The Business Observer - 17th July 2014

INTERVIEW

Issue 5

|

July 17, 2014

Distributed with Times of Malta

e removal of draconian tax measures and a pragmatic approach towards regularisation of activity is helping to curb tax evations, Revenue Commissioner Marvin Gaerty believes. see pages 7 and 8 >

NEWS

Fiscal incentives for private pensions too low Vanessa Macdonald The government may have to go back to the drawing board after stakeholders expresssed dismay at proposed fiscal incentives for third pillar pensions.

Finance Minister Edward Scicluna had promised some weeks ago to launch optional private pensions but stakeholders who were given a sneak preview felt that they would not be sufficient to encourage people to put more away to ensure they had a decent retirement.

Sources said the government intended to waive the 15 per cent withholding tax on interest paid on contributions of up to €1,000 a year which were put into an approved account.

This translates to a maximum tax saving of €6 a year. The government put aside €1.5 million in the Budget for this scheme.

Stakeholders were concerned about two aspects. They felt that the tax credit would appeal to those who were already putting away money for their golden years, encouraging them to switch to an approved account and get a tax sweetener for doing something they were already doing.

However, the tax incentive would be largely meaningless unless they was sufficient encouragement to give up immediate gratification for future comfort, the sources said.

There is another aspect which was brought up by the Malta Insurers’ Association: that the government would have been better off going for second-pillar – occupational – pensions first.

Pension reform started in June 2004, with the establishment of a Pensions Working Group which analysed previous work and came

up with recommendations in 2005 on the way forward. Legislative changes were announced in March 2006 and finally enacted in December of that year, which among other things, raised the retirement age over a number of phases based on the age of the person. They also changed the correlation between the number of years worked, the amount of contributions made and the actual pension received. And, finally, the maximum cap on pensions was raised to €20,964.36.

The Pensions Working Group made a further 45 recommendations in 2010, including introducing an explicit link between pension age and life expectancy, launching a second-pillar pension subject to political consensus and the drawing up of a third pension framework.

However, there are still concerns that this might not be enough. The issue was raised recently by the

European Commission in its ‘In depth review for Malta’: “While Malta does not appear to face sustainability risks in the short term, risks increase in the medium and long term. In particular, the projected growth in age-related expenditure is well above the EU average, with the increase in pension expenditure – including the impact of the 2006 pension reform – accounting for more than half of it.”

The Business Observer is organising a business breakfast on Monday July 21 at 8am at the Intercontinental Hotel to discuss the theme of ‘Pensions reform: Are we too late?’.

Head of Content (Business) Vanessa Macdonald will moderate a discussion with Finance Minister Edward Scicluna and Malta Employers Association director general Joe Farrugia. Space is limited. For reservations, send an e-mail to events@timesofmalta.com.

Some car brands have suffered more than others when it comes to new sales. Luxury makes were worst hit. see page 3 >

NEWS Feltom CEO Genevieve Abela thinks that the English-language sector is not being given its fair share of attention when it comes to the MTA marketing budget. see page 5 >

CASE STUDY Imagine a wind turbine for small industries which would deliver 20 per cent more efficiency. Econetique did so and is ready to launch its prototype soon – eyeing a global market see pages 10 and 11 >

e Business OBSERVER

|

July 17, 2014

3

NEWS

Rampant tax evasion in used-car sales – ICDA The Island Car Dealers Association has warned that there is rampant tax evasion in the sale of used cars, as these are being sold by dealers without charging VAT. “According to legislation, if you sell more than seven cars a year, you need to have a trading licence. But the reality is that with such bargains to be picked up overseas, a wide variety of businessmen from furniture importers to food wholesalers have decided to start selling cars as a sideline – but they bring the cars in as if they were for their personal use or they bring 10-11 vehicles in on transporters and claim they are just the shippers.

“But then they sell them on without charging VAT, competing unfairly with used-car dealers,” association president Chris Sammut said.

The extent of the abuse can be seen by doing a quick search on Maltese classified websites.

Mr Sammut pointed out that the abuse should be easy to verify as the cars’ number plates are clearly visible and Transport Malta should be able to check the import ation history and track the sales.

“And when a transporter comes in to Malta all the details should be taken and followed up,” he said.

The ICDA has a suggestion, which is unlikely to go down

very well with the authorities: a different registration rate for official dealers and individuals.

The Business Observer on July 3 reported that 41 per cent

of car purchasers rejected both new and used-car dealers, feeling that they were getting a better deal by going direct.

The new car dealers believe the best way to ensure a level

playing field would be to remove the registration tax completely.

The ICDA was set up two years ago. It represents around 60 dealers.

Used car market rules for luxury brands PERCENTAGE

SALES OF NEW CARS VS USED CARS

In the past five years, the amount of used higher end passenger car brands imported has dramatically overshadowed sales of new cars from the local agents, with only 9.8 per cent of BMWs and 13.2 per cent of Jaguars being bought new.

Mercedes fared slightly better, with 20.8 per cent of owners still going to the local agents, and Audi even better with over a third, according to statistics provided through Transport Malta.

The Business Observer reported two weeks ago that between 2009 and 2013, 29,223 used cars were brought in by individuals, with a further 13,555 imported by used-car dealers.

During the same five years, the authorised agents sold 27,971 cars – just under 40 per cent of the total.

The new car sector was hit in 2009 when the registration tax was cut to almost a third of its previous level.

4

e Business OBSERVER |

July 17, 2014

NEWS

Manufacturing still has role to play e European Commission wants to build up manufacturing to 20 per cent of GDP, but here in Malta, the percentage is still dropping and is almost half the level it was pre-global crisis.

But does this percentage tell the whole story? e percentage is dropping because other activities are growing, which is hiding the absolute contribution from manufacturing, and the gross value added has fluctuated between 2004 and 2013. e Business Observer asked stakeholders what they think about the future of manufacturing in Malta. Is there a long-term future for manufacturing in Malta? Is it realistic to aim for manufacturing to reach 20 per cent of GDP again, given the global and national realities? What would help us get there?

▶ Andy Gatesy

Toly Group

There is definitely a future for manufacturing here in Malta. But manufacturing has to be different from what it was 10 years ago. At Toly, we have embraced the future of manufacturing in various ways.

We moved all of our corporate functions to Malta over the past 5-10 years, so Toly Malta is no longer just a factory, but basically runs the whole group. These functions include: marketing; IT service; product design; concept design and innovation; logistics; sales support; finance etc.

We continue to automate our manufacturing processes. All automation is built locally in Malta and we take advantage of the local engineering skills.

We are focusing upon innovation not just in terms of consumer products, but also in terms of the new technologies that can give us a technological advantage over low-cost countries like China. For now, we cannot compete directly on labour cost, so we need to use technology as our competitive weapon.

However, the real issue when it comes to the longterm success of manufacturing in Malta is competitiveness. We must not forget that we are an island with no local suppliers nor local customers, so we need to import materials, convert them into finished products and then re-export.

This is a real cost compared to other European competitors. We have now lost our Objective 1 status which reduces our ability to apply for state aid. We need to work with all the stakeholders to try and find ways to support local manufacturing companies to offset the disadvantages of manufacturing on an island and help us be more competitive.

On the other hand the advantage that we have here in Malta is the skilled English-speaking workforce: their attitude, loyalty, pride, creativity and passion for success.

▶ Chris Cardona Manufacturing had, has and will clearly have an important central role in Malta’s long-term economic future. Definitely, for manufacturing to survive and gain in long-term competitiveness it has to remain dynamic in order to keep up with the fast developments that are taking place in this sector.

The way we look at manufacturing has also changed. We are now seeing manufacturing as including new activities such as aviation and its ancillary services, ICT, life sciences and industrial research and development.

It should be stressed that the manufacturing sector generates a number of positive externalities

Minister for the Economy, Investment and Small Business to other sectors such as transport and logistics, professional, scientific and technical activities.

Thus, ensuring the long-term survival of manufacturing would also be beneficial to other economic sectors.

We are doing this by ensuring that the business environment is conducive to growth through, among others, targeted investments and policy decisions to maintain competitiveness and reduce transaction costs for business.

Is it realistic to aim for manufacturing to reach 20 per cent of GDP again, given the global and national realities? Well, the reply is not that straightforward. What

is unequivocal is that manufacturing has to retain a central and vibrant role.

Irrespective of the targets set by the Commission we will strive to maximise the sustainable growth of the manufacturing sector in Malta. The success of manufacturing cannot be hinged to one factor, but rather to one characteristic: dynamism. The government is committed to keep abreast with Malta’s level of competitiveness through systematic analysis of the business environment and to take timely action to address any issues.

The manufacturing sector needs to remain aware of the

ever-evolving international trends to be able to identify new opportunities as well as to remain at the vanguard when it comes to adopting new technologies.

To attain the above, adequate human resources must be provided. We must seek to upskill continuously our present workforce and to invest even further in our education structures to meet the dynamic requests of industry.

Moreover, the government is incentivising education institutes (public and private) in order to participate in this process of continuous skills enhancement.

▶ General Workers’ Union Certainly, there is a future for manufacturing in Malta as it seems to be passing through a stable and somewhat consolidation phase, especially in the pharmaceutical sector.

However, while there have been very few job losses in the sector, there hasn’t been much appetite for investment and growth in the last few years.

In the past, manufacturing was one of the economic sectors

that lacked a strategic plan with the result that problems and challenges were given a piecemeal approach and a management by crisis approach.

Malta performed relatively well during the financial crisis of 2008 but we created a homegrown problem when the utility tariffs increased dramatically without any consideration to the negative effects both on households and on industry, particu-

larly the manufacturing sector which relies heavily on its competitive edge. It is now expected that the reduction in utility tariffs will increase competitiveness.

It is our strong view that in order to maintain competitiveness, businesses must plan ahead, target new niche markets and ensure that the costs compare favourably against our competitors’. It is also imperative that we invest in both capital and human resources, not

only to increase productivity but also to adapt to the challenges that lie ahead.

The manufacturing sector in Malta needs to be continuously nurtured and supported by all stakeholders if it wants to develop and prosper in the coming years.

To achieve this objective an industrial policy/plan needs to be put in place as part of a more comprehensive strategy for Malta.

Continued on page 19 >

e Business OBSERVER

|

July 17, 2014

5

NEWS

AT A GLANCE:

THE EFL SECTOR

Average length of stay was up by 12.8% to 21.8 days, compared with 8.1 for leisure and business tourists.

Feltom lobbying for more of MTA marketing share The federation representing English language schools is lobbying for a higher share of the Malta Tourism Authority’s marketing spend, arguing that the main schools spend up to 10 times as much as the authority.

Feltom estimates that its sector only gets around €50,000 to €60,000 of the MTA’s €4 million marketing budget for 2014. This jars with the economic impact of the sector, which brought in €64 million in 2013 in direct revenue – and almost twice that when indirect spending is taken into account. This represents nearly a tenth of the whole tourism sector revenue, and 13 per cent of all bednights.

Malta currently hosts 1.5 per cent of the global English-language teaching market – and Feltom believes that it would be easy to boost this to 2 per cent.

“We have managed to achieve a very high level of recognition out there, and our academic standards are very well respected,” CEO Genevieve Abela said.

The English Monitoring Board is very active in maintaining academic standards, doing random visits and checks to ensure schools and teachers are in line with the require-

ments. There are currently 4,500 people with teachers’ warrants but the National Statistics Office reported that only 1,469 were employed in 2013 – most of them on a part-time basis.

Ms Abela joined Feltom as CEO in May 2012, the first for the organisation. This changed the momentum dramatically. Apart from the obvious advantage of being there as a full-time employee, her neutral

language teaching is no longer about hordes of teenagers staying with host families in a six-week period between the end of July and August .

The 43 schools in Malta now have both full-time and part-time staff on their books – rather than relying on casual summer workers, usually students during their academic break. Host families, always in short supply – particularly hospitable ones with a good command of

“Feltom estimates that its sector only gets around €50,000 to €60,000 of the MTA’s €4 million marketing budget for 2014” position causes far fewer ripples for the schools, as until now school representatives attended meetings on behalf of Feltom with authorities, the government and so on, which inevitably opened the possibility of conflict of interest and made the other schools wary of sharing information.

Public perception of the sector has not kept up with reality. English-

English – are now supplemented by student residences and hotels.

The season has now spread across most months of the year, thanks to a concerted effort by the schools to attract students from the southern hemisphere and Asia – in fact Feltom is planning a trade mission to China by year end – as well as mature students not tied to a school year.

“The teaching of English as a foreign language (EFL) started in the 1960s and the 1970s aimed at students who wanted to study at University. It was only some time later than Malta became so popular with the junior market. But now the emphasis is being put on mature students, who want to hone their business English, for example.

“Now we are refining that approach even more and going for very niche sectors, such as aviation and maritime, technical and engineering, and legal and medical English,” she explained.

Membership of Feltom is voluntary – the 20 schools that signed up represent 85 per cent of all the incoming students – but accreditation is giving considerable weighting by agents. The organisation is currently reviewing the 2004 accreditation scheme and will put forward a new version by next year.

Malta is also one of the few countries with legislation to cover EFL. The legislation is currently being reviewed by the EFL Monitoring Board. The last review of the legal notice was in 1996 and is in dire need of updating to cover changes ranging from home tuition to online tuition.

Student weeks were up 3.3% in 2013.

However, since stays are longer, the actual spend goes down and revenue was down 3.5%.

Students spend an average of €274.4 per week, with 52 per cent going towards tuition, 38 per cent to accommodation, and 10 per cent to activities and other categories.

Since staff costs went up, the sector’s gross operating profit was down 26 per cent to €32.7 per student week from €45.5 a year before.

The 0-17 age group accounts for only a quarter of student weeks. Over a third are now aged over 26.

Russia has the largest market share of student weeks – 15% – with Italy in second place (10%) and Germany in third (9%).

Brazil saw an 84% increase between 2012 and 2013, even though it only has a 3% market share at present.

The Japanese and South Koreans spend an average of 56.5 weeks here, followed by Turks (53 weeks) and Brazilians (46.2 weeks).

e Business OBSERVER

|

July 17, 2014

7

INTERVIEW

A pragmatic approach to tax enforcement Revenue Commissioner MARVIN GAERTY told VANESSA MACDONALD that defaulters and evaders usually regularise their position as soon as they know they have been found out – but warned there would be zero tolerance for those that did not.

It is very worrying that there are so many different answers whenever I ask how much VAT revenue actually is, because the picture is complicated by assessments, arrears, interest and payments The amount of arrears makes it look as though the department is inefficient when it comes to collecting revenue, which is far from the truth.

If people do not submit a VAT return – or income tax return, for all that matter – the department issues a best of judgement assessment, based on information available to the department such as previous years’ returns. But this could be wildly inaccurate, either on the low or high side. But whatever the department calculates, that amount remains there in the system. These cases have been accumulating over the years but no one knew where to start.

After commissioning an internal exercise to delve into this very issue the results show that approximately 90 per cent of the arrears are made up of estimated assessments.

This, in my opinion, clearly shows that the arrears are in the majority made up of estimations issued by the department because no return was submitted which may have been overstated. The VAT Department must now focus on reviewing these cases and action must taken immediately.

The message we portray from now on has to be clear: we are on top of things and as soon as things go wrong with your tax, a red flag will be raised; if you are defaulting, we will let you know and we will do all that we can to help you to regularise your position; but if you ignore us and carry on defaulting, then we will do all that the law

allows us to make sure that you do not get away with it.

A year ago, there was a scheme for people to regularise their VAT position. How many came forward and what was the amount paid?

The scheme acknowledged that the problem was the interest charged and penalties which could add up to four or five times the amount due itself. Even reducing the interest rate and penalties to 20 per cent may not be enough of an incentive. The manner in which the appropriation system worked, although in accordance with the law, was extremely draconian. One cannot expect to be compassionate with defaulters but unless the department takes action in good time, it makes it far more difficult to collect what is due.

The first thing we did when I came here was to suggest changes to make appropriation system fairer – one of the measures promised by the government. For example, there was a short-payment penalty imposed if someone did not make the payment in full and on time. This was effectively a late filing penalty, however, at the same time the

legislation also imposed a late payment penalty – and it clearly did not make sense to have both. So we did away with the short-payment penalty completely.

You also had taxpayers who did not make VAT payments in the first and second periods of the year because of cash flow problems – but then paid it in full in the third and final instalment. In the past, we

“You have to prioritise and audit the cases where there is most risk of irregular activity” would penalise them for the first and second missing instalments, and the payment made by the taxpayer would go towards that, rather than the actual VAT due. The law has now been amended so that once you submitted your VAT return for a VAT period on time and payment made in full that period

would be closed. This provides a good opportunity for businesses which have problems of arrears to become compliant.

We also reduced the interest rates from 9 per cent to 6.5 per cent.

However, there are taxpayers who are in very deep financial trouble so we issued a legal notice a few weeks ago which gives the department the discretion to waive part of the interest due (in addition to the penalties as was the case). This will only apply to balances prior to January 2104.

Decisions in respect of approved/disapproved remissions taken by the internal board set up specifically to approve remissions will be reviewed by a Remissions Auditing Board, to be set up by the Finance Minister, which is independent of the department. The independent board will be auditing both the process and the actual remissions approved/disapproved so as to ensure that all applications are treated fairly and consistently.

And there is now a protocol and formula establishing how to assess applications.

There are now no more excuses.

Another area which is being tackled is the Final Settlement System

where employers deduct national insurance contributions from their employees’ salaries and do not pass them on to the Inland Revenue Department.

The government introduced the option of a flat rate of 15 per cent on rental income in an effort to encourage people to declare it. If they do so, won’t they fear investigation of past activity?

A new system effectively caps the tax payable on rental income to 15 per cent of the gross rent. The system is optional and very similar to the property tax and investment income tax, i.e. one can still choose to declare the rental income in a tax return and be charged to tax at the normal (applicable) tax rates. The new system will apply to rent received during 2013. From next year one has the opportunity to declare their rental income in a special form and pay tax at 15 per cent on the gross rental income – this income will not be part of the income declared in the annual tax return which means those who are non-filers will not be required to submit a tax return if they choose to submit Continued on page 8 >

8

e Business OBSERVER |

< Continued from page 7 the special form. Details of the system are to be announced soon.

There is a perception that there is widespread evasion when it comes to rentals, however, we believe that it is not nearly as bad as people think.

The Inland Revenue Department does a number of exercises on a regular basis – and we do a considerable amount of enforcement.

For example, as regards commercial property, if the lessee wants to deduct the rent he is paying as a business expense, this expense is not allowed unless he identifies the lessor – and of course, we then

check whether the lessor is declaring that rental income.

Our automated systems can search through individual taxpayers and identify those who have more than one property; one may assume one to be their residence and perhaps the second a summer house.

The more properties the taxpayer has, the more likely it is that he is renting them out. We then check whether he is declaring any rental income.

You have to prioritise and audit the cases where there is most risk of irregular activity.

There are obviously other initiatives which will help us to detect undeclared rental income.

July 17, 2014

There is another point that is overlooked: landlords still have the option of paying according to the old system, deducting their expenses and paying on the net income. I believe that there are a number of taxpayers who do not declare their rental income because they are not aware that certain deductions can be claimed which could actually result in no tax being payable – for example, those who take out loans to purchase property for rent.

What will happen to those who start to declare income as from this year? Will you investigate what they did in the past?

The perception that we will start investigating people on undeclared rental income because a new 15 per cent regime is to be introduced is wrong.

First of all if one declares rental income in 2013 or 2014 it does not mean that he was previously not declaring rental income.

The last thing that we want is to discourage landlords from coming forward and starting to declare their income. We are looking forward, not backwards. This scheme should not be a trigger for people to be investigated about their past because they regularise their position.

We will obviously continue investigating people on the basis of risk assessments, of reported irregularities, of crossmatches from tenants’ payments and so on – as we have done so far. No more. No less.

The reality is that it was the intention of the IRD to step up enforcement of rental income before the idea came about to introduce the 15 per cent regime. It was felt that once enforcement increased, it would be a good idea to provide an incentive to taxpayers to start being compliant. One can also look at it from another angle, i.e. honest/compliant taxpayers who may be paying tax at 35 per cent on their rent will now have the opportunity to pay tax at an effective lower rate.

Taxpayers will be given the opportunity to declare past undeclared rental income and pay tax at reduced rate such as 15 per cent.

Details of how this will work will be announced.

The government also announced an asset registration scheme where taxpayers would pay 7.5 per cent. How does that fit it with the rental scheme?

The asset registration scheme requires the registration of eligible assets while the reduced tax rate on past undeclared rent requires the declaration of income, i.e. rent.

If one did not declare, for example, €10,000 rental income, it would not make sense to register the property which is being rented out and pay tax at 7.5 per cent on a property worth for example €200,000 (partial registration is not allowed). So in such a case, one would be better off declaring the rent and paying for example €1,500. The two complement each other.

Personally I am fully against these type of schemes. However, the reality is what it is: there will always be those who get away with it - although everything comes at a cost, which in this case is peace of mind.

Those who evade tax need to find ways of hiding their undeclared funds which results in added risk.

10

e Business OBSERVER |

July 17, 2014

CASE STUDY

RYAN XUEREB, MANAGING DIRECTOR OF ECONETIQUE

‘Wind’-ing up the chances of success Vanessa Macdonald Ryan Xuereb carefully lines up his mobile phone with the corner of the leather desk pad and when he realised I was watching him, he laughed.

“I know. I have a touch of OCD. But you know... I am very aware of little details and perhaps that is what is so important in business.

The devil is in the detail. That is what makes us different,” he smiled.

And Econetique is different.

Perhaps the best way to understand why would be to delve into its origins.

Mr Xuereb had been working as an engineer for a manufacturing company for eight years. He was commuting on the ferry to his native Gozo and joined the directors of FXB for a coffee.

“One of them started probing me about my values and way of thinking. Eventually he told me

that they had a new business idea and wanted me on board. I thought about their proposal for a few days and was intrigued.

“But they had in mind a retail outlet selling photovoltaics and lighting, that sort of thing. I felt that it would be pointless to limit their idea to just this and asked for a week. I put together a presentation showing them that there was tremendous longer-term potential if we also got into R&D. I even

proposed the company name to them.

“When I finished they stared at me in silence at first. But they loved the idea and we identified five sectors in which we should be active.”

Five years ago, nearly to the day, Mr Xuereb started off with a desk inside the FXB offices in Xewkija but the company grew steadily and moved into its own premises. He now has 15

installers, as well as a new outlet in Msida. Training is high on the agenda and they approach each installation with an eye for detail.

“We draw up a plan for each PV project, working out where the shade would be on the shortest day of the year at 9am and at 3pm,” he said.

The retail outlets are complemented by consultancy services covering all aspects of energy, as well as project management.

e Business OBSERVER

|

July 17, 2014

11

However, these alone would not have been enough to slake his thirst for innovation and the company went heavily into R&D with a view to eventually manufacturing.

“As a Gozitan, my dream is to create good, high value-added jobs in Gozo. At the moment there are literally just a handful of firms who employ engineers,” he said.

And the dream is very close to becoming a reality. Within a few years, he set up a subsidiary called Allurwind and teamed up with the University of Malta in an Malta Council for Science and Technology project to develop wind turbines.

“I did some research and realised that there were many improvements that could be made to wind turbines aimed at small industries,” he said.

“Having floating solar farms would mean Malta could reach its targets for renewable energy” He started looking into the performance of 4kW turbines and realised that the problem was that they were certified for wind speeds of Force 7 – when the operating environment was far more likely to be in the region of Force 3-4.

“The performance curve is exponential so these turbines are operating at a very low level of efficiency for much of the time,” he explained.

He started using a CAD programme to toy with ways to change the shape of the turbine’s three four-metre blades, in a way which would not affect the weight, cost and durability of the turbine.

He used carbon fibre and attached the blades to a central telescopic column so that they can be tightened to add more curvature as the wind changes.

“As they open up, the torque increases and they generate more power,” he explained. “This means that we expect efficiency improvements in the range of 15-20 per cent.”

A scale model was tested at the university with very promising results – it took the supercomputer there a full six days to analyse the data, which monitored the flow of

every air particle over the blades.

The design was repeatedly tweaked and another spindle was added to reduce turbulence at the tip of the turbine.

Now a full-sized protocol is being made in Italy – and will be ready by next month.

“We will first test the turbine by driving it at Ħal Far on the back of a truck!” he laughed. “There is no full-sized wind tunnel here and it would cost an astonishing amount to get it tested abroad.”

In parallel, the company is also working on photovoltaic panels

which could float on the sea, again with MCST support. These have been successfully deployed on lakes but it is teaming up with a Canadian manufacturer trying to find a format which would be able to sustain the waves of the open sea.

“We are working on a pilot project, with just a small unit that could generate 8kW at the moment. But, if it is successful, we would look at larger installations.

“We are very excited about this.

Land-based solar farms are not feasible under the present policy

as there is simply not enough land available. But having floating solar farms would mean Malta could reach its targets for renewable energy.”

Needless to say, Mr Xuereb is thinking well beyond Maltese shores. Both the wind turbines and the floating solar farms would be of interest on a global scale.

But in the meantime, he is juggling telephone calls from installers and clients.

“You cannot only think about the big things. As I said, the devil is in the detail.”

e Business OBSERVER

|

July 17, 2014

13

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

EDITORIAL

Distorted vision of competition There have been four editions of The Business Observer so far and one theme has emerged consistently from the various stories: that the protectionist attitude of the pre-EU era has not been completely exorcised from the local psyche; and that political myopia has allowed an uneven playing field to distort free competition.

The volleys exchanged between stakeholders over imports from Sicily – of both products and services – has been extraordinary, ending up with judicial protests being filed by the operator of the catamaran, Virtu Ferries. But as The Business Observer delved more and more into the issue, it found numerous anomalies and it was clear that while some were laziness and procrastination, others were suspiciously like attempts to protect certain sectors and operators. The issue of car imports has opened another Pandora’s box.

For example, there are clauses in the law governing the registration requirements for new cars which effectively give their authorised dealers a monopoly, making it impossible for anyone else to import new cars. Is this discrimination? Is this free competition? Why can there be legitimate parallel imports of detergents, books and kitchens – but not cars? How does this work in the consumer’s interest?

The authorised dealers rightly point out that they have onerous obligations as the franchisee – but the reality is that the franchisers also have to wake up to the realities of competition. The days of Henry Ford and “any colour as long as it is black” are long gone.

Consumers have tasted blood – over 29,000 of them realised that they did not have to go through either new or used car dealers and bought cars directly over the past five years – and it is going to be nearly impossible for dealers to ever recoup the exclusivity they had in the past, no matter how hard they stamp their feet.

The flood of cars being brought down was also an incentive for transport companies to offer car haulier services – but this logistics service soon morphed into a complete car purchase service, from sourcing to delivery. The dealers are horrified: how dare anyone else sell used cars? So explain why they want to be able to import new cars freely and without restrictions, but other companies should not be able to import used ones?

Of course, there are other aspects which raise eyebrows. A number of dealers feel aggrieved by the system used to certify emissions of vehicles imported from Japan by their ‘EU equivalent’, which gives preference to the handful of members of the Used Vehicles Importers Association based on the fact that the UVIA foots the certification bills. Would they be less aggrieved if membership of UVIA were open to all? Does membership constitute a non-tariff barrier to trade?

The dealers have other gripes. They point to online classified sites and the thousands of used cars for sale. They prefer to assume that those posting the notices are guilty (of tax evasion) until proven innocent and are challenging the revenue authorities to work with the transport authority and check whether the vehicle transfers are linked to any VAT payments.

So here we are with a situation where everyone wants to have a piece of everyone else’s pie, without realising that if this principle were to be genuinely adopted, then everyone else would be able to have a piece of their pie too.

And the consumers? They are getting wiser and wiser and more and more irritated at being taken for fools who have no other option.

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

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

Printer Progress Press Ltd.

Progress PRESS

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

BUSINESS OPINION

Whatever money you may have…

Gordon Cordina Spend it. Quick. Get rid of it today.

Think not of tomorrow.

This is not the mantra of the financially irresponsible. It is the incentive that monetary and financial institutions across the eurozone, starting from the Board of Governors of the European Central Bank down to the tiniest bank branch in one of Malta’s villages, are giving each and every one of us who use the euro in their everyday economic lives.

After the European Central Bank cut its interest rates in June this year to also introduce a rate below 0 per cent, banks in Malta followed suit and are now offering practically nothing on savings accounts. Not really an alluring prospect compared to the joys of using money to enjoy purchases here and now.

From a longer term investment perspective, this state of affairs could well entice financial savings to be placed into real estate, with house prices being subdued as they currently are. Reasonably so, as banks appear not to be in much need of depositors’ money...

What is the macro picture behind this state of affairs? The financial and economic debacle of 2008-2009 led the European Central Bank to

“Apart from offering no free lunches, economics has a knack of being unfair” lend unlimited amounts of money to banks to prevent a domino effect of bankruptcies across the financial system. Thankfully, this was successful, but the result was a ballooning in the supply of euro, including monies just lying idle at banks.

In this abundance, the value of the euro – as reflected in the rate of interest payable to obtain it – fell drastically. Banks survived, but found themselves in a situation where the staple commodity in which they were trading lost much of its value… the proverbial absence of a free lunch in economics.

As with most good things, the return on financial savings moves in line with economic growth. When the going is good, business is able and willing to pay good returns to obtain funds for investment, which then trickle across all interest rates

in the economy. Central bankers also have a say in this, as they try to restrain economic exuberance by limiting their credit to banks, in their attempts to limit increases in prices.

But apart from offering no free lunches, economics also has a knack of being unfair. In time of economic hardship, it is often the case that a profligate attitude by Central Banks towards the money supply fails to kick-start the economy. After all, money is just inherently worthless pieces of paper…

Passing more of it around is no guarantee of the restoration of economic confidence and of an expansion in consumer demand.

And, lest I forget, there are still some basic economic textbooks which propagate the myth that when the central bank reduces in-

terest rates, business will invest more. True, perhaps, in an idealised world where the only hindrance to investment is the cost of finance. In a real world, where business investment depends mostly on human resources, the availability (as opposed to cost) of capital, operating costs, research and development, and market access and demand, lower interest rates can hardly be expected to spur business investment.

Which is why interest rates in the eurozone are so low, yet growth in most economies is barely a flicker, save of course for those which are competitively strong and are able to control their fiscal spending (which, in short, constitute a credible proposition with which to do business in the long run).

Some thoughts about Malta. Economic growth is relatively strong, at

2.6 per cent in 2013 compared to practically nil average in the eurozone. Inflation, curbed at 0.9 per cent by the extraordinary decrease in electricity and water prices, is no different from that of the eurozone.

Yet, growth in bank credit has stalled in 2013. A portent of impending doom? Not likely, as at the same time, investment in fixed assets continued to increase, while growth is being generated by service-oriented sectors which are themselves cash generators and have little need for bank credit.

Does our economy need even lower interest rates?

Say we take another half percentage point cut to interest rates across the board. Incomes earned by depositors, be they household or business, would fall by €50 million in a year, affecting all levels of society and the economy. This would almost nullify the positive effect on spending power generated by the reduction in electricity and water tariffs. It would act as a drag to consumer spending power, which would not benefit business.

Let us next argue that the same €50 million would be saved in terms of operational costs to business…indeed a boon to debt-laden sectors such as construction and wholesale and retail.

All taken together, I would look forward to a banking sector which is more proactive in its financing of innovative and perhaps riskier activity, not so much in cutting costs to sectors in transition at the expense of curtailing purchasing power across the economy.

But then, don’t interest rates in Malta need to follow those set at the European Central Bank? Arguably so, but that is another story…

14

e Business OBSERVER |

July 17, 2014

STOCK MARKET REVIEW

Is the European banking crisis returning?

Portuguese bank banco esPirito santo’s (bes) headquarters in Lisbon. PortugaL’s esPirito santo famiLy is racing to find a way to rePay €847 miLLion in maturing debt. PHOTO:RAFAEL MARCHANTE/REUTERS

Edward Rizzo Last Thursday, fears over the health of one of Portugal’s largest banks triggered a sharp decline across international equity markets especially in the banking sector. Meanwhile, yields on Portuguese government bonds rose reflecting declining prices.

The developments in Portugal also triggered a decline in government bond prices of the other peripheral eurozone nations such as Italy, Spain, Greece and Cyprus.

On the other hand, amid a renewed flight to quality, German bond prices increased with yields dropping to their lowest level in 14 months. Many international commentators argued that this reaction very much resembled the contagion witnessed a few years ago at the height of the eurozone sovereign crisis.

So what sparked the equity market sell-off and contagion in the bond markets of periphery countries?

Until recently, Banco Espirito Santo (BES), which was set up 94 years ago, was Portugal’s largest private sector bank. Remarkably, BES was the only one of the top banks in Portugal that did not require a government injection during the country’s sovereign debt crisis. The majority shareholder was the Espirito Santo family via two companies, a holding company Espirito Santo International (ESI) and Espirito Santo Financial Group (ESFG), a banking and insurance company based in Luxembourg. ESI owns 25 per cent of BES and ESFG holds a stake of another 26 per cent. ESI also has a majority shareholding in a major fund manager in Portugal.

Early last week, ESFG announced that ESI was experiencing “material difficulties” after it failed to pay the interest on some of its short-term debt instruments.

The problems had started surfacing last May when the Bank of Portugal ordered an audit of BES, ESI and ESFG following concerns that ESI was struggling. The auditors discovered accounting irregularities at ESI and BES admitted that ESI was in serious financial difficulties.

Following the news of ESI’s difficulties in paying the interest on its debt, the speculation on the possible exposure of BES and ESFG to ESI led to a suspension of the equities of both companies on the Lisbon stock exchange last week. However, shortly before the suspension last Thursday, the share price of BES had already lost 19 per cent at the start of the day. Meanwhile, international rating agency Moody’s immediately downgraded the bank’s credit rating by three notches to Caa2 – a rating representing a default situation.

In a bid to quell market speculation about its €1.15 billion exposure to the other companies of the Espirito Santo family, BES issued a press release late Thursday evening explaining that it had €2.1 billion in excess capital beyond the minimum regulatory requirements. The press release also noted that “the potential losses resulting from the exposure to the Espirito Santo Group do not compromise the bank’s compliance with the regulatory capital requirements”.

Despite the assurances from BES as well as those of the government and the Bank of Portugal that BES is ring-fenced from the problems of the Espirito Santo Group and that its solvency is not at risk, investors feared that the full extent of BES’s exposure to the Espirito Santo Group may not have yet been fully disclosed.

Some commentators estimated

that the exposures could leave BES with a capital shortfall of up to €3 billion. Portugal’s Prime Minister also confirmed that Portuguese taxpayers would not be called in to bail out failing banks, making it clear there would be no state support for BES. Portugal’s banking problems had an immediate negative effect on the Portuguese government’s borrowing costs and this could complicate the country’s ability to recover from their sovereign debt crisis. In fact, 10-year yields, which had dropped to almost 3 per cent in recent weeks from over 13 per cent in February 2012, jumped to 4 per cent last week on the news surrounding BES. Likewise, government bond yields of the other eurozone periphery nations had also declined steadily from their very high levels at the peak of the crisis (a clear signal that the market became more

e Business OBSERVER

|

July 17, 2014

comfortable with the creditworthiness of such countries). However, last week’s developments in Portugal confirmed the weak health of some of the banks in the periphery countries and the difficulties when dealing with struggling financial institutions – a clear signal that the debt crisis is not yet over.

A further rise in yields on Portuguese government bonds may compromise the country’s efforts to tap the bond markets regularly in the coming years to fund a series of bond redemptions. This has already led some international commentators to speculate that eventually Portugal will need to restructure its debt to be able to come out of its debt spiral. The government’s finances are stretched, as debt levels jumped from 94 per cent to 129 per cent of GDP over the past three years partly due to the severe austerity measures undertaken as part of the EU and IMF rescue package. A debt restructuring programme will inevitably imply losses for holders of Portuguese government bonds.

Apart from the developments in Portugal, renewed anxiety across financial markets was also caused by the publication of some weak data from the two largest eurozone economies and a bank run in Bulgaria. Recent statistics indicate that the German economic recovery appears to be slowing while France could slip back into recession. Meanwhile, last month there was a bank run at the Bulgarian fourth-largest bank, Corporate Commercial Bank (Corpbank), after media reports indicated that its top shareholder was involved in some suspicious business deals. The bank run, which drained Corpbank’s deposits by more than 20 per cent in a few days, spread quickly to another bank and the government inter-

15

PEOPLE WALK IN FRONT OF THE MAIN OFFICE OF BULGARIA’S CORPORATE COMMERCIAL BANK IN SOFIA. BULGARIA WILL STRIP CORPORATE COMMERCIAL BANK (CORPBANK) OF ITS LICENCE AND ALERT PROSECUTORS TO POSSIBLE MALPRACTICE AT THE LENDER, THE CENTRAL BANK SAID. PHOTO: REUTERS/STRINGER

vened with a protective credit line of $2.3 billion. After a number of initiatives failed to keep the bank in operation, earlier this week it was announced that Corpbank will cease to operate – another stark reminder of the problems that still exist in some parts of the banking sector.

The most recent developments in Portugal and the weaker economic data elsewhere could lead to the European Central Bank adopting quantitative easing (QE), i.e. money printing in a similar way to what happened in both the US and the UK. Such a decision by the ECB would be further proof of the economic problems still evi-

dent in Europe. QE is certainly more difficult in a monetary union with fragmented financial markets than in the US or the UK, where the central banks used QE partly to help the housing market and the corporate sector. While some economists argue that without QE, the eurozone economy will most probably get stuck in a long period of low growth and ultralow inflation, others believe that QE may have negative consequences on financial stability due to asset bubbles that this may create. In fact, the QE by the Federal Reserve and the Bank of England led to increasingly buoyant equity and bond markets across the

globe as these two major central banks injected the financial system with huge levels of liquidity.

The events of recent weeks and the impact on both equity and bond markets again highlights the importance for investors to keep the element of risk in perspective and not to follow the ‘herd instinct’. Equity and bond markets are bound to become increasingly volatile following their strong rally over recent years. Investors should therefore continue to seek professional advice periodically to ensure that their investment portfolios are constantly positioned to reflect their risk appetite and financial objectives.

Rizzo, Farrugia & Co. (Stockbrokers) Ltd (RFC), is a member of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the company/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon.

RFC, its directors, the author of this report, other employees or RFC on behalf of its clients, have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent, and may also have other business relationships with the company/s. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen.

Past performance is not necessarily indicative of future results. Neither RFC, nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report. © 2014 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved

e Business OBSERVER

|

July 17, 2014

17

CASE STUDY

100,000 sq. m of office space being built Over 100,000 square metres of office space is at various stages of construction and finishing, half of it at the Farsons business park, according to the manager of the commercial properties division at Frank Salt Real Estate Ltd. A third of the space is in core areas with the remaining 15 per cent in peripheral areas.

“In addition to this, the original plans for Smart City Malta incorporated two or three more office blocks and with high occupancy in the existing towers, we should assume that these additional blocks will go ahead,” said Joe Pace.

“And, of course, we now have a high-rise policy with some applications already in the pipeline which could provide quality office space.”

“e range of clients is extensive” He noted that some of the larger projects were being built in phases – sometimes with considerable time lapses in between each one – which were not the ideal scenario.

“The ideal situation would be to have all the phases constructed at the same time but, obviously, if the financing does not allow this, then as far as possible there should be no gaps between one phase and another because the tenants want to get the full benefit of these ambitious project as soon as possible.

The additional office space will undoubtedly put pressure on prices, which are buoyant at the moment, especially on properties which are not in prime areas.

“Foreigners love the Sliema and St Julian’s area, and although the Maltese might be put off by the lack of parking, many foreign youngsters working here do not rely on cars and prefer to work in an area with good lifestyle options like shops and restaurants on their doorstep,” he said.

“So while these areas will keep attracting good rental rates, properties further out might need to review their rates to ensure they remain realistic.

“Having said that, we monitor the market carefully and people are not being greedy. They are merely charging what the market can sustain – and yes, some sites can afford to charge premium prices because clients are getting a premium location.”

These developments are not coming a moment too soon. Demand for office space has been growing steadily over the past few years, particularly for properties offering location, good finishing and connectivity.

Purpose-built offices are obviously the most popular but since these are few and far between, many clients accept upgraded or

refurbished residential properties.

“The range of clients is extensive. We have everything from twoman start-ups who are moving into their own office after using a room in their lawyer’s premises, to gaming companies requiring thousands of square metres,” Mr Pace explained. “Our advice is always for the developers to go for open spaces which offer tenants flexibility.”

Developers are now scrambling to find suitable locations and Mr Pace believes that they may need to consider demolishing existing buildings and rebuilding them as offices, given the shortage of suitable greenfield sites.

But land is not the only constraint: finance is also restricted as banks have become very selective about projects. However, these constraints are not necessarily a bad thing... Mr Pace is concerned that if too many people jump on the bandwagon, the situation could be reversed in the next three to four years and Malta could end up with more supply than demand, which would drive down prices.

JOE PACE, MANAGER, COMMERCIAL PROPERTIES DIVISION, FRANK SALT REAL ESTATE

“However, I do not think that this is likely. This happened in the residential market but investors already got their fingers burned and learned their lesson. And the banks are much more selective about projects to finance. The only risk we see at this stage is demand dropping due to unforeseen external factors,” he said.

When it comes to real estate, the lack of formal data is a real problem as it makes it far more difficult to spot trends – and even subtrends – let alone to predict

future opportunities. “Our clients come to us for advice but we can only give them guidance based on our perception and best informed guesses!” Mr Pace said, adding that overseas, data was collected by specialised, independent research firms.

This lack of data makes it difficult to analyse the market – but the information from a major player like Frank Salt Real Estate gives a good indication of the situation at present. For example, eight out of 10 entities prefer to lease than to buy – but the two that do buy tend to be big clients.

“There is no emotion involved in developing commercial space.

Investors are looking at their return, and while you can expect a rental return of 5-6 per cent on residential properties, the expectation for commercial rentals is 7 per cent or over,” he said.

“This is especially important when you consider that the value of the property is not appreciating by double digits as it was a few years ago. So with around 1 per cent annual capital appreciation, it would not be a good investment unless you got a good rental income.”

e Business OBSERVER

|

July 17, 2014

19

< Continued from page 4

▶ Malta Chamber of Commerce, Enterprise and Industry

The Malta Chamber regards manufacturing as a key pillar in a balanced economy for Malta for the years to come. Having a solid manufacturing base provides any country with better defenses against economic downturns - as witnessed during the global crisis.

The European target of a 20 per cent direct contribution of industry to GDP is commendable and one which the Chamber wholeheartedly supports, not least because we are convinced that manufacturing – unlike other emerging sectors – is a sure means to support the country in finding jobs for those currently on the unemployment register.

Manufacturing is also a key contributor to investment, productivity, research and export potential in our economy.

The drop in share of manufacturing to GDP was due to other sectors developing and expanding at a faster rate but also because the country allowed the general conditions required for manufacture to gradually deteriorate.

The Chamber has taken the lead in outlining what is needed

to halt this deterioration in an Industrial Policy document.

This highlights 64 recommendations to secure competitiveness and the survival of manufacturing within the prevailing global scenario.

Among these recommendations are eight fundamentals needed to secure survival of manufacturing before focusing on future development.

The most urgent of these are: ■ Investment support ■ Efficient and competitive transportation links ■ Skilled labour force at competitive wages ■ Stable energy at competitive rates ■ Smart regulation The Malta Chamber is pleased to note that, from the meetings it held so far, the authorities have agreed to the general direction and recommendations outlined in our Industrial Policy. If the recommendations are taken on board and implemented, the Chamber is confident the country WILL recover competitiveness to secure a prime role for manufacturing in the coming years.

▶ KPMG Manufacturing is a major source of innovation and technological progress, and a strategic contributor to economic growth. Manufacturing firms usually undertake a high degree of research and development that contribute to specialisation and accumulation of human capital.

In Malta, the structure of the manufacturing industry has shifted over time, particularly due to the fall of the textiles and clothing industry. This fall was compensated with an increase in the electrical and optical equipment production and in the production of chemical products, plastics and publishing.

Issues which may hinder the manufacturing industry from flourishing in Malta in the long term could include the following: 1) Transportation costs for the importation of their raw materials and exportation of their final product. Nevertheless, this disadvantage is less of an issue in the case of relatively lightweight products with a relatively high added value component;

2) The type of manufacturing that makes sense in Malta is determined by the economies of scale required to run a cost-efficient manufacturing operation. This presents an opportunity for us to compete in the small run market of certain industries (e.g. printing) where small runs would be uneconomic for the large plants in Europe, China and elsewhere; 3) Higher labour costs in relation to other countries which

are more production-oriented, which include China, India, and Bangladesh. Again this is less important in the case of higher added value products and where market proximity advantages outweigh any labour cost disadvantages.

It is more realistic to aim for a halt in the decline of the manufacturing sector as a whole and for an increase in output by concentrating on those segments which can be viably located in Malta.

e Business OBSERVER

|

July 17, 2014

21

BUSINESS UPDATE

High ranking for online brokers Online traders face a number of choices when deciding which brokerage firms to work with globally. With so many options, potential users increasingly look to Forbes, FT, Bloomberg, Wired and Kiplinger’s Personal Finance among others to help find the most dependable and costefficient online brokerage.

Competition for customers is keen, with some major differentiation between the top firms.

Malta-based Exante, a nextgeneration broker, offers its clients access to a broad range of financial tools and markets.

It has been reviewed by elite financial press and has surpassed all expectations since its foundation in 2011.

Exante has brought transparency and accessibility to the next generation of investors through their ATP. Its financial products and

cutting-edge technology has been the focus of some major television networks including BBC, Russian Today, Bloomberg and CNBC. Exante directors all come from a trading background and are constantly seeking new ways to upgrade and be ahead of the game.

With offices in five countries, they are regular speakers at some of the largest global investor forums and continue to support local investment here in Malta.

“Exante technology is a game changer in the industry” – CNBC. “Setting the standard and constantly raising the bar, Exante is king” – Forbes.

“Exante is one of the most bona fide of these operations” – Wired.

“Best performing fund in history” – Bloomberg.

Exante’s communications director Patrick J. O’ Brien, winner of International Trade Journalist Award 2014, will be speaking at Exante’s business breakfast on July 25 at Villa Arrigo, Naxxar, at 8.30am.

Picturing business value It has been proven that eyes and minds have the natural capability and disposition to analyse pictures.

Today’s competitive landscape is increasingly dynamic and organisations have to respond quickly to market pressures and opportunities. The vast amount of data available today has caused an information overload and executives have less time to analyse and take decisions.

The challenge lies in finding new ways to analyse information quickly, leading to insights using natural image process capability to understand pictures.

The solution lies in creating graphical visual representations of information, which can present complex information rapidly and clearly. In essence, it is about creating business stories that every business person can understand.

Imagine you can paint a picture of your business story using images and colours which depict processes and measures representing key performance indicators enabling you to manage your business better.

Today this is possible by incorporating infographics to present business intelligence data in

formats that are delineated and simple to process and analyse.

Business intelligence solutions can provide executives with a highly visual and dynamic infographics business story, creating a collaborative data discovery experience to gain better insight into performance.

HSBC Malta helping customers in real time via Twitter With the launch of its new Twitter help account via twitter handle @HSBC_MT_Help, HSBC Malta is offering customers real-time responses to their banking queries.

Available from Monday to Friday between 8am and 4pm, the service is managed by a team trained to provide a dedicated social media experience. Tweets received after these hours will be responded to on the following working day.

Paul Steel, head of retail banking and wealth management, said: “HSBC Malta is offering a more convenient and direct customer channel of support. Twitter will enable us

to engage better with customers in real time while monitoring and responding quickly to their enquiries.”

Users may interact with @HSBC_MT_Help followed

by the question, comment or feedback.

Confidential personal information is not to be included in Twitter correspondence.

22

e Business OBSERVER |

July 17, 2014

BUSINESS UPDATE

One contact, one contract Operating across a range of markets, Bluhull Group is a single source provider of support services to clients throughout the asset lifecycle for drilling installations.

The Group delivers to the highest standard and offers a ‘One contact, one contract’ opportunity for rig-fit projects, engineering, logistics, shipping and manpower provision.

Bluhull Group’s philosophy is to minimise the number of additional contractor interfaces, inevitably freeing valuable clients’ time.

The Group’s growth in the inter-

national arena is further strengthened through securing work for a major international energy company, performing multiple drilling rig inspections, lifecycle evaluations and cost development for upgrading key drilling assets. The oil and gas industry is one of the world’s biggest success stories and a vital component of global economic growth. With more than 35 years of experience with direct involvement onboard drilling installations, our team developed and set Bluhull Group into the forefront as a leading service provider to meet today’s challenges and demands.

No better time to invest in PVs Due to the feed-in tariff, which guarantees income from photovoltaic panels for up to 20 years, it has never been a better time to invest in a PV system. CD Power Solutions Co. Ltd is an engineering company which specialises in custom-built, sustainable and energy efficient solutions.

Offering three-year payment terms, the company specialises in small to medium roofs which have shading issues, maximising your roof potential to generate energy.

The unique aspect of their PV system is the micro-inverters, which possess a number of benefits over traditional single inverters including greater reliability/production; better safety; better monitoring data; greater design flexibility; and better warranties.

Moreover, CD Power Solutions also install voltage optimisation units which lower your electricity bills by eight to 25 per cent – guaranteed. This, combined with a photovoltaic system, will actually generate more from your PV panels, which will enable you to reap your PV investment quicker.

Originally founded in 2005, CD Power Solutions is made up of professional engineers and business experts with many combined years of experience in installation and management.

They have over the years achieved considerable energy savings and cost reductions for many large organisations.