Business Observer june 28, 2018

NEWS

Issue 87

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June 28, 2018

Distributed with Times of Malta

Demand for diesel vehicles hit peak in 2015, now slowly declining

Bet365’s expansion in Malta is expected to impact the present local iGaming industry in various ways, not least from a recruitment perspective. see pages 5, 6 >

Marie-Claire Grima While it’s undeniable that dieselpowered vehicles are still in high demand in Malta, Malta’s car importers confirmed that demand for such vehicles hit a peak in 2015, and has been slowly in decline since then.

Figures collected from members of the Association of Car Importers Malta (ACIM) which were shared with this newspaper, show that from 2011 to 2015, demand for diesel vehicles rose exponentially, from 24.47 in 2011, to 42.76 per cent of total sales in 2015. However, in 2017, diesel vehicles represented 37.25 per cent of total deliveries, indicating a decrease of 5.51 per cent two years down the line.

“Demand is still strong, although there are clear signs that it is weakening,” commented Mark Testaferrata Moroni Viani, Marketing Manager at Kind’s Auto Sales Ltd, importers of leading brands including Mercedes-Benz and Renault. “Diesel engines are more fuel-efficient than petrol ones and so they offer significant savings on fuel expenditure.”

“The demand for diesel engine vehicles remains strong, although there has been a decline in diesel engine choice for smaller vehicle categories,” said William Shaw, spokesman for the ACIM. “Clients keep choosing diesel mainly due to consumption and power/ torque issues, and the fact that the latest diesel-powered vehicles have very low emission levels.

These same reasons are also applicable for commercial vehicles.”

Mr Shaw said that the ACIM, which represents the importers of

NEWS With the FIFA 2018 World Cup in full swing, it may seem like a peak time for fake sick leave claims from football fans – but is that true? see page 9 >

INTERVIEW HSBC Malta is entering a new chapter to focus on customer-led growth, say the bank’s Head of Retail Banking and Wealth Management, and the Head of Commercial Banking. see pages 14, 15 >

new cars, has always been at the forefront in promoting cleaner fuel vehicles. “Unfortunately, the importation of older used cars with higher emissions has had a negative effect on the emission levels average. We feel that this is a contradiction to Government’s aim to reduce emissions.”

Meanwhile, efforts are being made by countries all across Europe to phase out diesel vehicles altogether. When contacted by

this newspaper, the Ministry for Transport, Infrastructure and Capital Projects said that while it had issued a tender to commission consultancy services, with the aim of arriving at a cut-off date for the importation and registration of not just diesel vehicles, but all internal combustion enginepowered (ICE) vehicles in Malta, it did not expect the use of ICE commercial vehicles to be limited in the near future.

“Government is sensitive to the fact that such a transformation cannot happen overnight. In fact, the Government expects this consultation to result in suggestions on how to sustainably make the move towards full electrification.

As far as commercial vehicles are concerned, it is not expected that the use of such vehicles will be limited any time soon. Alternative Continued on page 3

STOCK MARKET REVIEW Why regulators need to assess the potential counterproductive risks over-regulation may pose to the market. see pages 22, 23 >

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“What will happen in the next decade depends on future EU legislation and the car market itself” Continued from page 1 technology and alternative fuels for such vehicles are still not market-ready, while the newer technology such as hydrogen is still a little far away to be mainstream technology, although fuels such as compressed natural gas (CNG) are already being used on certain types of buses. On the other hand, as far as passenger vehicles are concerned, once green vehicles become cheaper and more competitive in price, as well as become more readily available, it will be only a matter of time that such a switch is made,” the Transport Ministry said.

“In our opinion, the setting of such a cut-off date must take into consideration the likely speed of development of electric vehicle (EV) technology,” Kind’s Mr Testaferrata Moroni Viani remarked.

“Too soon would imply a much larger reliance on petrol engines.

This would point toward a substantial increase in CO2 emissions, which, although technically not deemed to be a pollutant, is generally accepted to be a significant contributor to global warming. The cut-off date must be planned for when EVs will replace diesel engines and not petrol ones. In the meantime, the Government, besides adopting initiatives such as the scrappage scheme for older vehicles and, recently, the checking of diesel particulate filters (DPFs) during VRT, can also encourage local councils to reduce the number and the height of sleeping policemen that can be found everywhere. Each time a vehicle must go over one of these, the driver has to rev the engine, thus increasing emissions of harmful particles in the neighbourhood.”

The uptake of EVs locally remains slow. Figures tabled in Parliament in March showed that

there were just 1,356 registered electric cars and motorbikes on Maltese roads in 2017. While it has indeed increased threefold over 2013, when 432 electric vehicles were registered, it’s still a tiny fraction of the 365,483 licensed motor vehicles that make up the entire complement of vehicles in Malta.

“The current electricity tariff structure acts as a deterrent for users who would like to charge their EV at home,” the ACIM’s Mr Shaw commented. “Many fear that the extra electric consumption would put them into a higher rate band, which would also affect their domestic consumption. Furthermore, people who live in apartments without car parking facilities face a major problem to charge the EVs. Overnight charging at a public charging point is a problem as a time limit applies.

Additionally, there isn’t a mechanism in place for those employees that benefit from a fuel allowance to be refunded for electricity con-

“As far as diesel-powered commercial vehicles are concerned, it is not expected that the use of such vehicles will be limited any time soon.” – Ministry for Transport

sumption at home. There’s also the fear of battery performance and cost of replacement of batteries. The residual value of an EV is next to nothing as a seven-year unit would be nearing its battery warranty expiry.”

Kind’s Mr Testaferrata Moroni Viani observed that another important obstacle getting in the way of EV uptake is “inertia and the fear of change. Psychologically, people take time to accept new technologies especially where the benefits are rather intangible – less CO2 and less pollutants in the air. The paucity of models is surely also a contributor. Compared to models with ICE, there are very few EV models.”

In replies to questions about EVs sent by this newspaper, the Transport Ministry said that Government had been investing heavily in pushing this kind of vehicle. “We are the only European country that has waived registration tax from electric vehicles and the licence fee for five years, apart from offering financial incentives to whoever opts to purchase these cleaner modes of transportation. The Government is also targeting private entities with financial incentives capped at €200,000 for those companies that opt to make the move and change their fleet to the electric models.

These schemes have been quite successful, and thus we are already seeing that a change in the mentality is starting to happen.”

“It is however also true,” the Ministry stated, “that car manufacturers are still investing more on car designs of conventional vehicles as against designs of EVs. In spite of the fact that the latter is the car of the future, innovative car design is still being applied to ICE vehicles and not so much to EVs. There are a number of car manufacturing companies that have already declared that they will stop producing

WHAT DO PEOPLE LOOK FOR WHEN BUYING A CAR? Mark Testaferrata Moroni Viani, Marketing Manager at Kind’s Auto Sales Ltd, shared his top five points.

Fashion. Currently, SUVs are very popular, even though some of them might not be entirely practical for Malta.

Herd instinct. Many people opt for what other people are buying.

Family needs. Families with young children often must forgo fashion and aesthetics, and opt for a practical model that can take bikes, pushchairs, etc.

Reliability and durability. Some brands are seen to be better made than others. This tends to sway the buying decision of many.

Status. For the status conscious, the brand name is very important.

full ICE vehicles and will start manufacturing plug-in electric and full electric vehicles, but these companies are still in the minority.”

Transport Malta is currently in the process of reviewing the Malta National Electromobility Action Plan (MNEAP), to bring it in line with the Malta National Transport Strategy and the Malta National Transport Plan. “The MNEAP is a guiding document in a bid to guide the Government in paving the way for these technologies,” the Transport Ministry stated. “But what will happen in the next decade depends very much on future EU legislation and the car market itself.

Not to mention the new climate change and energy targets set for member states for 2030. There are a lot of issues going on which could change the current scenario in 10 years’ time. For such plans to materialise, we rely on technology developments and the maturity of such technology to be readily available on the market.”

“Most importantly however, we need to wait for the conclusions of

the work of the inter-ministerial committee for the cut-off date of ICE vehicles, as any decisions and dates agreed upon would give the MNEAP a whole new set of parameters. The MNEAP still has up to 2020 to be reviewed, but it has been decided that the work to update it should start now. Most of the current actions in the MNEAP are in the form of pilot projects as well as policy decisions. While a number of these have been implemented, a number of other actions are still work in progress.

Hence it would be safe to say that the best way forward is to wait for the full review and the closure of the current term.”

The ACIM agrees with this assessment, and added, “Malta is not a car manufacturing country and the sales of cars in the country amount to a very small percentage of the overall sales of cars in Europe. Therefore, we will really need to follow the rest of Europe in this, as manufacturers will plan their production for the higher volume markets.”

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NEWS

Bet365’s size likely to challenge local businesses as talent wars intensify Martina Said Gibraltar-based betting company Bet365 has plans for a major expansion in Malta, which is expected to impact the present local iGaming industry in various ways, not least from a recruitment perspective, according to various sources that this newspaper spoke to. At a time when sourcing talent is already one of the biggest challenges across many industries on the island, Bet365’s Malta presence could make it more of a challenge for other companies, iGaming and otherwise, to attract and retain talent, while raising salary expectations and placing additional pressure on employers.

Josef Said, CEO of leading recruitment company Konnekt, asserted that the move will add more pressure on other gaming companies as well as mainstream local businesses operating in the services industry. He explained that, according to a recent survey among a number of gaming companies, whose aggregate headcount exceeds 1,100 employees, 70 per cent of a typical workforce of a gaming company is made up of foreign nationals, and 30 per cent is made up of Maltese nationals. “Our assumption is that the majority of the foreign nationals employed by Bet365 will be new relocations. However, plenty of Maltese will be sourced from other gaming companies or local set-ups. Taking into account the demand for talent within other sectors, this will certainly have an impact on local companies both in terms of availability, as well as salaries. This also puts pressure on local educational institutions to attract and prepare even more students to supply this industry.”

Mr Said stated that, from an economic perspective, Bet365’s move to Malta is good news and a vote of trust. “Data from salariesinmalta. com shows that salaries in gaming are between €7,900 and €9,300 higher than the average. Adding hundreds of well-paid professionals will have a significant multiplier effect on a number of sectors.” From a recruitment per-

spective, specifically for Konnekt, the move also brings significant opportunities, “We expect to see even more foreign candidates who seek to build their careers here.

Companies like Bet365 naturally attract numerous applicants. From our end, we would help them to attract passive candidates or identify Continued on page 6

“A mature discussion and a common position on sustainable development would benefit all stakeholders as well as future generations.”

– Josef Said, Konnekt

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NEWS

“An influx of opportunity is a nice problem to face” Continued from page 5 specialised talent given our deep knowledge of the talent pools available.”

Mark J. Galea, Managing Director at Quad Consultancy, stated that the arrival of Bet365 to Malta “is excellent news. The fact that we can attract major players in any industry is a massive boost to the country’s credibility, both as a jurisdiction and as a place to work. In addition, the relocation of a large number of employees will yield a massive indirect activity in many spheres of our economy.”

Having led the HR department of one of Malta’s gaming companies around ten years ago, Mr Galea has witnessed a drastic change in the industry’s landscape since then. “The iGaming labour market is now more stable, more structured and is becoming ever more corporate. This led to structured salaries and packages for employees.

In this respect – financially – I don’t believe that Bet365’s presence will upset the market or create any ripples. However, it will definitely create movement in the labour market pool. People will move around and up, and it will create opportunities for new entrants who want to join the iGaming industry.”

While the gaming company’s arrival should not affect the salary offerings of other companies in the industry, Mr Galea stated that it can, however, impact Maltese SMEs by recruiting people in roles such as

HR, finance, marketing and other corporate departments. “The salaries these people will be offered will almost certainly be higher than the ones Maltese SMEs can provide, hence, the latter may lose out on valuable talent. This is why local companies need to start thinking hard about the work environment they provide – it’s the only ‘up’ they can have on big companies with larger pockets.”

The arrival of Bet365 could spur on other companies with a base in British territory to set up an office in Malta in preparation for Brexit – most recently, another betting giant, William Hill, confirmed to local media that it will be opening a Malta office “and a small initial organisation for our international facing business.” In light of Government’s efforts to attract the Distributed Ledger Technology (DLT) and cryptocurrency industries to the islands, as well as continued activity in the financial services and iGaming industries, the island may witness another wave of economic activity and growth in the coming months and years. Can Malta handle such growth in numbers?

“Everything has a cost and nothing is better than balance,” said Konnekt’s Mr Said. “From an HR perspective, the pressure will only increase and the war for talent will intensify. The supply of talent is very tight as is the availability of residential and commercial property. At a bureau-

cratic level, a number of improvements have been made, however, getting all the paperwork to start working or opening a bank account can still be a challenge.

From an infrastructure perspective, increased economic activity plus record tourist arrivals put pressure on the environment, from waste disposal to the quality of the environment we live in.”

Mr Said added that although Malta is a politically polarised nation, all political players cooperate on economic policy matters. “I feel that the expectation of busi-

“Local companies need to start thinking hard about the work environment they provide – it’s the only ‘up’ they can have on big companies with larger pockets.”– Mark J. Galea, Quad Consultancy

nesses is that the issue of sustainable growth is put on the political agenda and everyone exhibits an equal level of zeal to cooperate. A mature discussion and a common position on sustainable development would benefit all stakeholders as well as future generations.”

Quad Consultancy’s Mr Galea asserted that an influx of opportunity is a nice problem to face – “it’s always better to deal with the challenge of abundance, than one of scarcity. We need to be proactive and structured in our approach. This is something that – unfortunately – we seem to endemically lack as a country. I hope that all the development and planning is in sync with the industries’ projected growth for the next two, five, even ten years, and I also hope that service providers will fight the temptation to get greedy and start charging exorbitant prices that will negatively impact our competitiveness.”

“I think that if we play our cards right, yes we will be able to cope with the growth,” Mr Galea added. “There are a lot of vacant buildings and factories that can be regenerated and converted into functional edifices. The lack of human resources can also be addressed in the same way we’re doing it now: importing talent.

At the end of the day, an influx of international employees will – in addition to the financial and economic benefits – enrich our culture and diversity.”

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NEWS

Flexibility key to ensuring World Cup doesn’t disrupt employee engagement Rebecca Anastasi With the FIFA 2018 World Cup in full swing, it may seem like the peak time for fake sick leave claims from football fans who just want to stay home and watch the game.

Even though local favourite Italy is not in the game this time, the number of expats working in Malta – approximately 43,000 according to figures tabled in Parliament, over 30,000 of whom hail from the Eurozone – means that the world’s biggest football tournament is bound to have an effect. But what is the reality in the workplace?

Speaking to this newspaper, the Head of Human Resources and Corporate Communications at Mediterranean Aviation Co. Ltd, Ivan Refalo, said that leave applications were on par with the figures of last year, and that there have been no instances of people calling in sick or caught skiving off work to catch one of the games. “The effects have not really been significant,” he told this newspaper.

Indeed, the key to minimising any negative effects, according to Farsons Group Human Resources Manager Antoinette Caruana, is to grant flexibility by, for example, permitting changes of shift and trying to grant more vacation leave. “We believe that granting more flexibility, where possible, will prove to be a win-win situation,” Ms Caruana noted, going on to emphasise that the Group also needs “to meet our production commitments to ensure supporters can enjoy their beer,” particularly since summer is a busy period for the business. “The World Cup of course makes it more challenging but to date we have managed well,” she added.

Nonetheless, Ms Caruana highlighted the benefits of the games,

ENGLAND’S JORDAN HENDERSON. PHOTO: FIFA

“We believe that granting more flexibility, where possible, will prove to be a win-win situation.” – Antoinette Caruana, Human Resources Manager, Farsons Group particularly since the company has become more diverse and multicultural. “We have employees who are supporters and citizens of different countries playing in the World Cup. For example, our employees from Croatia are very proud of their team’s achievements, while the Italian supporters have other things to say. It’s all good fun though.” Moreover, the tournament also means that “different groups of people make the

effort to watch games together,” resulting in a sense of teamwork both inside and outside the office.

This was also corroborated by many of the iGaming companies who spoke to this newspaper. Pia Rosin, the Vice President of Corporate Communications at Betsson AB, emphasised the cohesive force of global celebrations of sport such as this, noting that the company’s management and staff take “this opportunity to come to-

gether as a team and, not only create great customer experiences, but also a great employee experience.” Employees are encouraged to watch the games, with the sportsbook trading team even sending out an email “to all Betssonites with insights on the matches of the day and some tips from the trading floors,” they have even organised an internal betting competition, giving some great prizes – such as tickets to

the World Cup final – to successful entries.

In addition, the games are shown in the Betsson offices themselves, with “TV screens in all offices and big screens in common areas,” which, according to Ms Rosin, discourages any member of the team from faking sick – simply because there is no need to. Breaks are given for staff to watch their favourite games and “with employees of more than 50 nationalities we almost always have someone cheering for every team in the World Cup,” she said.

Damien Azzopardi, Branding and Events Specialist at Catena Media, which also operates in the iGaming sector, concurs, explaining that a competition such as this has resulted in “different teams and employees spending more time together than they usually would.” A projector, showing all the games, has also been set up in the offices “so employees can simply take their laptop and work from the common room and enjoy the match,” he said.

Moreover, Line Peteri, Marketing Manager at Twin Affiliate Gaming, echoes this tone, though she was of the view that “most staff members actually just have the matches on their computer, in the background.” She went on to specify that the company’s flexible hours mean that there is no need for skiving or calling in sick to watch a game since “if someone wants to watch the games they can.”

Yet, with two and a half weeks left to go until the end of the world’s biggest and most popular football tournament, it remains to be seen whether such buoyancy and dedication persist as participating nations edge closer to the final.

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

Managing Editor Marie-Claire Grima

EDITORIAL

Striving to go green Diesel vehicles may be in a slight decline on Malta’s roads, but emissions are definitely not. According to Eurostat, Malta recorded the highest carbon dioxide (CO2) emissions from energy use increase in the European Union in 2017 – 12.8 per cent – and that’s despite having shut down the Marsa power station and the Delimara 1 station in 2017, and switching over to the use of gas and the interconnector. Air quality appears to be in free fall – in fact, the European Environment Agency recently ranked it as very poor – but action to do anything to tackle the biggest source of pollution, vehicle emissions, is taking an awfully long time to have any effect.

When researching our cover story, this newspaper wrote to the Transport Ministry to ask about the cut-off date for diesel, and we were told that the Government is sensitive to the fact that such a transformation cannot happen overnight, with the consultation process expected to result in suggestions on how to sustainably make the move towards full electrification. This is something we’ll be waiting for with bated breath.

With car manufacturers including Nissan, Toyota and Fiat announcing plans to phase out the manufacturing of diesel vehicles in the near future, and green groups across Europe lobbying to have diesel vehicles completely off the road by 2030, could Malta be next to fall in line?

We also asked about the goals achieved from the Malta National Electromobility Action Plan (MNEAP) for 2020, which is being reviewed, updated and extended to 2030. Take-up for electric or hybrid vehicles has been slow-going, with such vehicles still making up a negligible part of Malta’s entire vehicle fleet. We were told that since 2014, the Government has been introducing and improving specific grants for the purchase of EVs, which have been improving year after year. 2018 saw the introduction of zero-registration tax, new grants for pedelecs and electric motorcycles, and a five-year waiver on annual car licences for electric vehicles, as well as the introduction of a maximum grant of €200,000 for companies which want to renew their Internal Combustion Engine-

Publishers Allied Newspapers Ltd. Content House Group Ltd.

powered (ICE) vehicle fleet, and the launch of a scheme to assist car importers to upgrade their garage and train their personnel.

“Today we are pleased to note that the majority of EVs on the European market have paved their way onto our national market. This has materialised because Government had created the right conditions for original equipment manufacturers (OEMs) to start exporting such vehicles to Malta, especially when taking into consideration that production of these vehicles is still very limited. One has to say that as far as incentives are concerned, the grants we provide for the public are on the same standing as those given by larger countries,” the Transport Ministry said.

While this is all well and good, the thing is, Malta is quite an exceptional case. We’re not a large country at all, but we’re the third most cardense in Europe, with 615 passenger cars for every 1,000 people. That’s just private cars, mind you, so if you factor in the amount of commercial vehicles, the number gets much higher. We’re not a car manufacturing country, but we’re addicted to our vehicles. And any vehicle related to doing business in Malta still runs on diesel – from lease vehicles, to delivery vans, to construction trucks, to farmers’ tractors, to school vans.

And those are just the land-based vehicles – let’s not get started on boats.

The Government needs to start thinking of concrete ways to move the sector into taking action to switch to cleaner fuels. If dangling an even bigger carrot in front of it is what it takes, so be it.

Our size is no excuse. Haven’t we heard over and over again that we can leverage our size to our advantage? Well, this is as good an opportunity as ever. If anything, we need to make more of an effort to switch to more sustainable vehicle solutions, from private to public to commercial. And with more of the precious few trees in our urban areas being felled every day, leaving us with nothing to help absorb the noxious CO2 emissions generated by ICE vehicles, there’s really no time like the present to make the switch to green.

Advertising Enquiries Tel: 2132 0713 Email: info@contenthouse.com.mt Advertising Sales Matthew Spiteri Head of Advertising Sales Paul Azzopardi Jean Mark Meli Brand Sales Executives Advertising Sales Coordinators Lindsey Napier Marvic Cutajar

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BUSINESS OPINION

Distributed Ledger Technologies – beyond cryptocurrencies

Matthew Scerri

Distributed Ledger Technologies (DLTs) are, at a high level, a digitised form of a traditional ledger.

For a ledger to serve its purpose, existing records should not be erased or modified, and it needs to be accurate, as doing otherwise would be fraudulent. The most well-known form of DLT is the Blockchain. Other notable examples include the Tangle and Block-Lattice.

DLTs gained significant prominence throughout 2017, heavily driven by the surging popularity of cryptocurrencies like Bitcoin, and their increase in market value throughout the year. 2017 also saw a substantial upsurge in Initial Coin Offerings (ICOs) for organisations to obtain financing. This is much like a traditional IPO, but as ICOs are

largely unregulated, the whole process becomes quicker and easier. This effect snowballed to greater proportions in the first quarter of 2018. On the flip side, this (currently) unregulated ICO market is also prime preying ground for scams, which is why a large number of countries are scrambling to ‘regulate’ them in one shape or another, with Malta taking a prominent and leading role by issuing a consultation document to the public, specifically on ICOs, Virtual Currencies (VCs) and related service providers. As of today, we can safely say that the regulatory framework has been devised and we can expect this to be in place very shortly.

But where do DLTs fit in all of this? When a DLT is public, anyone with a computer and an internet connection can become an entity (node) that obtains and continuously verifies the ledger, which is why terms like ‘distributed’ and ‘decentralised’ are often associated with DLTs. The network is constantly keeping everyone in check and tried-andtested cryptography provides security. Since users do not have to trust anyone else to ensure validity and accuracy, DLTs are often called ‘trustless technologies’.

This means that we can now have Decentralised Applications (DApps). Consider an online

market: in a traditional system, the intermediaries (such as eBay or Amazon) bring sellers, buyers and other intermediaries (such as PayPal) together and provide confidence due to their reputation to all parties in return for charging fees. In a DApp, this process can take place entirely on the DLT, with trust transferred onto the network. By eliminating the middleman, not only do the fees go down but so does the risk that a middleman gets compromised.

So, are DLTs just about trade and finance? Not by a long shot.

Public voting, goods tracking, certifications, compliance mechanisms and digital identity are just some of the applications slowly being disrupted by DLTs. While the technology is still very much

in its infancy, it has already been used in Sierra Leone’s 2018 presidential elections to provide a ‘fully transparent and end-to-end verifiable’ voting process. Companies like IBM are offering businesses the ability to track their supply chain logistics on Blockchain ensuring ‘traceability and transparency’, and educational institutions have started issuing certificates in digital format on Blockchain – Malta has announced that it is undergoing an initiative to follow suit. Meanwhile, the city of Zug in Switzerland has already started to register government-verified citizen IDs on the Ethereum platform. Once the merits of this technology are understood, it is only natural that it will become more prevalent.

“Since users do not have to trust anyone else to ensure validity and accuracy, DLTs are often called ‘trustless technologies’.”

Cryptocurrencies have proven how relevant and resilient DLTs are, while also exposing weaknesses such as scalability, something various projects are currently tackling with priority.

This is evidenced by the recognition of its importance by governments which are seeking to resolve DLT regulatory and taxation complexities at the earliest, particularly, in the latter case, where DLTs give rise to the generation of income or value, such as upon the issue, creation, exchange or investment of tokens, coins and virtual currencies in general. Malta is at the forefront of having an established framework to regulate such business within its jurisdiction. The Government has pronounced itself open to business and is in the process of issuing guidance to enable clarity on the tax treatment of the transactions at play, pending, of course, any harmonised EU action. But one thing is clear: DLTs are here to stay, and just like the internet, we will soon be relying on it in its various forms for many things we do.

Matthew Scerri is a Manager of KPMG Software for KPMG in Malta.

Contributing authors: Mark Curmi (Associate Director, Banking and Financial Institution Advisory Services) and Trudy Muscat (Manager, International Tax Advisory Services). www.kpmgsoftware.com

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Malta Chamber business portal wins prestigious national award The Malta Chamber of Commerce’s online business portal – www.maltachamber.org.mt – has received a prestigious award in the National Enterprise Support Awards organised by the Commerce Division. The portal was awarded for its support for business and enterprise in Malta. www.maltachamber.org.mt – Malta’s first business portal – provides the business community in Malta with news tailored to their interests. Created and managed by Content House Group, it features business news updates from the national and international spheres, insights on national

issues, and notifications from the Malta Chamber.

It was formally launched on 2nd May 2016, and in two years, the portal has established itself well in the local information scene, providing timely and regular stories relating to the endeavours of the Malta Chamber, as well as the business sector.

The portal features a Business News section, a Business-to-Business Directory, and the Malta Chamber’s corporate website. It also includes a useful toolkit for SMEs. The portal forms part of the Malta Chamber’s portfolio of communication

channels, namely the bi-monthly glossy magazine The Commercial Courier, the annual Administrative Report, Economic Vision – Business. Finance. Economy., and Chamberlink, the weekly digital newsletter that reaches upwards of 4,000 businesses.

The National Enterprise Support Awards are organised by the Commerce Department within the Ministry for the Economy, Investment and Small Businesses. This was the eighth consecutive year of the competition. The awards aim to foster more awareness of the importance of entrepreneurship, on various levels.

iGaming Capital launched The first issue of iGaming Capital, a ground-breaking new Maltese publication focusing on the gaming industry in Malta, is out this month.

This landmark edition features profiles of local key industry players, movers and shakers, including Parliamentary Secretary for Financial Services, Digital Economy and Innovation Silvio Schembri, and Gaming Malta Chairman Christian Sammut, and a mix of in-depth features about hot-button topics in the industry, including changing iGaming regulations across Europe, and what these could mean for Malta.

Launching her column in this first ever issue is Marion Gamel, a C-level executive with over 20 years of experience, who coaches entrepreneurs, founders and executives around the world. The aim is to provide advice to business leaders to empower them on issues ranging from improving efficiency to driving transformation and international growth within their company – invaluable advice

for high-level executives managing transformations in this changing industry. iGaming Capital spotlights not just the work, but also the play, diving into the fast-paced and cosmopolitan world that the industry has created in Malta, and giving those who have made this island their home a guide that they can relate to. From paparazzi pages to lifestyle features to restaurant reviews, this publication reflects the excellent quality of life that an expat iGaming professional can expect to find in Malta. “iGaming has become one of the most important sectors for Malta. Its presence on the island has affected the country’s economy, lifestyle, and culture in countless ways,” said editor Marie-Claire Grima. “Yet, up until now, there has never been a publication that caters to the specific interests and needs of this fascinating and constantly changing sector. We felt the time has come for this to change.”

Matthew Spiteri, Head of the Print and Digital Ad Sales Department at Content House Group, the publishers of iGaming Capital, said, “we’ve been told on repeated occasions that there is a need for a strong, high-profile media brand that serves as the voice of the growing iGaming industry and that fulfils the country’s ambition to become a capital city for this successful industry. This is how this brand was conceived and the feedback we’ve received – from the industry itself as well as from the equally important industry that services the iGaming community at large – has been superlative. The publication of iGaming Capital is just the beginning for this brand!” iGaming Capital is a brand owned and operated by Content House Group, one of Malta’s leading media organisations in both print and digital media. It is distributed to all iGaming companies operating in Malta, as well as to relevant business and commercial stakeholders in Malta, including

law firms, financial services companies and business consultancy firms, auditors, accountancy firms, and Government ministries. iGaming Capital is also distributed in London to major business and fi-

nancial consultancy firms, as well as to UK-based investment and venture capital firms. For more information visit www.contenthouse.com.mt or email info@contenthouse.com.mt

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e Malta Business OBSERVER

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INTERVIEW

HSBC Malta enters new chapter to focus on customer-led growth Rebecca Anastasi HSBC Bank Malta has announced a shift in focus in the bank’s business strategy to ensure increased customer engagement and empowerment, placing the client at the heart of the bank’s operations, according to Daniel Robinson, Head of Retail Banking and Wealth Management (RBWM) and Michel Cordina, Head of Commercial Banking (CMB).

The bank has recently emerged from a challenging 18month period, in which de-risking and financial crime risk management were the priorities – with the aim of strengthening the institution and ensuring stability and long-term sustainability. Now, however, attention is being turned towards the clients’ needs and priorities.

“We are part of an amazing group which is strong, professional and with hundreds of years of experience,” Mr Cordina stated.

“And, in line with group strategy, the bank is entering a new chapter and is now focused on getting the bank to growth mode and improve ways of working.” Emphasising the importance of sustainable – and compliant – growth, Mr Cordina went on to specify that our main purpose is “connecting customers to opportunities, enabling local businesses to thrive and the Maltese economy to prosper.”

“We’ve got to help our clients grow,” continued Mr Robinson, noting the necessity of “having more conversations” as well as “exploring new avenues in which we can engage with them. We are focusing on designing the right propositions and products for our clients.”

He pointed to HSBC Fusion – aimed at small business owners –

DANIEL ROBINSON, HEAD OF RETAIL BANKING AND WEALTH MANAGEMENT (RBWM) AND MICHEL CORDINA, HEAD OF COMMERCIAL BANKING (CMB)

as an example. Launched towards the end of last year, this service makes it easier for small and micro companies to manage their business and personal bank accounts through a single set of logon credentials. It also provides access to a dedicated banker, available in each of the bank’s branches, thus offering these en-

trepreneurs greater support in the growth of their business. “The feedback we’ve got since launching is very positive,” Mr Robinson said. “We’re about to reach our first 1,000 clients, we’ll reach around 3,000 by the end of this year, and we’ll continue to grow.”

He attributes this success to the physical and digital ease of access

provided by the proposition.

Indeed, customer connectivity is a priority for the bank and is also one of the main deliverables for growth in CMB, according to Mr Cordina. He referred to the bank’s global network, providing access to expertise and specialised financial knowledge which can be leveraged “for Mal-

tese business customers in such areas as project finance, foreign exchange, hedging, trade finance and global payments.”

The Head of CMB also referred to the investment being made in the upskilling of the business community, through events organised by HSBC Malta, such as the recent talk with HSBC Group’s renowned Global Head of FX Research, David Bloom, who, together with leading local economist Dr Gordon Cordina, provided the bank’s business customers with a view on the changing face of global trade.

“There is a thirst for knowledge,” Mr Cordina emphasised. “And we will continue to work with our customers and strengthen our commercial banking relationships so that they can benefit first-hand from HSBC’s international expertise and commercial solutions.”

This renewed focus on delivery to customers, shifting from a “compliance-driven agenda” to one more focused on customer experience, is reliant on a strong team which, Mr Robinson went on to stress, effectively has faced off the challenges of this last period including managing processes which have been built to work best for the bank but not for the client. Noting that “fundamentally, retail banking is very simple,” consisting of a two-way relationship between “engaged people who understand what they need to do and clients who understand what they need,” the Head of RBWM notes the role of the bank in stripping down complexities to enable the strengthening of communication. “We have a fantastic set of people who work with us, whose engagement and understanding of our strategy is very important,” he asserted.

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He explained that the priority for the bank is to “very thoughtfully and very overtly” re-engage back with their clients by “enabling our people to meet with them” by reducing the number of processes, improving the bank’s systems and providing the bank’s staff with the ability to approve actions, without many levels of authorisation. “This is not only about investment technology solutions, but sometimes it’s about giving a little more authority to where the knowledge is, which is in the customer-facing teams,” Mr Robinson added.

Moreover, empowering staff has also meant opening up the channels of communication internally and “reversing the flow of information,” according to Mr Robinson. A new scheme, launched at the end of last year, has put into practice this approach, with the bank’s employees having been invited to propose changes to processes and systems.

This has resulted in over 100 changes in six months, with many more expected. Indeed, the bank has now selected two branches – on Merchants Street in Valletta and one in Mosta – to act as live test sites for any improvements suggested by staff, with the view of extending those changes to the bank’s entire network of branches.

“Our role is to support and listen to what our staff want us to fix, not the other way around. We need to act upon their ideas because they frequently are the better ideas,” Mr Robinson asserted.

This respect for the bank’s team also extends to the commercial banking division. Mr Cordina emphasised the constant training and career development planning undertaken with his colleagues, who are also able to avail themselves of the educational opportunities offered by HSBC Group and HSBC University. “Our people are trained to become real professionals in anything they do,” Mr Cordina stated, going on to outline the various training initiatives on topics such as relationship management, customer service, credit risk, trade, financial crime, cyber security threats and

GDPR, as well as “personal development skills in all areas of management and leadership.” Staff retention is a priority, with the bank even offering a pension plan, designed in collaboration with the Malta Union of Bank Employees (MUBE), which involves contributions from employees being matched by the bank.

This level of professionalism, and the raising of service standards, also extends to HSBC Malta’s flagship corporate banking centre in Qormi, which has been transformed to provide a personalised experience, incorporating face-to-face transactions with digital innovations. Mr Cordina noted the importance of this recent upgrade to the lobby area and the meeting rooms in “portraying a more professional

“Our focus is on what our clients want. ey’re asking for control and for better and easier access and this is what the bank is doing.” – Daniel Robinson, Head of Retail Banking and Wealth Management (RBWM)

image” which has “already been appreciated by corporate customers and staff alike.”

Technology plays a pivotal role both in the redesigned corporate centre, as well as in the bank’s revamped processes and systems, even in the areas of Retail Banking and Wealth Management. “Technology is what makes people’s access to the bank easier,” Mr Robinson explained. “It puts the ownership in the hand of the client, allowing them to give you the information they want to give you.”

Indeed, the bank has initiated online on-boarding for business customers and student accounts; online Know-Your-Client (KYC) processes; a new wealth management questionnaire which assesses the client’s risk appetite; and a reduced dependency on paper with the introduction of greener soft copy initiatives. Moreover, HSBC Malta was also the first local bank to introduce contactless cards as well as Touch ID and Face ID, both of which are available on the HSBCnet platform and Personal Internet Banking, and the respective mobile banking apps.

“We’re putting the control back into the clients’ hands,” Mr Robinson stated. “This is not about developing applications for niche segments. Our focus is on what our

clients want. They’re asking for control and for better and easier access, and this is what the bank is doing.” Mr Robinson also referred to the videos produced by the bank, as well as its social media platforms, as examples of the ways in which it is trying to reach out to customers by keeping channels of communication open, with the aim of “helping our clients understand their banking needs.” Mr Cordina elaborated on this by specifying that as a group, HSBC has invested over 2.3 billion dollars in technological innovations, which have also been implemented locally and been of benefit to Maltese business customers.

“Such investment is also evidence of our commitment to the Malta business community and shows that we care for our customers,” the Head of CMB added.

And it is this human element which is at the forefront of the new chapter in the growth of HSBC Malta. “We have a long way to go and now our focus is about making things simpler,” Mr Robinson underlined, with Mr Cordina stressing that this was also the aim for the bank’s commercial division. “We want to strengthen the relationship we have with our customers and be their partners in their growth,” the Head of CMB concluded.

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CASE STUDY

Teambuilding events in Malta shift from competition to collaboration

DANICA FAVA, FOUNDER AND DIRECTOR, OUTDOOR LIVING

“We wanted to show what proper teambuilding events should be like – fun experiences that at the same time provide an excellent return on investment.”

Although teambuilding events tend to be taken for granted in a corporate environment nowadays, back in 2004, when Outdoor Living was set up, the concept of such events was still relatively unheard of in Malta. “At that time, we mainly focused on teambuilding events as a different and fun way to showcase Malta to visiting conference and incentive groups,” said Danica Fava, Founder and Director of Outdoor Living, a leading teambuilding events company. “Our main activities were treasure hunts and medievalthemed games in historical venues such as Fort St Angelo.”

“We wanted to specialise in something that we really believed in. Before, teambuilding events were regarded as purely fun events. We wanted to change that ideology and show what proper teambuilding events should be like – fun experiences that at the same time provide an excellent return on investment.”

Nowadays, Outdoor Living has a portfolio of over 100 different team experiences – the largest portfolio on the island – ranging from highadrenaline activities to mental challenges which involve deciphering codes and solving puzzles. “We have events that see teams going out and about exploring a particular area, as well as a list of active team challenges that have been intelligently designed to positively shift the motivational dynamics that influence team behaviour, productivity and performance such as the ‘War of the Dragons’ and ‘Around the World’,” Ms Fava explained.

“We also organise events focused on innovation and invention, whereby teams need to use their creative and analytical skills to build F1 cars, boats and twometre high puppets. For any or-

ganisations that want to do something different for their team, we have a selection of musical activities such as Beatswork, Crescendo and Orchestrate, whereby each participant is given an instrument and groups of individuals are transformed into a giant percussion band or an orchestra.”

For long conferences, which can drain attendees’ energy and focus, Outdoor Living offers short energisers aimed at refreshing and motivating the audience, which can also be used as ice-breaker events. And for organisations that find it difficult to get their staff together for a team event, Outdoor Living offers teambuilding activities specifically designed to be carried out during dinners or Christmas parties, such as the intriguingly named ‘Whisky Wisdom’ and ‘Team Tonic’.

“Most of the activities can be customised to suit different group sizes. However, for us, rather than the size of group, the most important thing is that we know what our clients want to achieve through our teambuilding activities so we can tailor-make the activities, to not just meet, but exceed their expectations,” Ms Fava added.

When asked if more companies in Malta are taking account of the importance of teambuilding events, Ms Fava replied that there has certainly been an improvement in the last few years. “We now have clients coming to us once every quarter to organise an event for their team. We have others linking our teambuilding activities to their training or marketing programmes. We have also organised teambuilding activities for local companies in Sicily. All this shows that more and more organisations are recognising the importance of such activities.”

She remarked that over the past couple of years, the company has seen a trend towards collaborative events, where the aim is not for a small team to win, but for the entire group to work together to achieve one common goal. “Two of our most popular collaborative events are ‘Flat Out Pyramids’, where teams are given the task to work together to build a large pyramid, and ‘Beat the Box’. In ‘Beat the Box’, teams have to utilise each individual’s different skills to uncover a series of mysteries and then finally collaborate with other teams to crack a code before time runs out.”

Treasure hunts will always remain popular with all types of companies. “Six years ago, we took treasure hunts to a whole new level by combining the latest technology with the history of our islands. Besides the very popular iChallenge, a treasure hunt using iPads, for which last year we received an award for being the top European sellers of this activity, we now also have ‘Escape the Mob’, ‘Maltaopoly’ and ‘Knights Chase iChallenge’.”

Teambuilding activities can yield several benefits, including increasing motivation and collaboration, encouraging creativity, improving communication and providing positive reinforcement.

However, Ms Fava stated that whether or not a company actually manages to reap these benefits depends on the teambuilding activity provider chosen and the preparations made for the event.

“One crucial point to remember when organising a teambuilding activity is to ask yourself why your team needs a teambuilding activity. What areas do you want to focus on? What is the result you want to see after the activity? With the help of your teambuilding activity provider,

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“We have a list of active team challenges that have been intelligently designed to positively shift the motivational dynamics that influence team behaviour, productivity and performance.” such information will help choose an activity that is targeted to help your team skills in that area, to ensure the event meets the business skills you want to acquire. We have different activities targeted to help with different skills such as communication, leadership, strategic planning,

change management and creative thinking. No activity is the same for any group, which is why it’s important to customise activities according to the profile and goals of every group.”

At the end of all its activities, Outdoor Living offers a debriefing session where participants are asked to

reflect on the challenges they completed, and how they can be linked to their place of work. “This is a crucial part of a teambuilding activity,” commented Ms Fava. “This is what makes our teambuilding events worthwhile and impactful.”

Outdoor Living is also the exclusive licensee in Malta of Catalyst

Global products, a network of teambuilding providers spread over 40 different countries.

Through the Catalyst network, Outdoor Living attends different training programmes along the year to ensure that it has the besttrained staff in the field of teambuilding events.

“Through our partnership with Catalyst Global, for every occasion someone participates in a Catalyst global programme a donation is forwarded to B1G1 – a donation which makes a direct and measurable impact in a B1G1 project around the world,” Ms Fava shared.

“In addition, since we strongly believe in the importance of corporate social responsibility, we have designed teambuilding events where the main focus is CSR. The aim of our CSR events is to make a difference, raise awareness and demonstrate company values in a fun and engaging way. Over the years we had groups of different sizes taking part in our CSR events.

The biggest one involved over 800 people who were split among different charities and carried out activities such as painting, gardening, and putting together new furniture and toys. They also donated a large number of bicycles.”

Ms Fava concluded by stating that the company will continue to push the level of teambuilding events in Malta to a much higher standard. “We promise our clients that every year we will come up with at least three new innovative events.

We started as a teambuilding events company and will always remain focused on this concept. Our aim is to positively affect the culture of teams with lasting results.”

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CASE STUDY

Mdina International provides people-focused solutions for business success Jo Caruana

MANAGING DIRECTOR ALEX GALEA AND GENERAL MANAGER MYRA PEARSON. PHOTOS BY ALAN CARVILLE

“From teambuilding to training, the iGaming industry really has upped the level of the way things are being done in Malta, but even in innovative sectors like this one, it’s important not to rest on your laurels.” – Alex Galea, Managing Director

In today’s competitive market, businesses know one thing for certain: they need to stand out. There are all sorts of ways to achieve that, of course – including honing your marketing, branding, and products.

Beyond all that, there’s also development, and the concept of investing in the focused progression of your personnel and your business optimisation. But how do you take your team and elevate it to the next level? One particular company has the answer.

“Mdina International was created to help other businesses become the best they can be,” explained Managing Director Alex Galea, who joined the company a decade ago. “Our founder – the company’s chairman Steve Tarr – conceived the idea behind Mdina International 34 years ago, and the company has been growing ever since.”

The original company pillars were management solutions and sales development.

Two additional pillars – HR Services and Process Optimisation – were brought into focus in the years that followed. Mdina International knows that by investing in their people, companies can hope to enjoy fantastic results. With that in mind, they create bespoke solutions and programmes for teams of all levels – from executive level all the way up to C-level. The key thing throughout the company’s journey has been the tailor-made approach that they have taken with every client; they simply do not believe in out-of-the-box solutions.

With that in mind, Mdina International puts its relationship with its clients at the very core of everything it does. “The origins of our company actually date back to when Steve Tarr worked for a blue-chip company.

He was trying to find a trainer that would provide the service he was looking for, but he kept receiving the same syllabus from everyone he approached, and it just didn’t work. That’s when he realised there was a gap in the market, and he decided to start providing custom-made training himself,” Mr Galea explained.

However, the team here is quick to underline that their offering is so much more

than training. “It’s really all about development,” continued Myra Pearson, the company’s General Manager. “So much goes into the process, whether it’s research, feedback, consultation, coaching and learning programmes. Our role is to get to know our client, look at their workings from both the outside and the inside, and suggest an approach that will help them to achieve development or change that they actually need. It’s very holistic and we leave no stone unturned.”

Clearly it’s an approach that has worked, as Mdina International has enjoyed exponential growth since it was first launched. The company now has offices in the UK, Germany and Malta, and is exploring plans for further expansion over the next couple of years.

“Our international approach is also very much part of our core ethos,” Ms Pearson continued. “Our team of trainers and coaches travel on projects to ensure global thinking is part of every exercise, as we know that that adds value to our clients’ results. Nowadays, we also optimise on technology, and coach people via Skype or other tools, which means there are literally no boundaries when it comes to the people we can work with.”

Mdina International has been offering HR services for over eight years, and has assisted various companies by implementing or enhancing their HR practices. A more recent service line that has been introduced is process optimisation. Consultants conduct detailed audits on current processes within organisations and find leaner and more efficient ways through which they can operate. One common thread amongst Mdina International service lines remains that, when it comes to organisations: “it is all about the people.”

Of course, this very much ties in with one of the biggest challenges that many Maltese companies are facing – attracting talent and retaining it. “We come at this from a different angle and really help our clients to develop their team’s potential, and encourage them to enjoy long-lasting business relationships. We have also embarked on a number of research exercises to help provide insight into this phenomenon. For instance, we recently worked with our partners Business Leaders Malta on a proj-

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ect called XYZ, which specifically tackles generational differences and how to attract, communicate efficiently with, and ultimately retain people of different age groups. We have really embarked on challenging the current status quo both internally and externally,” Mr Galea said.

And one of the industries within which Mdina International is certainly taking on that status quo is the iGaming sector, and the company has worked extensively with iGaming companies to help them increase leadership skills, enhance retention rates and boost development. “From teambuilding to training, the iGaming industry really has upped the level of the way things are being done in Malta,” Mr Galea explained, “but even in innovative sectors like this one, it’s important not to rest on your laurels. With that in mind, we are working with iGaming companies on how best to tackle their challenges and to think long-term. For instance, one of the tests these companies face is how best to integrate their international employees into long-term life here in Malta. Yes, they can have fun with teambuilding and company events, but there are other vital factors to tackle. So, by bringing our team to the table, we can help to provide insight on how best to strategise for the future, and not just for the shortterm. The results these companies are looking for don’t come from a one-size-fitsall approach, and that’s where our experience really does produce results.”

With all of this in mind, the team at Mdina International stresses the importance of taking a three-pronged approach

to your business development and success.

“We highly recommend starting with the research phase, followed by the delivery phase, and finally going into the measurement phase,” Mr Galea continued. “When our clients genuinely capitalise on that, they see a real difference – with results. Examples include a company that increased its sales by 15 per cent, and another company that gained a more sustainable structure, encouraging leaders to take more accountability of their respective roles. For us, it all centres on taking a genuine interest in our clients and in getting to know their culture. In allowing us to do that and really giving us the time to assess, the results can be magnified, and then followed up with the right products, consultancy and next recommendations.”

Meanwhile, the team behind Mdina International is as focused on their own future as they are on the future of their clients, and constantly strive to incorporate the very latest research, knowledge and services into their portfolio. Their next goal is the introduction of more technology into their services; this is very much driving the markets today and they have plans in place to integrate this aspect into their current and future service lines.

Finally, they will also be growing the team and focusing on their own people’s development, so that they can continue to deliver success consistently, both in their current markets and beyond. “At the end of the day, for us, it’s about people and empowering growth – the growth of the individual people within a business, and, of course, the business as a whole,” Mr Galea concluded.

“Our role is to get to know our client, look at their workings from both the outside and the inside, and suggest an approach that will help them to achieve development or change that they actually need. It’s very holistic and we leave no stone unturned.”

– Myra Pearson, General Manager

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CASE STUDY

OFICI welcomes new era, shifts focus to creating tomorrow’s offices Martina Said When setting up a business, be it legal, accounting or IT, having trusted partners in all spheres of operations is key. The same can be said about office supplies, and finding what you need, every time you need it, is crucial to the smooth day-to-day running of an office, no matter how big or small.

With a vast portfolio that includes a range of stationery products, office equipment and even cleaning products, OFICI, previously known as Office Point, makes itself indispensable to its clients, no matter their requirements or where they’re based on the island.

I met Justin Pace, OFICI’s Sales and Marketing Manager, at the company’s offices in Msida. He explains that, since its recent rebranding, OFICI has positioned itself as a one-stop shop for all office supplies, particularly to those companies that have recently relocated to Malta and are looking to get themselves up and running in the shortest time possible, but also to those that have established their base here, be they local or international.

Since joining the company less than two years ago, Mr Pace has helped usher in a new era for OFICI, shifting the company’s focus from consumers to businesses. OFICI’s years of experience in the field have been crucial for helping to provide companies with reliable support where and when they need it.

“We recently carried out an exercise to better understand the needs of the market, and we realised just how much, and how fast, offices are changing. Until a few years ago, it was relatively

straightforward to transform a block of offices with furniture and all the basics required in an office,” said Mr Pace. “However, nowadays, offices are an extension of the home, and places where we spend very long hours. Employees need certain comforts which help make the workplace feel like a home away from home, while employers aim to provide a stimulating work environment so that employees are happy and motivated. So we felt that rather than focusing on the mass market, we are better positioned using our expertise to focus on this one sector.”

Today, OFICI only supplies a handful of stationeries, and has zoomed in on the office sector with the aim of fully equipping it with the stationery, equipment and general operational items required in a work space. “As more and more offices are relocating to Malta, they are eager to organise themselves as quickly as possible so that they can start operating without delay. They all require the same standards they operated with elsewhere in the world, with the prospect of future growth on the island. This is what we do: we step in and handle that side of the business which is essential, yet invisible. With this in mind, we rebranded from Office Point to OFICI, which doesn’t only reflect our new, corporate route, but also reflects what the company is all about.”

Mr Pace explained that, in line with the company’s new image, a general restructuring was required, particularly in the areas of human resources and IT infrastructure. “Having employees with the right attitude to work is crucial to a company’s success, as is having the right IT infrastructure which facilitates a smooth

PHOTOS BY ALAN CARVILLE

and easy process, both for clients to place their orders and for us to take stock and keep track of the many products which we supply,” he said. “We spent over a year training staff in preparation for the rebrand, and we’re proud to have a new identity which completely reflects our company’s philosophy. OFICI is not just a name – it stands for Organised, Flexible, Innovative, Capable and Indispensable. These are the pillars of our brand, our service guarantee.

“We step in and handle that side of the business which is essential, yet invisible.”

These are the drivers that push us to strive for more every single day, giving good service to our clients, even if it that means stepping outside of our comfort zone.”

The latest in a wide-ranging portfolio of products offered by

OFICI is office furniture, which the company imports, supplies, installs and even alters by working closely with trusted carpenters.

“We go beyond the standard desks and chairs, and offer design consultation to clients by reviewing

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their property plans together with our trusted partners in this field, to come up with a design proposal that reaches our clients’ expectations,” said Mr Pace. “Besides a stimulating office environment, the general well-being of employees at the office is also important, and having the right furniture is essential for this.”

While large, foreign companies in tech and iGaming lead the pack when it comes to creative office design, Maltese offices are also catching on. “Quite a few of our clients are hotels, and unfortunately, the back-of-house offices pale in comparison to the pristine and beautiful interiors of the rest of the hotel. But this is changing, and we’re increasingly being asked to upgrade all kinds of office spaces to better match the standards required by a modern-day workforce.”

“Our philosophy is that any company that starts out small will need to grow at some point or other, so we don’t distinguish between small or large and frequent orders. We’ve had anything from a €20 to €3,000 order – and we approach both in the same way, and offer the exact same service,” said Mr Pace. “Our online ordering system was also designed in line with this. Clients may view the full selection of items on our website

“Our philosophy is that any company that starts out small will need to grow at some point or other, so we don’t distinguish between small or large and frequent orders.” and place their order, no matter the size. The order gets processed and delivered seamlessly. Of course, anyone who prefers to place an order by email or over the phone may do so too. We’re always striving to improve, and we are working on a new online portal which is simpler for the client and also better for us to achieve a wider reach.”

In line with the company’s forward-looking approach, Mr Pace asserted that OFICI is working to achieve ISO certification in the coming months, specifically ISO 9001 for quality management and ISO 14000 for environmental management. As for growth plans for the coming years, Mr Pace said that the company is setting its sights on the area of printing and related consumables. “I be-

lieve this is an area with a lot of potential for us, and will be incredibly valuable for our clients, including the selling and maintenance of printing and photocopying machines, and the supply of related consumables.”

“However, we’re looking to consolidate our most recent addition first, which is that of office furniture before moving on to this new phase. We’ll be taking stock later this year to review what we’ve done, what we’ve achieved and what we wish to achieve next year, and set our sights on new objectives in line with our motto: Simplifying Office Supplies.”

Want to discover what OFICI can do for your company? Visit www.ofici.com.mt or email sales@ofici.com.mt to learn more.

JUSTIN PACE, SALES AND MARKETING MANAGER, OFICI

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STOCK MARKET REVIEW

Complex financial instruments – risk perception and retail investor access “‘Complex’ financial instruments are ineligible for retail investors, unless they are capable of demonstrating that they have sufficient knowledge and experience to understand these features and characteristics.”

Vincent E Rizzo MiFID II allows investment firms, subject to certain conditions, to provide investment services that only consist of execution or reception and transmission of orders, without assessing the appropriateness of the service or product for the client (so-called ‘execution-only’ or ‘non-advisory’). One of the conditions for the application of the specific rule is that the services relate to products which are defined as ‘non-complex’.

At its simplest, regulation defines a ‘non-complex’ financial instrument as one which is easy for a potential investor to understand and assess, and which has no particular features or characteristics that puts this understanding or assessment into question. On the contrary, ‘complex’ financial instruments are instruments which include a feature or characteristic that make it more difficult for potential investors to understand and assess in so far as risk is concerned.

‘Complex’ financial instruments are therefore ineligible for retail investors, unless they are capable of demonstrating that they have sufficient knowledge and experience to understand these features and characteristics.

By way of example, and in the interest of keeping this article as simple to understand as possible as well as relevant to the local context, the rules identify, amongst others, ordinary shares and plain vanilla fixed interest securities (bonds) having a fixed maturity date as ‘non-complex’ financial instruments. On the other hand, ‘complex’ financial instruments include bonds which have an early redemption option (callable bonds), instruments embedding a derivative, or presenting a structure which makes it difficult for the client to understand the risk, as well as

subordinated bonds, amongst many others.

Over the past couple of years and with the onslaught of ever-increasing regulation that is becoming harder to interpret, the market has had to adjust in an unprecedented manner. In the local context, there has naturally been no exception to this onslaught, and we have had to contend with formal regulatory ‘policies’, as well as informal understandings over and above regulation.

All this has indeed created an environment where investment services providers on the one hand and investors on the other

are having to struggle with continuous adaptation while attempting to continue to provide a service in the main to the retail investor.

Without a doubt, these investors cannot and do not follow regulatory developments as they unfold.

Do you blame them?

In a circular addressed to the investment services industry dated 4 March 2014, the MFSA stated that securities’ regulators are concerned that “alternative and more sophisticated investment strategies” are being made available to retail clients and that this trend poses certain risks for retail investors as they may

not be able to understand the risks involved.

While regulation no doubt creates a safer and more structured environment in which investors may indeed be ‘protected’, it also runs the risk, as, in my humble opinion, it seems to be doing, of creating an unwanted adverse scenario. A situation seems to have arisen where the monitoring of ‘risk’ on one side is simply creating an unwanted and unfortunate shift of risk on the other. I will seek to explain this in simpler terms while adapting it to the local context.

Today, regulation effectively prohibits a retail investor from

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investing in a subordinated bank bond (‘complex’ instrument) unless the investor passes a rigorous test. This test takes the form of a lengthy questionnaire-type assessment that investment service providers need to provide to investors prior to an investment in this type of instrument. The answers provided by the investor are then assessed by the licenced financial intermediary, who in turn assumes the risk and responsibility of determining whether the investor possesses the necessary knowledge, experience and expertise to invest in these instruments. This laborious process is time-consuming and therefore costly, a cost which invariably would need to be passed on to the retail investor over and above the brokerage to be paid for acquiring the instrument. Realistically speaking, given the profile of most local retail investors, several investors are unlikely to pass this assessment. Effectively, this means that many local retail investors are unable to invest in subordinated bank bonds as a matter of fact.

Explaining this to the investor after having gone through the assessment is not at all easy, and few would accept the conclusion that an investment cannot be processed on their behalf, even

on a non-advised basis. The challenge goes one step further.

At this point, all these being equal, the retail investor could decide, out of lack of choice, to consider (and probably) invest in ‘non-complex’ financial instruments since they are easier to understand simply because they are not burdened with ‘complex’ features. Perhaps the cost of assessing investors is one of the factors that also leads them down this route.

The shift of risk though, as I referred to earlier, is in fact this ‘alternative’. In order to obtain returns and achieve the desired objective of an investment in financial instruments, has this burden partly created a demand for higher risk ‘non-complex’ instruments? In reality, retail investors have easier access (effectively no barriers) to other financial instruments simply be-

cause they are ‘non-complex’.

The difficulty and worry though, from my perspective, is that in all this process of ‘protecting’ and ‘educating’, regulation has effectively provided retail investors with the completely incorrect perception that a ‘non-complex’ financial instrument is less risky and therefore more appropriate. Add to this the ease with which one can access these instruments relative to subordinated bonds (using my example above) and what you get is the perfect misconception!

Retail investors now also have the possibility of investing even in bonds issued effectively by startups or relatively small unknown issuers which don’t have an adequate track record and almost certainly offer rates of return not commensurate to the risk being taken. In increasing instances, these bonds are not admitted to

“Regulators ought to assess the potential counterproductive risks regulation may pose to the market as it adjusts to the realities at the time.”

the main regulated market and are very illiquid. In the process, these same retail investors have to shun bonds issued by large, regulated, dominant and strong banks simply because these institutions are issuing subordinated – and therefore ‘complex’ – bonds. So much for risk vs return considerations!

I would not wish to be misinterpreted. I am not against regulation – on the contrary!

However, regulators also ought to assess the potential counterproductive risks regulation may pose to the market as it adjusts to the realities at the time. There is somehow always a ‘way out’ as it were, and the result may not always achieve the desired effect.

The problem, as I see it, is the extreme to which we have now taken regulation in certain instances and the lack of conviction that the intended objectives are indeed being achieved. Complexity does not necessarily equate to risk. This is where educating as opposed to just regulating is highly needed. As is, the concern seems to be that retail investors are getting the wrong message.

Vincent E Rizzo is a Director at Rizzo, Farrugia & Co (Stockbrokers) Limited.

Rizzo, Farrugia & Co. (Stockbrokers) Ltd, “Rizzo Farrugia”, 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. Rizzo Farrugia, its directors, the author of this report, other employees or Rizzo Farrugia 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 Rizzo Farrugia, 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. © 2018 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved

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NEWS

Local project in the running for the World Architecture Festival Awards 2018 The restoration and extension of a Grade 1 Scheduled residence in Balzan known as The Coach House, led by leading architectural firm Architecture Projects (AP), has just been shortlisted for the prestigious World Architecture Festival Awards, the most popular and prestigious awards for excellence in international architecture.

Making the shortlist in the category with the highest number of submissions is a great achievement for AP. Projects from 81 different countries have been shortlisted for the 2018 awards and world-leading firms including BIG, OMA, and Zaha Hadid Architects are among those on the shortlist.

AP will present the project at the festival, which this year will take place in Amsterdam, between 28th and 30th November 2018, and during which winners will be selected and announced.

The Coach House has also recently won the Din l-Art Helwa Awards for Architectural Heritage, both in the Restoration and Regeneration category, and the overall Silver Medal, signifying the best in all categories. The Balzan project has also just been shortlisted for two additional awards by the Kamra tal-Periti.

The Coach House is thought to have primarily served as a service building connected to Palazzo Bosio, built in the 18th century for Vincenzo Bosio, Commander of the Knights of the Order of St John, as his own residential quarters. The Coach House is composed of an outer set of buildings adjacent to the palazzo.

The rehabilitation of The Coach House was organised around the need to preserve the functional nature of the building while accommodating the requests of the new owners. In order to turn what used to be a one-storey service building into a home, an extension was designed and grafted on the perimeter wall of the preexisting structure.

All extensions and their structural interventions were carried out in a way to ensure the protection of the existing building, and the reversibility of new additions wherever possible.

In fact, the volume of the main extension sits exactly on the perimeter of the pre-existing building. A new staircase, an independent sculptural structure which is self-supporting and constructed from solid steel plates, was

PHOTO: CYRIL SANCEREAU

built as a connection between the old and new, and their different levels.

The extension of the building incorporates a ‘woven’ stone façade that combines contemporary minimalism with vernacular building technologies.

David Drago, an Executive Director at AP, commented, “The Coach House is the result of an approach which combines vernacular building technologies with contemporary design and which takes into account the needs of today’s highly-demanding environment while preserving our unique built heritage. It is also the product of the passion that all the people involved in the project have for their work. We hope this project will serve as a relevant case study on how we can preserve our built heritage while keeping it alive.”

PHOTO: ALEX ATTARD

e Malta Business OBSERVER

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BUSINESS UPDATES

Enemed undergoing major upgrades, introducing new infrastructure Enemed is currently undergoing a complete transformation to upgrade and introduce a new operating infrastructure, as part of its ongoing effort to become a benchmark for the industry. Over the past two years, the company has invested more than â‚Ź700,000 to build a new laboratory for quality assurance purposes.

The Has-Saptan project, which is currently underway, includes the upgrade of all the underground storage tanks to double-lined, vacuum-sealed tanks, as well as the building of a new logistics centre and Head Offices.

Enemed is also improving its jet storage facility at the Malta International

Airport. All the existing reservoirs are being replaced by brand new ones.

This â‚Ź15 million project is expected to be ready by mid-2019. Once all the projects are completed, Enemed will close down another site where it currently stores its jet fuel, namely Wied Dalam.

Enemed Company Ltd. was established towards the end of August 2014 and is a wholly-owned subsidiary of the state owned Petromal Company Ltd. Previously referred to as Enemalta, the company is responsible for the importation, distribution and wholesale of petroleum products for the inland market, including the aviation sector.

Designing locally-manufactured LED lighting Lighting design plays a key role in the functionality of sporting facilities. Besides providing illumination for players, officials and spectators, sports lighting must also fulfil various characteristics to optimise the quality of indoor and outdoor sports and recreation spaces.

Altern Limited has been working on INNOVLED, a project whose aim is to develop an LED floodlight for sports applications. The project is funded through FUSION, a research and innovation programme launched by MCST. Altern brings in extensive expertise and experience within the sustainability and lighting industry, offering a range of locally built LED lights.

Following in-depth research into the lighting requirements for different sports, the design team visited multiple facilities and conducted site surveys and interviews with facilities managers. The surveys revealed that there are lighting installations of widely varying quality in the sports facilities, with some sports facilities facing various challenges relating to their lighting, including difficulty to maintain and control, and high consumption of energy.

Using their findings, the project team at Altern have been designing a high-power LED floodlight which will satisfy lighting requirements and provide additional functionality. LEDs are ideal for sports applications as they have

high light output-to-power ratios, long lifetimes, require low maintenance, and provide lighting instantly. They can also be closely controlled and programmed to vary light output depending on the particular use of the space, making them suitable for multi-use spaces such as sports halls used for conferences or events.

Over the past months, Altern has built and installed prototypes in selected sports facilities, and carried

out in-depth monitoring. These findings have been used to further develop the luminaire and control system design, ensuring that INNOVLED luminaires meet all required characteristics and provide high-quality sports and leisure facilities which can be enjoyed by participants, officials, spectators and building managers.

For more information call 2099 6465, visit www.altern.com.mt or email info@altern.com.mt

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e Malta Business OBSERVER

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BUSINESS UPDATES

Acumatica Cloud ERP for all your distribution management needs Distribution management is an overarching term that refers to numerous activities and processes

such as packaging, inventory, warehousing, supply chain and logistics.

Distributors of any size face many of

the same global challenges, including rapidly-changing customer demands, complex inventories, and

fluctuations in the supply chain.

The main task of distribution management software is to help companies manage their distribution activities.

Acumatica Cloud ERP offers a distribution management solution that integrates and automates the entire cycle, from quoting to cashing. It enables businesses to simplify complex distribution processes involving multiple products and suppliers. Here are a just a handful of reasons to choose Acumatica for your distribution management needs: Minimise investment costs Everyone in your company needs up-to-date and accurate information to make the best decisions. That’s why the Acumatica pricing structure lets you add casual users, suppliers, and customers without paying for additional licences. Therefore, the cost to you is based on the features and resources that you choose to utilise, not on the number of users who access the system.

Real-time inventory management With the Acumatica inventory tracking feature, business owners can control system-wide inventory to efficiently manage the distribution process from beginning to end.

The best part is that inventory is accessed in real-time, so you can stay on top of everything – from viewing available stock and expiration dates to reordering quantities across multiple warehouses.

Improve customer satisfaction Through Acumatica’s availability of accurate real-time information, any situation needing attention can be identified and addressed immediately, thus allowing you to provide customer support anytime, anywhere. With its fully-integrated financial management, customer management, and distribution management modules visible across the entire company, customer satisfaction can easily be improved.

Reduce order times With the Acumatica sales order management feature, you can improve the order process and eliminate delays by means of integrated workflow and automated sales order processing. Acumatica allows you to set rules to optimise the sales management of multiple warehouses from a single screen. You can split orders, verify credit limits, and drop shipments. Furthermore, with Acumatica’s notifications and alerts, you can always keep on top of your distribution business.

Know your true profitability Apart from enabling you to keep track of costs in real-time, Acumatica allows you to control costs across the entire supply and distribution chain, determining profitability by warehouse, product line, and location. Start making the shift to Acumatica Cloud ERP today. For more information visit www.computimesoftware.com/ acumatica-erp; T: 2149 0700; E: info@computimesoftware.com

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e Malta Business OBSERVER

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BUSINESS UPDATES

Medserv wins contract for Cypriot offshore services Oil and gas logistics specialists Medserv signed a second contract with a multinational oil and gas corporation to provide shore base logistics services for exploration activities taking place offshore Cyprus.

To provide these services, Medserv will be setting up additional logistics facilities in the port of Limassol. It is expected that this contract will be serviced through the group’s internal resources.

Cyprus is a key growth driver for the company’s integrated logistic support services business.

Medserv also supports the offshore activity of energy company ENI in the region. The award of this contract is another major step to broaden

the group’s oil and gas client portfolio, and establishes the company now in eight countries as tendering activity continues.

“As we have described before, the Calypso lean gas discovery offshore Cyprus is believed to be ‘Zohr-like’,” said investment intelligence firm Edison Investment Research, in a report titled ‘Medserv Winning Ways’.

“Zohr, offshore Egypt, is the largest gas field in the Mediterranean. The new find should provide an extended drilling programme, offering greater visibility and improved returns from Cyprus now from multiple customers.”

HSBC Malta and EY organise seminar to support corporates HSBC Bank Malta and EY Malta jointly organised an exclusive event on the latest European Central Bank (ECB) guidance, titled the ‘Implementation of the ECB Guidance on Leveraged Transactions’.

The purpose of this seminar was to assist corporate customers at better understanding the requirements around certain

financial exposures related to the use of borrowed funds to finance assets, known as leverage.

The goal of this very well-attended seminar was that of preparing these business customers for the eventual implementation of said guidelines.

The information session commenced with an introductory ad-

dress by HSBC Malta Head of Corporate Banking, Kevin Rapinett, in which he gave an overview of the ECB guidance and the proactive approach being taken by HSBC to ensure it is implemented in the most practical manner possible for the benefit of its corporate customers.

This was followed by a presentation from EY Malta Banking Advisory Services Associate Partner, Grace Camilleri, in which she explained to the audience, most of whom were Chief Financial Officers, the technical requirements required by this guidance and other practical recommendations on how best to prepare for it.

“HSBC believes in the importance of investing in such thought leadership events and is pleased to support its customers by bringing the latest information about developments in the financial services industry to the attention of businesses in Malta,” said HSBC Malta Head of Commercial Banking, Michel Cordina.