The Business Observer Issue 7 - 14th August

INTERVIEW

Issue 7

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August 14, 2014

Distributed with Times of Malta

ETC chairman Clyde Caruana believes the time has come to rethink the corporation’s mission and to focus on improving information about the labour market. see pages 4, 5 >

NEWS Arts festivals rarely do more than break even but Malta Arts Festival coordinator Toni Attard said this did not mean they did not have a positive economic impact. Quite the contrary. see page 3 >

Hope for cruise ship casinos The Lotteries and Gaming Authority is going to engage in more consultation on legislation which would allow cruise liners to open their casinos – giving a ray of hope that it could be more attractive than the original proposal.

The LGA head, Joe Cuschieri, told The Business Observer it was “not far” from issuing the new regulations.

The operator of the cruise terminal, Valletta Cruise Port, has been frustrated by delays in enacting the new legislation, saying it could help negotiations for the 2016 season which are currently under way.

However, the delay may be worth it if it means that the regulator listens to their concerns about the costs it imposes on cruise lines.

At present, cruise liners have to shut their casinos as soon as they enter Maltese territorial waters. The only other country in the Med which allows them to stay open is Gibraltar, which changed its legislation two years ago, enabling them to open after 6pm.

The original legal notice for Malta was drafted over a year ago.

Ships would have had to pay up to €30,000, based on a concession fee and licence, and a charge of €100 a year for every gaming machine on board and another €150 for each gambling table.

“Onboard gaming is one of cruise lines’ main sources of income. We gain nothing out of allowing them to open in port – but

neither do we lose anything as only passengers would be able to gamble. But for them it is an incentive to stay overnight,” VCP chief executive officer Stephen Xuereb explained.

“We have repeatedly encouraged the LGA to rethink. The best model is Gibraltar – which exempted them from licence requirements,” he said.

Only 6,200 cruise passengers stayed overnight in the first six months of the year, according to the National Statistics Office.

Mr Xuereb explained that Malta stood to gain considerably from overnight stays.

“Cruise lines would be able to sell night tours – such as village

feast visits – an additional source of revenue for us and them,” he said.

An added benefit is that daytime tours will not be rushed, as at present many ships leave around 6pm in order to be in territorial waters by the time passengers have eaten.

“The proximity of Valletta to the port is a disadvantage as it is very easy for passengers to do their own thing. Night tours would be a way to sell them something...

“The ships want to offer a positive customer experience but ultimately they also want to make a profit out of a destination!”

Continued on page 3 >

NEWS Rather than seeing Bitcoin as a volatile cyber-currency, should Malta be looking at ways to fill the gap for a well-regulated jurisdiction tapping into its opportunities?

Exante co-founder Anatoliy Knyazev certainly thinks we should. see page 6 >

CASE STUDY PFK Malta is planning to offer its services to the growing captive insurance sector, leveraging its ties with London-based PKF Littlejohn. see page 10, 11 >

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NEWS

Festival sets revenue record The ninth edition of the Malta Arts Festival has set new records for revenue and audience numbers. The figures are stilll coming in but it is already clear that ticket revenue is higher than in 2013 and much higher than 2012’s €20,000.

The appropriate pricing of festival tickets is crucial as the demand for some performances is more inelastic than for others. But the council’s remit is not to maximise revenue but to promote the arts, so this year it reduced the prices to €10-15, and offered a €30 ticket which allowed access to three events.

Over 100 bought the trio ticket, up from just 46 last year.

“The reduction in price was clearly effective,” artistic committee member Toni Attard said.

Ticket sales were also boosted by having an info point at the old Opera House, which allowed the organisers to sell tickets up to the last minute.

The festival costs around €400,000, mainly from public funds with the support of a few sponsors.

“It doesn’t generate a profit but it is not expected to; few festivals anywhere in the world would survive on ticket revenue alone. But here in Malta we only have a handful of private sponsors . We do not have a very strong culture of private business partnering with the public

This year’s event will give an even better return than the €1.3 for every €1 of the arts festival, calculated by a 2012 study carried out as part of the Creative Economy project.

The study found that festivals and concerts generated €1.2 million direct revenue and €345,000 in indirect revenue, while Heritage Malta museums give an even better return on investment at €2 for every €1 spent, thanks to the impact they have on restaurants, bars and shops

nearby. They bring in €5.6 million in direct revenue and €9.2 million in indirect.

“It is important to calculate the impact on Valletta and to understand the spill-over on to businesses,” Mr Attard said.

“It is true that abroad, because of the lengthier commute, patrons tend to make an evening of it and have dinner and drinks etc. But there are 900 people at the Pjazza Teatru Rjal, and another 2,000 from events at the Mediterranean Conference Centre, St James Cavalier and the Manoel Theatre.

“Although there are many bars and restaurants that now make it a point to cater to theatre patrons, there are many that still close too early. Look at the business generated for those who stay open for Notte Bianca!”

We are seeing more and more tourists who drop in; what we want to do is put the events on the cultural calendar so that tourists come here deliberately to attend.

“We have managed to do this with the Baroque Festival after just two editions,” he said.

“The important thing is to launch the programme months in advance and encourage international agents to book packages to Malta, as they did for the Baroque Festival.”

The flight element boosted the returns from the festival to €1.5 for every €1 spent.

“We are not yet reaping the full benefit of the festivals. This year the Malta Tourism Authority invited foreign journalists to attend and it might be a good idea for the team working on 2015 to pay special attention to the tourism aspect.”

spend the day in Gozo, come to Malta for the night and then leave the following day.

“Apart from the Xlendi buoy, we would need an alternative in case of inclement weather. Mġarr is already in the pipeline,” he said.

VCP is forecasting that 2014 will see a 5-8 per cent increase over 2013. But this will still be a long way from 2012, which was an exceptional year because of repositioning calls and last-minute bookings of ships diverted from Tunisia as a result of the Arab Spring.

Between January and June in 2012, there were 208,594 passengers, but this figure fell to 139,411 in 2013. It has now recovered to 161,502, according to the NSO. July and August are particularly quiet because MSC Cruises are visiting Malta with a smaller vessel, and Malta is now on Costa’s 12-day itinerary – not their weekly one – which also affects numbers.

September to November will be the busiest months, boosted by TUI’s homeporting with MeinSchiff 3, its newest vessel. It is already too late to do much to affect

2015’s figures, expected to be slightly higher than this year.

VCP is now working on increasing MSC and Costa to previous levels, as well as bringing back the Aida and Norwegian Cruise Lines.

Discussions are also under way with two or three lines for homeporting.

“With homeporting, our biggest challenge remains airlifts. It is a chicken-and-egg situation. With TUI it was a bit different because it has its own aircraft. But if there is demand, I am sure that we will find an airline that would service it.

sector; unfortunately they do not see it as an opportunity to brand and to be associated with quality projects,” he said with a shrug.

“And the businesses that benefit from association with a museum or festival are happy to reap the rewards but not always as happy to contribute towards them financially. All businesses look forward to Notte Bianca but how many contribute towards the cultural content?”

“e reduction in price was clearly effective”

Photo: Darrin Zammit Lupi

With Valletta preparing to take on its role as the European Capital of Culture in 2018, Mr Attard believes the time is ripe for the economics of art to be given more emphasis.

“Of course, there is art for art’s sake. But that does not mean that we should not make art a part of our marketing as a tourism destination.”

< Continued from page 1 There is also frustration after the delay in repositioning the Xlendi buoy, which was installed after years of planning but whose design was then found to have be endangerously miscalculated.

“The cruise lines are shortening their itineraries to save on fuel.

“If we provide two different destinations, with minimal costs to them – especially for fuel – it would be a real attraction.

“We strongly believe that Gozo can only work in tandem with Malta. Our idea is that they would

We could also benefit if Malta were to fast track visas from China and introduce direct flights...

Imagine if the Chinese flew here to start a Mediterranean cruise?”

Not all the factors affecting 2106 are in Malta’s control.

Mr Xuereb pointed out that Malta stands to win considerable traffic if North Africa opened up and stabilised.

“Places like Libya and Tunisia have an exotic appeal. This would put Malta on their logical path back to the northern Mediterranean,” he pointed out.

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INTERVIEW

CLYDE CARUANA was appointed chairman of the Employment and Training Corporation last April, shortly before the government published its Employment Policy. He tells VANESSA MACDONALD it is time to rethink the corporation’s role.

Developing a virtual labour marketplace CEO Philip Rizzo said recently that the ETC is seen as “the recruiter of labour that could not keep up with the times”. You are not seen as the place to go to, by either employers or employees...

Over the years, the ETC has not managed to keep up with the expectations of either employers or employees. When I came out of University, it never occurred to me to come here to register for a job even though I was unemployed for three months. About 25 per cent of the workforce have tertiary education but only 10 per cent of the vacancies we list are for people with such skills.

Did you know that only 35 per cent of those looking for work actually register with ETC? The European standard is about 70-80 per cent.

This is very contrary to the perception of the public: that there are many people registering who do not actually want to work...

That is not the case. For someone to claim social benefits, they must register with the ETC. There is a connotation that you only go to ETC if you want benefits. How are we going to change this?

The current website is not at all user-friendly and must be completely overhauled. We are discussing our plans for new software and a new interface with our French, German and Belgian counterparts. It should be up and running by next year. We want to

“ere is a connotation that you only go to ETC if you want benefits.

How are we going to change this?” develop a virtual labour market online, something that is not available at the moment.

What role do you see for private recruitment companies?

We do not want their market and we do not want to compete with them. There is a market failure out there in terms of information and the ETC must fulfil that role. But a substantial amount of money has to be invested in IT.

How are you going to match jobseekers and vacancies up more effectively?

A unit is going to profile every job available on the labour market in terms of the qualifications and skills required. If a person wants to be a teacher, he will be matched against the profile. If he does not fulfil the criteria, he will either have to get more training or be referred to another job.

The system will not depend on the client telling us what he wants to register for.

It will also flag jobs he might not have considered. For example, people have no idea what sort of jobs are available in the i-gaming sector.

And, of course, it will also suggest what training is available to fill gaps for the original choice...

Should ETC still provide training when the vocational training through Mcast and other providers has improved so much?

We will outsource some of our training needs, perhaps to Mcast.

But we have to be very careful to ensure that it has the capacity to provide it.

We are auditing our own training arm because what we have now is not working. For the next nine months, we recruited a number

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August 14, 2014

of trainees through direct contracts. That system cannot continue forever.

As from next year, we will have direct links with Mcast and the Institute of Tourism Studies and a framework agreement with key private players.

What are you after? Lower costs, flexibility, avoiding duplication with private offerings?

Punctuality. It takes us at least seven months to develop and deliver a course. That is not acceptable. I would like to be able to deliver training within two, certainly no more than three, months.

By the time the course is up and running, the number of participants accumulates and we do not have enough places for them all.

We then have to do sessions at other times or recruit other trainers.

If we have timely delivery, this would address this problem too.

“At the moment we are involved in too many things. Our mission should be to keep the unemployment rate low...”

At the moment, we are involved in too many things. Our mission should be to keep the unemployment rate low and at the same time reduce any labour market imperfections. Any other deliverables we should look at and if need be – like the apprenticeship system now handled by Mcast – pass on to someone else.

Most chairmen try to increase their empire, not reduce it.

I am not looking at that at all.

How is the ETC going to “make work pay”?

The government is going to introduce “in work benefits” in the coming Budget. At present we give people benefits to stay at home and do nothing. The concept is to encourage people to take up a job, even if it pays minimum wage, by topping up the income if they need it.

We distributed a questionnaire among those on social benefits asking them for their reservation wage – the minimum for which they were willing to work. The average was €11,000, barely a few thousand more than the minimum wage.

What about enforcement?

Right now there are discussions between different ministries on the possibility of merging the inspectorates of the ETC, the Department of Social Security, Employment and Industrial Relations and the Occupational Health and Safety Authority. It does not make sense to have so many resources chasing the same workplaces.

Who will this fall under?

Definitely not us. There is enough for us to do. For example, we do not have a problem of unemployment but we have a big problem with underemployment. There are people who want to work more hours and others who are overqualified for their jobs. There is no unemployment with regards to university graduates – but does that mean that they are all employed appropriately. It is not for everyone trained in a specific field to find work in that field. But it is also true that we do not have any information. How many are there? In which sectors?

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So far our policies have been reactive. I prefer to take decisions based on research. For example, before I set up free child care I did four months of research, then months of negotiations with the private sector and only then did we launch the service. It might not be perfect but it is working well. So far 2,400 mothers are using the service; my target was 2,000 by year end. We still have to analyse how many were inactive, but a good number were on parental leave and returned to the workforce earlier.

What about the very long-term unemployed who defy all attempts to find them jobs?

They are going to have a hard

time... So far, you can specify what type of job you are looking for but, with the new system, once you are profiled, you will be eligible for different jobs. If you do not accept that job, then you will be struck off the register. As simple as that.

Until they phone up a minister or MP and get reinstated...

No. They will not be reinstated.

Look at the unemployment figures.

They have gone down substantially in the past few months. Enforcement is being taken seriously.

If this process is stopped, I will simply leave. We mean business. If I am entrusted with ETC and it needs an overhaul, it will get one.

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NEWS ??

Malta lags behind on Bitcoin opportunities Malta ranked 131st in a recent survey of the countries most likely to adopt Bitcoin.

The Bitcoin Market Opportunity Index ranked 177 countries and was based on nine sources of information, ranging from the World Bank and IMF to CoinDesk and Google Trends. It comprises 39 variables such as technology penetration, remittances, inflation, financial repression and Bitcoin penetration.

Argentina emerged as the most likely, followed by Venezuela and Zimbabwe, pushed up the ranks by their high inflation.

So far, Bitcoin regulation varies greatly from country to country but some jurisdictions are seeing it as a tremendous growth opportunity. The Isle of Man, for example, is poised to create a regulatory environment that is conducive for Bitcoin business.

However, the Isle of Man Financial Supervision Commission subsequently warned that there was no consumer protection for entrants in the digital currency market and such businesses would only fall under its remit if they were engaged in regulated activities such as money transmission services.

“It is not the appropriate time to introduce such a regime until the market develops and international consensus on the matter is reached,” it said recently.

The possible uses of Bitcoin are still evolving. It could be used as an e-gaming currency as the ‘digital anonymity’ of its owners could be used to overcome the cross-border restrictions currently imposed on various jurisdictions. These restrictions are officially there as a way to

GEORGE ROTARIU USES ROMANIA’S FIRST BITCOIN ATM IN DOWNTOWN BUCHAREST. Photo: Bogdan Cristel/Reuters

protect their players for the greater public good, but they are also a way to prevent revenue leakage from the country, and as such have repeatedly fallen foul of competition rules.

businesses. We do not think it would be a good idea for it to be used for negative reasons!” he said.

At the moment, few countries are willing to face the complex regulatory minefield that Bitcoin

“Volatility... is not an inherent quality of the digital currency” Anatoliy Knyazev, founder of the first Bitcoin hedge fund, handled by Malta-based Exante, is uncomfortable with the idea of Bitcoin being used to circumvent rules – for any reason.

“After a period of volatility, there is now much more awareness of the advantages Bitcoin offers so many

would entail. Mr Knyazev would like to see Malta taking a proactive stand, saying the country was normally very proactive.

“I understand that people were afraid of volatility in the past but this is not an inherent quality of the digital currency; this is just a by-product of its youth,” he said. “Its price has

been around $600 per Bitcoin for the past two months now. It is more volatile than the euro but better than many emerging currencies, and is comparable to the price of gold for the past 30 days.

“Times have changed. There are now Bitcoin dispensers, for example, which accept most currencies.

Expedia accepts Bitcoin for travel and you can buy a Dell computer with the currency.”

Mr Knyazev sees a wealth of opportunities for Malta, saying there was a “pipeline of businesses” looking for a reputable jurisdiction: “The first jurisdiction to have good regulation would get a lot of business and create a lot of employment.

“At the moment, the US seems to have the most favourable outlook and wants to regulate the use of Bitcoin for exchanges and payments.

But there are very high barriers to entry, such as upfront capital, background checks, different licences for each state and so on. Any country which could offer a more userfriendly ecosystem would have a competitive advantage.”

Regulating a digital currency is not straightforward, he admitted, as it could potentially involve the Malta Financial Services Authority, the Lotteries and Gaming Authority, the Malta Communications Authority and the Central Bank of Malta, for example.

“All we need is a signal from the government giving us direction. We believe that we have everything in place – even the current tax framework would be sufficient – but we cannot proceed until we get the green light. The country could be looking at billions in just a few months,” he said.

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e Business Observer is a new business newspaper distributed with Times of Malta every fortnight.

EDITORIAL

A better relationship between employee and employee

Editorial Vanessa Macdonald, Head of Content (Business), Times of Malta.

Publishers Allied Newspapers Ltd. Content House Group Ltd.

Allied

N E W S PA P E R S

A M E M B E R O F T H E A L L I E D G R O U P O F C O M PA N I E S

Malta Employers’ Association president Arthur Muscat believes that the unions are deliberately making a fuss about its proposals on sick leave and public holidays in order to distract from the real issues that are raised.

In an interview with Times of Malta, he stressed that the focus of the proposals was a “radical reform” of the Industrial Tribunal and union recognition.

Indeed, only three pages of the 39-page document are dedicated to sick leave. And there is very little that was not already brought up by the General Workers’ Union in 2007 when the exact same issues of sunburn, sports injuries and cosmetic surgery were brought up after employees were refused sick leave. What the MEA is after is not to insist on the employee turning up: if a person is unwell, they are unwell. What they want is the discretion to refuse to pay for that sick leave when it becomes blatant abuse.

There is also measured reasoning behind the proposal on public holidays as all it wants to do is remove the anomaly which currently means that those who have a midweek day off get a day’s leave in lieu of a public holiday falling on that day – while those who work Monday to Friday have for the past years forfeited that right when the public holiday falls on a weekend.

The issue with the Industrial Tribunal is definitely much thornier, even though it is not as obviously controversial to the public. The MEA is uncomfortable with things that have happened over the years. It sees

a very important role for the tribunal in sorting out trade disputes and employment issues, one which could divert cases from ending up in court.

But this would not be possible unless changes are made to the appointment of the tribunal chairmen, their qualifications and the validity of their rulings. The tribunal cannot be a valid alternative to the court unless it enjoys the same independence, security of tenure of its members and executive powers of its rulings. The abrupt request for chairmen to resign after the election clearly disturbed the MEA, and rightly so. The rationale for changing government agency chairmen and ambassadors might – and the word “might” is important – be justified because these appointees need to reflect government policy. A tribunal that enforces legislation does not fall into this category.

The document’s preliminary statement said there should be a “clear and unequivocal legal framework” which should not be “subject to multiple interpretations”. It would be hard to fault that argument. Everyone likes to know where they stand.

And yet the MEA has been heavily criticised by the union and online comments from the public for its proposals. The perception is that the association fights for employers’ rights, and does not pay enough attention to the mutual respect that should form the basis of any employer/employee relationship. The fact that the entire two-page preliminary only uses the word “employee” once should make the association stop and ask itself whether that perception is justified.

Advertising Enquiries Tel: 21 320713 Email: info@contenthouse.com.mt Advertising Sales Petra Urso Publications Sales Manager

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BUSINESS OPINION

Of the sun and the sea

Gordon Cordina Our economic history is intrinsically linked to the sea, but it fell sadly into disrepute over the past 50 years, what with the decline of the shiprepair and building sectors, to the undesirable – though not quite understandable – connotations of a sun and sea tourist market. It is high

time to change all that and exploit opportunities which may create new growth over the next 10 years.

One obvious reference point is the Blue Growth Strategy being advocated by the EU Commission, which targets the marine and maritime sectors and their contribution to the economy in a sustainable manner. The areas targeted by the strategy are some of the main contributors to job creation in Malta with the largest sector, coastal and maritime tourism, generating up to 10 per cent of jobs.

Tourism has always been a driving force for the Maltese economy. Its success is not only related to marine activities but also to the wider maritime sector including cruise liners.

Future prospects within the tourism sector depend on the creation and diversification of marine

and maritime activities, including homeporting and sports. Other crucial areas contributing to the economy are the transport, shipbuilding and shiprepair, fisheries and aquaculture sectors, which present important potential for development.

The foundation of these sectors has been long established. However, they are far from their full potential. These sectors face a number of challenges but with proper support they can embark on both local and international opportunities to increase their value added.

The main concern is that although the Blue Growth economy contributes around 20,407 jobs, the productivity of these sectors is low when compared to other countries.

Although the share of employment in maritime activities in Malta outstrips that in Greece, Italy and

indeed the EU average, the value added generated from every job is the lowest compared to these economies. Furthermore, the economic contribution of the targeted sectors is still relatively small when compared to other sectors.

It is estimated that an increase in productivity would generate an increase in annual value added of around €195 million, around €480 per capita. This translates to economic growth of approximately 3 per cent.

So far, the Maltese economy has focused on value added from tourism, transport, shipbuilding and shiprepair, fisheries and aquaculture. However, ‘nontraditional’ and ‘unexplored’ sectors, such as renewable energy and biotechnology, should be considered. These could lead to

new activities and create new job opportunities.

This entails research, collaboration with investors, change in infrastructure and much more.

Parallel sectors should also be considered. These include education, research and development and innovation, health, international regulations, laws and licensing, finance and insurance and other sectors which could increase value added.

Overall, prospects in this sector are conditioned by two imperatives. The first requires a more rational and effective use of natural resources and the available maritime infrastructure including ports. The second involves exploring and investing in new sectors that could lead to additional economic growth.

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CASE STUDY

THE PKF TEAM WHO WILL BE RUNNING THE CAPTIVE INSURANCE SERVICES INCLUDE (FROM LEFT) PIERRE MANGION, DONNA GREAVES AND ATTILA RADNAI. Photo: Jason Borg

PKF Malta to serve captive insurance industry PKF Malta is in the process of getting a licence to provide internal audit services to the captive insurance sector.

“A normal insurance company has a lot of customers and the public needs to be protected, so there is more emphasis on their statutory audit. A captive is totally different as it is a parent company offering its insurance services to its own subsidiaries,” audit partner Donna Greaves explained.

“Nevertheless, in Malta, under the Insurance Business Act, you

need to be an approved internal auditor for captives and we are in the process of getting that licence.”

The new section will be headed by Ms Greaves, who has worked for the company for eight years and a partner for the past three. She will be assisted by Attila Radnai, who joined the team from Hungary, bringing with him four years of experience working for a Big Four audit company. PKF senior partner George Mangion will also be heavily involved.

According to the Malta Financial Services Authority, there are 11 affiliated companies – also known as captive insurances. ere are also 10 PCCs, with 22 cells in all, up from eight in 2011. ere were four incorporate cells companies, with 11 cells, up from one ICC in 2012.

Captive insurance legislation was introduced to Malta in 2009 and in anticipation of this, a year before, PKF started promoting Malta as the ideal jurisdiction.

Mr Mangion and other team members have attended several conferences in various countries,

as well as organising PKF’s own events.

The legislation has been repeatedly updated and has been extended to Protected Cell Companies and Incorporated Cells Companies: a PCC is a single legal entity and cells within a PCC

have no legal personality; an ICC, on the other hand, is a unique vehicle with each cell having a separate corporate personality. Malta is the only EU member which has both PCC and ICC legislation.

Captives are regulated by the Insurance Business Act and need to be licensed by the Malta Financial Services Authority. However, they have some advantages: their application is approved within three months, rather than six, although they still require a ‘fit and proper’ test for their executives and need to

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have ‘know your customer’ procedures in place, as well as an identified ‘ultimate beneficial owner’.

The proactive legislation is crucial as Malta has considerable competition from Ireland and Gibraltar.

Malta’s membership of the EU gives it an edge over Gibraltar, which has a unique situation. For example, Mr Radnai explained, Gibraltar is part of the EU for VAT but not for insurance business. Malta also has lower servicing costs and a very favourable tax regime.

PKF Malta is drawing on the expertise of another member of PKF International – PKF Littlejohn – which is already very active in this sphere, with seven partners and five managers dedicated to captive insurance.

“Solvency II will impose considerable burdens on all insurance companies, and they will be very complex and costly” PKF Littlejohn has been in the insurance market for over 100 years in London but wants to expand and sees Malta as the ideal conduit.

The implementation of Solvency II by 2016 has created a great demand for internal audit services for captives – among other things – a demand that PKF Malta intends to fill with the support of PKF Littlejohn.

“Solvency II will impose considerable burdens on all insurance companies, and they will be very complex and costly. It will hopefully resolve some issues, by narrowing the accounting gap between IFRS and Solvency I, thereby reducing the need to report to two different regimes,” Mr Radnai said.

“Insurance companies will also probably be able to choose between

Understanding the game PKF Malta has been among the leaders in promoting the i-gaming industry in Malta but after years of spiralling growth, the sector is due for a revamp of its legislation, with an eye on “future-proofing the industry”, in the words of the head of the Lotteries and Gaming Authority, Joe Cuschieri.

The LGA has already made several changes to procedures – which it described as “quick wins”. But there is considerably more that needs to be done, from

an internal capital requirement calculation or the European standard.

For smaller companies the standard calculation will be more advantageous as the internal model will be very expensive and complex.

“The PCC structure offers great advantages because they can leverage their mutual funds to satisfy capital requirements. And since the Solvency II regime will probably require more and more capital, we believe the PCC will gain in popularity.”

expanding the sector to digital games of skill, to introducing a multi-platform licence and casino licences for cruise ships.

“We have sent out 150 questionnaires to get feedback on what the operators want from the new legislation. We have several gaming clients and understand their opportunities and challenges... The ultimate scope of this study is to see what changes are needed,” Ms Greaves said.

The study will also analyse whether they are interested in operating in other jurisdictions such as Asia and the US, using Maltese regulation, something that the LGA is trying to facilitate

Apart from capital requirements, Solvency II has another two pillars: risk governance; and disclosure.

One of the details still being discussed is whether PCCs can disclose financial statements at a mutual level.

“If this happens, it could be a very cost-effective structure for small insurance enterprises,” Mr Radnai added.

For now, PKF Malta is preparing for the launch, with training

through various channels at political and diplomatic levels.

“It will be very difficult – but very interesting. The European market is saturated and this is where growth will come from,” she said.

The study will also get feedback on the LGA itself, asking whether the operators feel that it has sufficient resources to cope with the rapid growth of the sector.

“We also need to ensure that they are coping with the regulatory side. Are they vouching for financial statements, conducting oversight and monitoring?” she said.

planned and a “significant” client already in the pipeline.

Ms Greaves believes that the personalised services offered by smaller firms puts them in a good position to compete with the Big Four auditing firms.

“We are able to offer services like consultancy, advisory, internal audit and other services – backed up by PKF Littejohn’s expertise. We also offer registration and licensing procedures.

“We will be meeting the regulator in the coming weeks and do not foresee any obstacles. In the meantime, we have spent several weeks developing working papers and standard formats as the audit procedures for normal companies are totally different. We are also inviting local insurers to meet us so they can see what we will be able to offer and we can understand their needs.

This means that we will be able to hit the ground running,” she said.

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BUSINESS UPDATES

Improving customer experience through innovation Customer Experience Innovation demands that a retailer offers a personal shopping experience for each and every customer. This maximises the sales opportunity as well as creates loyalty and repeat business. The only way this can happen in today’s profitsqueezed, fast-paced, retail environment, is through the use of IT. In the past, such systems were only for large organisations, however, today it is possible for retailers of all sizes to use technology to enhance their clients’ experience.

It is no longer sufficient for a retailer’s POS system to merely sell and record stock movement, it also needs to assist shop assistants to upsell and cross-sell. Retailers also need a system that takes advantage of powerful promotions and offers to maximise sales and out-of-the-box analytics that will allow them to gauge the effectiveness of promotions.

Another important aspect of a retail system today is the power of its customer loyalty and how this tool can be used to engage

customers in the long term. Loyalty systems should update loyalty points in real time and notify clients via e-mail instantly. This

should be paired with smartphone e-wallets whereby points, coupons and vouchers can be sent in digital format to the clients’ smartphone.

These can also be geotagged to remind customers of any digital coupons or vouchers when they are in the vicinity of the shop.

Register your undeclared assets In June, Finance Minister Edward Scicluna launched the Asset Registration Scheme 2014 with a warning that “the government is determined and will make full use of tools to address tax evasion.” The minister is now armed with multilateral agreements between countries for the exchange of information between tax authorities.

Individuals and companies should grab the opportunity to register undeclared eligible assets, located both locally and abroad.

The scheme is also open to individuals who find themselves in possession of undeclared assets

through inheritance. When assessing whether an investment or any other asset is declared or undeclared it is important to assess the origin of the funds and whether that income was declared at the outset.

The fact that one has been paying tax at source on the income

generated from an investment does not mean that the assets are declared. The registration of assets will be done against a one-time registration fee of 7.5 per cent of the value of the asset, while a rate of 5 per cent will apply in the case of assets held abroad and which are repatriated to Malta. The scheme will close on September 30, 2014.

For further information and to register your assets contact Jesmond Mizzi Financial Advisors who is an appointed registration agent on 8007 2206 or visit one of their branches in Valletta, Birkirkara, Ta’ Xbiex or St Paul’s Bay. HSBC MALTA IS THE MAIN SPONSOR OF THE TRANSLOG 2014 AWARDS. SEEN HERE ARE HSBC MALTA’S MICHEL CORDINA AND DIRECTOR OF SSM GROUP ALEX BORG, THE AWARDS ORGANISERS.

Malta to hold Transport and Logistics Awards with HSBC Malta’s support Outstanding achievements in the transport, logistics and supply chain sectors – which between them provide employment for over 25,000 persons – will be recognised for the first time in Malta through the first edition of the TransLog Awards 2013.

Applications are open. Based on international benchmarks and organised with HSBC Bank Malta’s support, these industry awards recognise excellence in 12 key areas. Interested companies are invited to write to: info@ssmgroup.org.

Participation in the awards is free of charge.

HSBC Malta’s head of commercial banking Michel Cordina said, “the TransLog Awards complement our own initiatives to support growth in Malta’s potential to become a logistics hub. This initiative forms part of the Malta Trade for Growth Fund where we dedicated €50 million towards stimulating international trade.”

Deadline for participation is Thursday, August 28. Fore more information go to www.translogawards.com or call 2123 1015.

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August 14, 2014

BUSINESS UPDATES

Campari presents the 2014 art labels The 2014 Art Labels are a modern reinterpretation of a number of works by Fortunato Depero, one of the most representative artists of the Futurist movement who had a long association with Campari.

The first label was inspired by a black and white ink sketch from 1928. It was a graphic study made for Campari, closely recalling aperitif time, revisited and recoloured. The second label depicts a collage dating back to 1927. The image takes up a

sketch, created by the artist with coloured pencils, representing the pleasure and passion of enjoying a Campari. The third Art Label is a 1928 illustration created by Depero with the collage technique. The work depicts the iconic little man during the tasting of a Campari.

The modernity of Futurism and its direct nature make these limited editions a collector’s item for Campari consumers, who will appreciate the simple and easily comprehensible language.

Andrea Conzonato, chief marketing officer at Gruppo Campari, commented: “The new Art Labels want to be a tribute to a great artist, Fortunato Depero, who worked extensively with Campari and produced truly unique works of art. Campari wants to present its consumers with a special collection that is a testimony to the strong innovative nature of the brand”.

The Campari Art Labels are marketed and distributed by Farsons Beverage Imports Co. Ltd.

Exante exclusive partners with TradingView.com Exante has formed an alliance with Trading.View.com, which will allow it to expand its existing clientele base.

TradingView will benefit from a reliable and reputable advertising partner. The collaboration entails other exciting projects for both parties.

In the future, Exante is also planning to become a featured trading partner, which means that TradingView’s members will have the possibility to trade on Exante’s revolutionary Automated Trading Platform via www.tradingview.com.

TradingView.com is considered to be the YouTube of financial charts, a place for everybody to upload and share their charts. Exante is planning to integrate their extensive programme libraries within Exante’s upcoming web ATP. Therefore, Exante’s clients can take advantage of the advanced financial visualisation platform for better market analysis.

“The exclusive collaboration will draw on the distinct strengths of both our companies and bring invaluable benefits to our clients as well as users of TradingView.

This alliance will undoubtedly reinforce each party's presence in the financial industry,” stated Exante’s communication director Patrick O' Brien.

EXANTE’S GEORGE GRECH, HEAD OF TRADING, ANNOUNCES EXANTE’S COLLABORATION AT VISIT BUSINESS BREAKFAST

Demand for rental properties exceeds supply In the past decade, the rental market has boomed, with demand now exceeding supply all over the island. The north as well as the south of the island has experienced an influx of foreigners which requires an increase in properties available for rent in good locations.

Rental is increasing in popularity as people require freedom of mobility nowadays.

Foreigners coming to Malta, forming part of gaming companies, the film industry and other lucrative professions on shortterm contracts require lodging for a limited period of time in the best locations of Malta. Furthermore, foreigners considering moving to Malta are renting property to test the area prior to making their move a more permanent one.

Foreigners are not the only clients when it comes to renting property. Rental has become a

common practice among the Maltese as couples decide to move in together before marriage without making the binding commitment of purchasing property together. Moreover, young people are opting to rent property if they do not yet qualify for a bank loan.

Therefore, it is feasible to invest in rental properties and the government is supporting potential landlords by introducing an initiative urging landlords to put their vacant property on the market by reducing the tax to a 15 per cent flat rate on rental income.

The potential rental return on capital investment is significant given that the property is situated in a prime location.

Dhalia can help you buy property to let and ensure your property satisfies tenants’ expectations. Book an appointment by calling 8007 4949 or visit www.dhalia.com.