19 in Malta, the Ministry had already put a contingency plan into place, allowing all entities to be well-prepared for any eventuality. This meant that we had a strategy ready to be implemented as soon as the first case in Malta was found. Moreover, in an effort to manage the crisis, we gradually rolled out measures as the situation developed.

What was the first significant operational change related to COVID-19?

Officers have been carrying out spot-checks to enforce mandatory quarantine regulations and inspections to ensure that there are no gatherings of more than three people in public places. In fact, we have increased police presence in our streets to encourage people to maintain a safe distance between each other.

I must say that I am extremely proud of the teamwork shown by all disciplined forces. The Civil Protection Department, the Police Force, the Armed Forces of Malta, Correctional Officers and LESA’s community officers are working round the clock to ensure our safety. At the end of the day, we’re all in this together.

Does this mean that police work has only been limited to issues arising from the pandemic?

Besides playing a crucial role in fighting the spread locally, we must realise that the police,

MINISTER FOR HOME AFFAIRS, NATIONAL SECURITY AND LAW ENFORCEMENT, BYRON CAMILLERI

“ I am extremely proud of the teamwork shown by all disciplined forces.”

like the Armed Forces and other entities, are also dealing with other challenges. Criminal offences tend to follow societal trends. For instance, cybercrime will most likely increase during the next few weeks. An increase in scams due to a high demand for cer-

tain products will be expected.

There are also issues related to fear and anxiety: with more people staying inside their homes, some might find themselves in more vulnerable positions. We’ve already had two cases of delivery-men being robbed at knife-point whilst on

the job. We might not have witnessed many similar cases in the past but in the current particular circumstances, crimes are taking place under different conditions. I’m satisfied to note that the police responded immediately and apprehended those involved. It is also for

these reasons that our police officers are conducting more patrols on a daily basis.

The focus of the day-to-day operations has, inevitably, shifted.

However, we are determined to keep offering essential services albeit in a different manner. For instance, police reports can be done online or via the 112MT app. Remote reports are encouraged in cases when an immediate police presence is not required. This might not be the procedure we are accustomed to, however, the spread of COVID-19 has caused us to change the way we work.

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CASE STUDY

Before the outbreak there were plans to implement certain reforms. Are these still going to happen or is everything on hold?

As Minister for Home Affairs, my focus is to implement muchneeded reforms in some of our country’s most crucial institutions. COVID-19 might affect certain timelines since we needed to prioritise other issues. However, these reforms will still be enacted.

In fact, we are already seeing the first reform being implemented. For the first time in history, the Police Commissioner will be selected through a public competition, a process which has already been approved by Parliament. By changing the way the Police Commissioner is appointed, we are increasing the level of scrutiny in the selection process for this pivotal role in the Police Force.

How will the new method work?

The process is fairly simple and goes well beyond the recommendations made by the Venice

“As Minister for Home Affairs, my focus is to implement much-needed reforms in some of our country’s most crucial institutions. COVID-19 might affect certain timelines since we needed to prioritise other issues. However, these reforms will still be enacted.”

Commission. A public call will be issued by the Public Service Commission (PSC). The Commission will then evaluate the applications and make a shortlist of two candidates to be referred to Cabinet. When the final selection is made, and the best person is selected, the chosen candidate will be grilled by the Parliamentary Committee for Public Appointments, thereby being placed under the scrutiny of the highest institution of the country.

In addition, I must point out that the chosen candidate will be facing the scrutiny of not only elected representatives but also

of the general public as they can follow the grilling whilst proposing possible questions to be put forward by their MPs. Is this according to the Venice Commission?

The Venice Commission did not propose any parliamentary procedure. However, as a Government, we felt that the country’s highest institution should play a role in this important decision. Furthermore, the Venice Commission also stated that the Prime Minister had the power to veto the chosen candidate. The Prime Minister has relin-

quished that right so as to ensure that the process remains fair and untarnished throughout. This is just the first step in a series of reforms that we aim to introduce to strengthen the rule of law in the country. The Government launched a Cabinet Committee on Governance to propose changes to Maltese law in line with recommendations made by the Council of Europe’s Venice Commission and GRECO. This decision was welcomed internationally and further proves our commitment to delivering change. In the coming months, we will be propos-

ing and implementing a reform in the Police Force.

We are living a new reality but, when you think about the future, are you at all optimistic?

Right now, I think it’s difficult for any of us to look on the bright side of things. Our economy is bearing the brunt of the impact and as a Government, we had to intervene with fiscal measures to try and safeguard people’s jobs. We do not know when this will all be over. However, I believe that, as a policymaker, it is my job to look to the future. We cannot stop working to make this country a better place for its citizens. That is why we must use this time wisely and plan ahead. If COVID-19 has taught us anything, it’s the importance of being prepared. As a Government we have always focused on being proactive rather than reactive and today’s reality proved us right.

My message to readers is one of hope. We will get through this together and, once we do, we will all be better for it.

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BUSINESS UPDATES

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On-the-go access anytime, anywhere In the past, significant amounts of information came in the form of paper documents but, nowadays, the majority of data is transferred digitally. Likewise, processing capacity and availability wasn’t as demanding as it is presently. This is why modern ERP solutions are built for the cloud, thus enabling users to tap into their business documents, customer data, product or service information, reporting, and more from any connected computer or device, no matter where they are.

view of business performance in a single dashboard.

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HSBC Malta launches trade finance initiatives to support businesses affected by COVID-19

Enemed’s guarantee of quality Enemed are truly proud of their high standards and their ability to guarantee the best product on the market. This belief is what differentiates Enemed from any other fuel company, and this quality assurance kick-starts when Enemed’s chemist is sent abroad to check the fuel quality before it is sent to Malta.

Inspection during transit, in the fuel tanks in Malta, in the trucks that escort it to the fuel stations and during random checks across all fuel stations

continue to ensure that the quality is kept throughout. Furthermore, the Research and Development department also finds ways to improve existing products whilst keeping a look out for new ones that are needed on the market.

Additionally, whilst all fuel distributed is audited regularly, franchised fuel stations are audited twice a year on other factors including the upkeep of the station, employee training, and product knowledge.

HSBC Bank Malta has launched a series of measures to further support businesses negatively affected by the COVID-19 outbreak.

These measures are tailored specifically to those customers facing supply chain disruption including delays in receiving both goods and payments.

The first measure is a 90-day extension on Trade Loan maturity dates which is being proposed to assist customers experiencing delays in the receipt of goods and/or selling or obtaining payments from debtors. The second is a 90day extension on the funding period of specific Receivables Finance dues which will enable customers to avoid having to repay funds when invoices fall over-due, thus relieving further strain on cash flows.

Joyce Grech, Head of Commercial Banking at HSBC Malta, said: “the Global Trade and Receivables Finance (GTRF) team at HSBC Malta is ready to support our customers during this period, including through the formulation of solutions that extend trade finance to our clients in a more structured manner. We will continue leveraging our extensive international network on behalf of our customers and remaining close to our clients in sectors that are experiencing increased work-

ing capital challenges such as the medical, healthcare, consumer industries and certain service sectors. As the situation continues to evolve, HSBC will continue to adapt in order to support the business community in these difficult times.”

These new initiatives build on the support already in place for business customers affected by COVID-19, including capital repayment holidays; fee free temporary short-term working capital funding; faster turnaround on issuance of Shipping Guarantees; and the waiver of related urgency fees, as well as the waiver of amendment fees on Letters of Credit impacted by delays.

The Global Trade and Receivables Finance team at HSBC Malta is also leveraging the new digital capabilities of HSBC Group to increase utilisation of e-channels and make international trade and trade finance simpler, safer and faster for all customers. This is having a significant positive impact by reducing the use of paper and avoiding unnecessary journeys.

Specific terms and conditions may apply on the support measures available. Further information may be obtained by sending an email to trade.services.malta@ hsbc.com or by visiting www. business.hsbc.com.mt/en-gb/mt/ generic/important-announcement