The Business Observer Newspaper - 6th November - Issue 13

INTERVIEW

Issue 13

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November 6, 2014

Distributed with Times of Malta

Just because chairman Tony Zahra is not making a lot of noise about Malta Industrial Parks does not mean nothing is happening there.

Quite the contrary. see pages 10 and 11 >

NEWS Forget about the salary... In the future, employees are going to want more flexibility and more benefits. see page 5 >

GRTU renews call for abolition of eco-contribution Vanessa Macdonald The GRTU is making an eleventh hour effort to ensure that eco-contribution is removed in the next Budget.

The Chamber of Commerce, Enterprise and Industry is supporting its initiative, the GRTU said.

The promise to remove the tax had been mentioned in the last Budget and Environment Minister Leo Brincat said last week in a speech that the time had come for this promise to be fulfilled. He referred to the setting up of a working group a few weeks ago which has now prepared a report on waste prevention – as the solution had to be a holistic one.

GRTU chief executive officer Abigail Mamo explained that eco-contribution was “a Maltese invention” which has nothing to do with the EU and is not found in other member states.

INDUSTRY FOCUS Eco-contribution was introduced in 2004, based on the ‘polluter pays’ principle, ostensibly making importers pay towards the recycling or treatment of a list of items ranging from beverage containers and mattresses to car tyres and fridges. It ranges from a few cents to €69.88 per item.

The GRTU is concerned about eco-contribution for a number of reasons. Because it is a uniquely Maltese tax, local importers are at a disadvantage when it comes to online purchases, for example, and are clearly unable to compete fairly with those who import goods illegally.

“Traders coming in on the catamaran are not subjected to the same checks and inspections as those who use other importing channels. They should by law be reporting and paying eco-contribution but how many do? How many get caught?

“Those who evade this tax are saving a lot of money and are able to undercut the prices of those who do pay it,” Ms Mamo said.

“It also affects online purchases.

If you buy a tablet from Malta, the trader will have paid eco-contribution on it. But if you buy it over the internet, the foreign trader does not have had to pay it, making it automatically cheaper.”

Because it is a uniquely Maltese tax, local importers are at a disadvantage when it comes to online purchases

It is also irritated because the €7.8 million collected from eco-contribution does not seem to be spent on recycling on waste treatment, but just gets swallowed up in government spending. Questions to the Environment Ministry on the use of the funds were not answered.

However, one of the major concerns is that Malta is already facing infringement procedures over delays in applying the EU’s Waste Electrical and Electronic Equipment (WEEE) directive, which basically covers anything that is plugged into electricity – many items of which would be now subject to eco-contribution.

“If we have both running in parallel, importers would be paying twice for the same thing!” she said.

“At least with WEEE, importers would be paying the same as Continued on page 5

With just 11 days till the next Budget, we asked three experts about how the last one impacted the economy – and what they want to see next. see pages 8 and 9 >

ANALYSIS Edward Rizzo looks beyond the numbers announced by Bank of Valletta and analyses the implications of the new dividend policy. see pages 17 and 18 >

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November 6, 2014

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NEWS

MIA investing in airfield service Malta International Airport has spent €9 million on the airfield since 2008 – mostly on tarmac on the runways – but it has also undertaken other projects, such as creating a loop on which aircraft can get off the runway after landing, as well as the widening of all the taxiways.

Other projects are also planned, including the resurfacing of the “Charlie” taxiway.

Chief commercial officer Alan Borg strenuously denied that the airport was investing more enthusiastically in landside operation to boost non-aviation revenue, rather than in the airfield itself.

He was reacting to an article recently carried in The Business Observer, which had touched on a number of issues.

“We invest heavily in the airfield.

We would be crazy not to when 70 per cent of our revenue is derived from it!

“We have all the surfaces analysed on a regular basis. The main runway is in good condition but Apron 9 needs some work, which is to be completed out of the 2015 budget.

He also disagreed that MIA should have tried to retain Park 4 for aircraft parking, rather than allowing Malta Industrial Parks to develop it.

“It is useless to us commercially.

It is simply too far away from the terminal and from the handling equipment base for it to be used.

We have 11 aircraft which ‘sleep’ at the airport – and even then this is very often just for a few hours.

There is enough parking space for them. However, we are always looking ahead and we are in negotiations with government over 40,000 sq.m. of land near the AFM which is currently owned by Malta Industrial Parks.

Another issue that had been raised was the delay for vehicles wanting to cross the main runway – which means business jet passengers often have to wait for half an hour at the traffic lights there. MIA has opted to move the ‘threshold’ for the runway that crosses the end of the main one so that it is before the traffic lights. The threshold is an

“We want to make a tangible investment, leaving something long term and visible – what we call shared value – for tourists and the Maltese to enjoy” operational line established for navigation purposes, which means that the lights will only be red – and the vehicles will only have to wait – for around 10 per cent of the flights.

In the meantime, MIA is also willing to pay around €300,000 to upgrade the road which skirts the perimeter of the runway and will be meeting Transport Malta to get approval.

The airfield investment – especially the 40,000 sq.m. expansion near Apron 8 – will mean that the airport can cope with future demand for parking. If anything, the

bottleneck will soon be at check-in, he said. One way to solve this is to offer the option of self-check-in booths and the three already available are being used very effectively

by Lufthansa. Mr Borg said he hoped that Air Malta will follow suit, and said that there was space allocated for more kiosks should their use grow.

In the meantime, the airport has also looked at its corporate social responsibility. Rather than spread its €150,000 annual budget across numerous small projects, it will now take up fewer

ALAN BORG

projects but ones with a clear and visible added value.

“We want to make a tangible investment, leaving something long term and visible – what we call shared value – for tourists and the Maltese to enjoy,” he said.

The airport will be looking at cultural, heritage, social and environmental projects – no longer sport – and it has decided to channel requests through a foundation.

It will also publish the results of its CSR in its 2015 annual report, adopting the Global Reporting Initiative (GRI) model used by most of the big airports, which establishes measurable goals.

The projects will be vetted by an airport committee chaired by Mr Borg and with members drawn from various departments. The decisions will be taken by the foundation, which brings together the diverse expertise of Frederick Mifsud Bonnici, Frank Salt and Simone Mizzi. The first project will be the €130,000 restoration of the 17thcentury watchtower at Żurrieq.

“The MIA chairman will retain a fund for projects at his discretion.

And of course, we will still have CSR targets for our own operations, such as energy-saving projects,” he said. The airport has already invested in a solar farm and rainwater collection and will be purchasing a more energy-efficient air conditioning system and LED lighting by 2016.

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November 6, 2014

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NEWS

Tariffs do not always make sense

THE I-GAMING SECTOR OFFERS VENDING MACHINE ALLOWANCES, ONE OF THE MANY INNOVATIVE BENEFITS DRIVING UP EMPLOYEE EXPECTATIONS.

Continued from page 1

Employees looking for benefits in contract Forget about the wage: employees are looking beyond their salary and are increasingly looking at benefits.

“The i-gaming sector has brought about new concepts of fringe benefits – and ones that are new to Malta, such as a vending machine allowance,” Misco consultant Maria Zahra said.

“Many people no longer bring food with them from home... And since the i-gaming companies have very flexible hours spread across the day – and sometimes even round the clock – a canteen is no longer the best option.”

To lure and retain the best talent, other companies are going to have to match or exceed these benefits – and as workers’ expectations rise, companies in other sectors will also start to feel the pressure.

“Packages are definitely getting more complex. Before we used to see packages for particular sectors which were similar but now there is so much specialisation within

e Google way Fortune Magazine and the Great Place to Work Institute named Google as the 2014 ‘Best Companies to Work For’, the fifth time that the company topped the list. Here are a few of the perks that make it stand out from the crowd.

■ Employees can schedule an on-site haircut free of charge.

■ To work off all calories, employees can head over to a gym filled with equipment.

■ Google also provides swim-in-place swimming pools.

■ Google employees can take a break and play a quick game of pool or foosball.

■ Google has laundry facilities available to employees on site. The company even offers dry cleaning services.

■ Google’s healthcare plan includes on-site medical staff.

■ Google allows its employees to use up to 20 per cent of their work week at Google to pursue special projects. sectors like financial services and i-gaming that each package tends to be tailor-made,” Misco partner Lawrence Zammit said.

Employees are expecting this individual approach to reflect on other aspects too, like their car.

“Instead of a car, more and more employees are opting for a

car allowance as this will allow them to drive the type of car they want,” Misco head of HR Ritienne Xerri added.

The recent Salaries and Benefits Report published by Misco found that 90 per cent of companies now offer fringe benefits – although as this is only the second time that

benefits are being included in the report, it is too soon to be able to determine trends.

Health insurance was at the top of the list, with 70 per cent of employers offering this benefit, with a communications allowance next.

Almost half – 46 per cent – offer family-friendly measures such as flexible working hours.

Times are definitely changing.

Netflix recently introduced a policy allowing salaried staff to take leave whenever they want for as long as they want, which was later copied by Virgin. And Google is famous for its work culture and perks (see box below).

“The world is like a village. People read about the working conditions at Google and begin to ask themselves why this culture should not be disseminated. Why should they work nine-to-five?

Why shouldn’t they be able to take more or less leave?

“This is going to pose a real challenge for employers,” Mr Zammit said.

companies in other member states, which levels out the playing field. But the government would only bring in some €3-4 million. We believe that this is all about the €7.8 million that the government would forfeit.”

The ministry acknowledged that the duplication was a concern. Minister Brincat replied to questions about the removal of eco-contribution, saying: “In view of stakeholders’ general feel that the business community is subjected to a dual ‘eco tax’ as implemented by previous governments, this administration is evaluating options to review the situation in a way that this contribution does not hinder with the full implementation of the WEEE directive while ensuring that EU directives are fully honoured.”

It does not help that the ecocontribution tariffs do not always make sense. For example, the ecocontribution on a cot mattress and a large king size mattress is €6.99. Some of the tariffs are also outdated, particularly on electronic goods whose costs has come down dramatically since 2004, making the eco-contribution disproportionate, the GRTU argued. For example, the eco-tax on a tablet is €35.

“Tablets did not exist when legislation was out so the eco-contribution was extrapolated from the tax on a bulky computer tower. And the tax is €11.60 on a printer which costs just £35 now,” she said, adding that the recyclability of some items had also changed dramatically since then.

The impact of the tax is compounded by the fact that VAT is charged on the amount including eco-contribution. For a €60 tablet with a 25 per cent markup, VAT would be charged on the total amount.

“So if the eco-contribution of €35 were removed, the tablet would be €41 cheaper,” she explained.

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November 6, 2014

NEWS ??

Parked cars are traffic culprit

Property sales to rise by 6% The number of properties sold in Malta in 2014 could be as much as 6 per cent higher than in the previous year, according to a survey carried out by Re/Max Malta.

The survey is carried out by an independent firm twice a year and this year incorporated unpublished data from the Home Affairs Ministry.

The real estate company found that 9,875 properties were sold in 2013, while 6,989 were sold in the first eight months of 2014.

“If sales were to continue at the same pace until the end of the year, the total will reach over 10,400 properties. This would signify an increase of promise of sales over the previous year of circa 6 per cent,” regional director Jeff Buttigieg said.

Part of the increase is due to the schemes introduced by the government for first–time buyers, he added, with 2,100 promise of sale agreements concluded from the introduction of the scheme in July 2013 to the beginning of September, 2014. This means that first time buyers account for nearly a third of all property sales in the first eight months of the year.

Asked about their intentions to buy a property within the next three years, 18 per cent of the respondents said they or their immediate family wanted to buy, with 68 per cent and 14 per cent saying “no” and “do not know” respectively.

The survey also looked at perceptions of real estate agents

and nearly 60 per cent said they felt a real estate agent could assist them in making the right choices about the type of home they want.

Just six months ago, in the previous survey, only 51 per cent had given this response, showing an increase in confidence of the competence of an estate agent.

The respondents were also asked whether they agreed that a real estate agent could professionally guide them and negotiate a better deal than purchasing directly through an owner.

In this case, 41 per cent agreed with this statement, compared with 32 per cent in the March 2014 study. www.remax-malta.com/maltareal-estate-report-sept-14.aspx

Cars should not be allowed to park on main roads, freeing up space for traffic to flow and for the creation of cycle lanes and bus lanes, according to traffic expert Manfred Boltze.

Boltze was in Malta on behalf of the German-Maltese Business Council and the German Embassy, and addressed a conference last week. Although he had only been in Malta for a short time, he said the problems with traffic were obvious.

“Your roads are clogged with parked cars. You need to get rid of them and create more space. Of course, people must be allowed to own a car – but it does not have to be parked so close to their activity; people can walk 100m or 200m!

“Changing long-standing behaviour is clearly not easy” “It is not about restricting parking for residents; in Germany, this has very high priority. It is more about commuters who want to park in front of their office,” he said.

He was quick to add that the problem could not be solved by applying this concept to one road but that there had to be a whole network as problems would just get shifted from one road to another.

“In the early 1990s, we introduced comprehensive parking management concepts in all the cities in Germany and the amount

of parking was adapted – usually reduced – to make space for other road users.”

He boiled down the entire issue of traffic management to three words: avoid, shift and control.

Changing long-standing behaviour is clearly not easy but he said that it was possible, given a combination of stick and carrot. Neither is it possible to keep extending the infrastructure to cope with demand, not merely because of the cost but also because of the space and environmental impact.

His proposed “stick” is to use various pricing instruments, ranging from road tolls to vehicle taxes and parking fees.

“There are many examples of restrictive measures which have been accepted. But it is important for the stick to be paired with a carrot. Once you have done something about the restriction, you have to use the space you win to introduce cycle lanes, and bus lanes so you can offer a faster and more punctual bus service. A bus lane is very efficient as a bus carries dozens of people compared with a car that very often carries only one person,” he said.

He stressed that congestion was not only about the waste of time.

“Most people are not aware that there are nearly three times as many early deaths from air pollution as there are than from accidents. This should be a very good motivator to do something, not only for ourselves but for our children and for all society,” he said.

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November 6, 2014

INDUSTRY ?? FOCUS

Of budgets past and budgets future Finance Minister Edward Scicluna will present the Budget for 2015 on November 17. It is a good opportunity to look back to see whether the last one achieved its targets and what should be in the next.

Malcolm Booker

Chief executive officer – Deloitte Here at Deloitte, we are in a good position to get feedback from a spectrum of clients and we have been receiving some clear messages over the past few months.

The World Bank report on the ease of doing business showed that Malta is still lagging in 94th place – and it had the lowest ranking of the EU member states. This is a very big issue as FDI is obviously very important.

Last year, the minister indicated that the government wished to cut down on red tape. More has to be done if we are to make Malta more competitive, to make it easier to do business.

We hear this often, particularly from our foreign clients, who complain that moving here is never as easy at they were promised it would be.

Opening a bank account is a major, major issue. I understand that the banks are very cautious as they do not want to attract the wrong business, but the reality is that it sometimes takes months for companies – and their employees – to open a bank account.

When it comes to finances, I think the government is doing a good job of keeping things under control. A

contentious issue, in my personal view, is free healthcare which takes up a considerable chunk of public finances. It needs to be looked at once and for all. I think there should be means testing for the use of health facilities. I know this is very delicate politically and that governments hate to do this because it loses them votes – but from a neutral, economic point of view, it is something that needs to be looked at.

We also need to be aware of the importance of credit ratings as this is something that foreigners look at. Moody’s A3 rating, for example, was very good and the fact that we have a stable to good outlook is also very positive.

It is obvious that there has been a lot of government debt off balance sheet, as well as Enemalta debt covered by government guarantees. The quicker we conclude the Enemalta deal with the Chinese, the quicker we can get clarity on exactly how the numbers are going to change. And the quicker we do that, the better.

However, we should not only be looking at attracting foreign investment. We should also be looking at the number of Maltese individuals and companies

“Students will always have their own preference but if they had the right information, they might take different decisions”

looking to invest overseas. On the whole, they do it with their own resources but there could be more government incentives to help.

We also see a great labour force mismatch with graduates coming out of university finding it difficult to find work while, on the other hand, financial services and accountancy firms cannot find enough people.

Counsellors should guide students as to which career path to take – but they themselves need to be informed.

They should be speaking to people like us much more as we are in a position to tell them what is happening, and not just today but over the next three-four years. Students will always have their own preference but if they had the right information, they might take different decisions.

With regards to pensions, I am not sure that the tax incentive – capped at €150 – for third pillar pensions is going to make a difference. For it to work, you really need to incentivise people to save. And second pillar – occupational – pensions also need to be looked at. It is all still too much of a political game.

Indirect taxation has been mentioned as being in the next Budget.

I am curious to see what they are going to do as this tends to affect those of lower income disproportionately. Perhaps we should be looking at more environmental taxation.

Mark Bamber

Partner, advisory services – KPMG A number of positive trends emerge from the pre-Budget document’s economic analysis. With a GDP growth rate of 2.9 per cent in the past year, we are growing faster than the EU average and getting closer to the cohesion target.

The government has done very well, in my view, to reduce the deficit to below the 3 per cent threshold and the downward trend is very healthy.

Inflation at 1 per cent is extremely low which raises the risk of deflation. If it keeps

going down, what are the implications for postponement of consumption, for people on fixed incomes?

Employment is growing and unemployment is stable at 6.5 per cent.

This is a very important statistic and an

important indicator of economic activity.

A certain level of unemployment is important to have but at the same time, excessive unemployment leads to all sorts of problems, both economic and social.

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Robert Attard

Partner, tax policy leader Central & South East Europe – EY (Malta)

MARK BAMBER

“We also need to look at connectivity – in a very broad sense” When it comes to competitiveness, an investor looking at setting up shop here will look at what it will cost and at what productivity is like, to know the input cost of his operation.

Unit labour costs are competitive, compared with the north of Europe. Maltese salaries compared to those in Western Europe are competitive but also compared to those in Eastern Europe when you factor in perceptions of productivity. A number of overseas investors are very positively impressed by the productivity of Malta-based operations.

However, according to the pre-Budget analysis, productivity has slipped since last year. A small slip is not necessarily problematic in itself but if it denotes the start of a trend, we need to understand why this is happening.

I see the country as being on the verge of a new impetus of investment in the infrastructure. We have developments in the energy sector – a new power station and investment in gen-

eration, with a 10 per cent target of electricity from renewable and the switch to cleaner gas.

However, we also need to look at connectivity – in a very broad sense. Are our traditional linkages to the rest of the world the right ones for today?

Is our connectivity to the rest of Europe the right one? With the exception of London, it is tremendously difficult to fly out of Malta to have a business meeting and to return on the same day.

The other part of connectivity is internal connectivity, getting from point A to B in traffic. One of the reasons we have such big traffic problems at the moment is the significant number of roadworks. Traffic is a tremendous problem: there are real costs to traffic jams. There is the cost of getting to work late, that deliveries are late, that people are tied up in their cars, that more petrol is used, that time is not spent more productively elsewhere. There are also health issues and environmental issues.

From a personal tax point of view, the next Budget Act could well be the most important Budget Act of the past 50 years.

The Civil Unions Act provides that a civil union, once registered, shall have the corresponding effects and consequences in law of civil marriage but, from a tax point of view, the full implementation of the aims of the Civil Union Acts requires an overhaul of our tax laws.

Necessary changes to our tax law are expected in the Budget Act. Presumably, new definitions will be introduced. I cannot see how a computational regime based solely on marital status can be retained.

The will of Civil Unions law is crystal clear. A civil union must have corresponding effects to marriage which suggests that definitions of ‘married couple’ and ‘married individual’ should vanish. The current version of the Income Tax Act provides for a capital gains tax exemption for transfers made by persons to their spouses and the latter’s descendants and ascendants. Clearly, the remit of the exemption should be extended to include transfers made by persons to their partners in a civil union. The most popular capital gains exemption in the Income Tax Act does not equate married couples to partners in a civil union. The exemption applies to the principal residence owned by the taxpayer or ‘his spouse’. The reference to ‘spouse’ clearly breaches the value of equation and the exemption should refer both to spouses and to partners in a civil union.

The most unpopular capital gains exemption in the Income Tax Act is undoubtedly the exemption which applies in the context of a transfer of assets between spouses as a result either of a separation, a divorce or dissolution of the

community. The Civil Unions law provides that the sections of our Civil Code dealing with these unpleasantries should apply to civil unions too. Clearly, this exemption should be extended to provide for dissolutions of civil unions.

ROBERT ATTARD

Last year’s Budget amendments introduced a new property transfers tax exemption applicable to the transfer of property made in the context of a liquidation. As it stands, the exemption applies to transfers made to an individual or his spouse who owns no less than

95 per cent of the company’s share capital. Clearly, references to a ‘spouse’ should be replaced by references to transfers made by a person to his spouse and transfers made by a person to his partner in a civil union. The current version of the Income Tax Act provides for a tax exemption on financial assistance paid for the maintenance of a child and a tax deduction on alimony payments paid to an estranged spouse. Since the Civil Unions Bill equates civil unions to marriages, tax law needs to provide for the tax treatment of payments made pursuant to a breakdown of the civil union. References to ‘estranged spouses’ should be substituted by a neutral term.

Computational rules pose a challenge. Our computational system for individuals is based on their tax status. A person’s married or single status determines their tax liability.

For income tax purposes, spouses report their income in a particular way. The law provides for joint computations and a joint tax return. Will this joint tax return system apply to partners in a civil union ushering in major administrative changes? By being treated like spouses, some partners in a civil union could end up paying more tax than they are doing. Will the 2015 Budget Act abolish the joint tax return and have all taxpayers file their returns separately?

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INTERVIEW ??

A suitable place to work TONY ZAHRA was appointed chairman of Malta Industrial Parks in May 2013. He told VANESSA MACDONALD that the new board had been working quietly behind the scenes to solve numerous problems.

At one stage, MIP had debts of almost €100 million. What happened?

We took care of it and the finances are now in good shape.

We restructured it in such a way that we could smoothen the ups and downs and have regular yearly payments.

So you refinanced the debt?

That is not the correct word. I would opt for ‘restructuring’, so that the company can afford to meet its obligations.

So what is the debt now?

[Pause] This is a commercial company so we would not like to talk about it. But we pay our bills on time.

MIP is saddled with factory rates which are established

by Malta Enterprise, which considers economic factors and not MIP’s sustainability.

Should they be higher?

The operation is sustainable at the moment. Remember that our objective is to make factories or other properties available for the development of Malta. We do not

look at ways to maximise profits.

We look at the bottom line but do not seek to maximise it.

Don’t forget that we do not want to compete with private sector space.

Over the years, the profile of the MIP user has changed considerably. Factories given for manufacturing were being used for activities which were not in the covenant. What have you done about enforcement?

We have an administrator who is chasing every cent owed and the amount of arrears due to MIP has been reduced considerably over the past 12 months.

We talk to our tenants and remind them that rent is not paid voluntarily: it has to be paid – and paid on time. We now invoice on the due date and the rent is collected on the date it is due. There is no more credit given. That is the way it is done everywhere else. Why should it be different for MIP? Many tenants have come up to date merely because until now there was no one knocking on their door asking for payment.

“We do not look at ways to maximise profits. We look at the bottom line but do not seek to maximise it”

TONY ZAHRA

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INTERVIEW

Some cases are a bit more difficult because the companies are facing problems but we talk to them and see how we can help out.

Some are no longer in existence and these have to be considered as bad debts.

So the time has come to be pragmatic and write them off...

Very much so.

Has it been necessary to evict any?

Why should we evict anyone?

We would only do that if they were breaking any of the covenants.

There were complaints in the past that there were many factories breaking their covenants on the number of employees, productive activity and so on...

Basically, we are facing an eventual shortage of factory space, so we are looking at every single operation to see whether factories are still being used for the original purpose.

Surprisingly, only a very small number were in default of their covenants. My perception was that there were more... We are now talking to those few. We want to be fair but also firm, explaining that they must comply with the covenant.

We want to maximise use of the existing stock before we look at new factories. For example, there may be people who needed 5,000 sq.m. in the past but who now only need half of that space.

How many factories will be required in five years’ time – and how will you pay for them?

We still have land available.

MIP will use a mixture of financial instruments. We have a substantial income, so there is no reason why we cannot leverage that, as long as we can meet our commitments.

How many factories will you need?

I think that is something you would need to ask Malta Enterprise as they are the ones that will do the promotion. We respond to their needs.

One thing which has changed is the definition of ‘qualifying activities’ for factory space being extended to nonproductive activities such as warehousing. What pressure will that put on you?

The pressure comes from the financing of the project but we are lucky as the present interest rate regime is very low which allows us to borrow at a very reasonable rate – meaning we can do more than we would if the interest rate were higher.

There is also a problem with the condition of the existing factory stock. What are you doing?

We have a group of people constantly monitoring the situation. We are pragmatic in our approach and look at each case on its own merit. Sometimes we do the repairs; sometimes the tenant does.

There are other things going on too. Ta’ Qali has been on the boil for 25 years and it is now being done. We applied for a Mepa permit and got it.

We applied for financing through the EU, which will come from the 2014-2020 Budget. We should get the funds next year and will start redoing the village, including the roads, water services and so on.

And the removal of asbestos from roofs...?

That is a challenge but the roofs will be tackled in the shortest possible time. There were various options we adopted, one of which was to use the roofs for solar panels. But there are obstacles with the feed-in tariff which could be perceived as state aid.

We are contesting this.

Look, MIP is trying to be as user friendly as possible. We are not talking about the past but about what we can do going forward. The new board found a number of problems but it is pointless to make a fuss because we have solved a lot of them, quietly and without making a fuss. We hope that when our term is up, we will leave things better than we found them.

“We are facing an eventual shortage of factory space, so we are looking at every single operation to see whether factories are still being used for the original purpose. Surprisingly, only a very small number were in default of their covenants”

MALTA INDUSTRIAL PARKS IS PLANNING A PROGRAMME OF REPAIRS AND UPGRADING OF THE FACTORY STOCK. PHOTO: DARRIN ZAMMIT LUPI

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CASE??

STUDY

It’s all about analysis When the herd is galloping in a particular direction, it takes guts to keep your head and go in the opposite direction. That is where VFM portfolio manager Uli Gerhard excels. He now manages the Insight High Yield Bond Fund, as well as, being responsible for the high yield product (VFM).

“Financial markets tend to be governed in equal measure by greed and fear. In the market – any market – people often act like lemmings. When people are scared, they want to sell and they may sell at any price. But if this panic is ir-

rational and merely down to emotion, and nothing has changed with the fundamentals of a particular company, then arguably an investor should buy at what may feel the most uncomfortable moment.

“Investors who were brave enough to buy sub-investment grade bonds in 2009 may have achieved impressive returns if they were able to pick up goodquality assets at ludicrously low prices. While the sell-off in September was nowhere near the same magnitude as that seen during the peak of the credit crisis, it

was not one that had, in my view, anything to do with deteriorating fundamentals. For me, this was a time to add exposure,” he said.

Mr Gerhard is a portfolio manager specialising in sub-investment grade bonds, also known as high yield bonds, at Insight Investment, a London-based fund manager with €318.5bn under management1. Mr Gerhard manages a number of high yield bond portfolios, including the €53m Vilhena High Yield Fund2, which is offered in Malta by Valletta Fund Management (VFM).

“VFM offers five different diversified portfolios”

Marketing and Business Generation of VFM, Mark Vella, explained that VFM’s wealth management team often recommended a diversified investment portfolio to its retail customers, spread across cash in bank accounts, some investment grade bonds, some high yield and some equities.

Vella said: “In Malta, people like income. In equities, income investors are dependent on a company issuing a dividend but bonds generally pay an income on a quarterly or half-yearly basis. You only get 1.5 to 2 per cent from in-

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vestment grade bonds but in subinvestment grade the income may be higher.”

Mr Gerhard dismissed the notion that high yield must always mean high risk, saying that stock selection is key to success.

“Default rates in Europe remain very low, below 1%, and this will probably remain the case over 2015. Companies, whether investment grade or sub-investment grade, can default out of the blue, and this will always happen on occasion. While there is little that investors can do about this ‘idiosyncratic’ default risk, if you are able to carry out in-depth bottom-up credit analysis, you are more likely to pick strong companies and avoid those that are deteriorating,” he said.

Surely this is an easy claim to make – and one which all portfolio managers would make? But he is not fazed by the question.

“It is important to have a large and experienced analyst team and a specific process in place to analyse companies, with a repeatable and consistent approach.”

Insight has €3.2 billion invested in its high yield strategies3, giving the company considerable clout when it comes to attracting the best analysts for general as well as specific sectors. The credit research team in London and New York consists of 22 analysts who each specialise on specific sectors, conducting thorough bottom-up analysis and regularly meeting company management teams.

His views are clear: Europe will remain weak for the foreseeable future, while the US economy will continue to grow. As such, he believes a global investment approach is the way to go, with a focus on the US high yield market.

“There are a greater number of companies to choose from in the US which can be strong and generating good cash flow. In Europe, many high yield companies tend to produce less cash flow after having issued their bonds and deleveraging the balance sheet is typically only achieved through earnings growth. The US high yield market is more mature, with a broader investor base and a far greater liquidity” he said.

13

In addition, he said “One way to boost returns within high yield is when your sub-investment grade bond is upgraded to investment grade, a so-called ‘rising star’. Unfortunately, in Europe, these opportunities have been few and far between in recent years.”

The level of exposure he has taken in the EU periphery – Italy, Spain and Greece, for example – is very limited. Mr Gerhard is honest about their prospects.

“Many of them are very small companies who will find it difficult to operate when things get tough.”

“Secondly, many are narrowlyfocused regional businesses and you have to be able to understand the region’s economic context. For instance, if the company concerned is a local Spanish bus operator, you have to be in a position to appreciate whether they are going to win or lose a concession.”

“So I believe it is preferable to look at multinationals which are active in more than one region and more than one activity. Diversification in geography can help to mitigate risk.”

As at September 30, 2014. Assets under management are represented by the value of cash securities and other economic exposure managed for clients.

2 As at September 30, 2014.

3 As at September 30, 2014 1

“ere are a greater number of companies to choose from in the US which can be strong and generating good cash flow”

The opinions expressed herein should not be interpreted as investment advice. Past performance is not a guarantee to future performance.

The value of the investment can go down as well as up and any initial charges may lower the amount invested and the amount received upon redemptions. The income that the assets of the Fund generate in relation to their value or market, and the frequency of payment may vary and are not guaranteed. Investments should be based on the full details of the Prospectus, Offering Supplement and the KIID which may be obtained from Valletta Fund Management Limited (“VFM”), Bank of Valletta plc Branches/Investment Centres and other Licensed Financial Intermediaries. VFM is licensed to provide Investment Services in Malta by the MFSA. The Vilhena Funds SICAV plc is licensed by the MFSA and qualifies as a UCITS. Issued by VFM, TG Complex, Suite 2, Level 3, Brewery Street, Mriehel BKR 3000, Malta.

Tel: 21227311, Fax: 22755661, Email: infovfm@bov.com, Website: www.vfm.com.mt. Source: VFM

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

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

EDITORIAL

Does eco-tax still make sense?

The ‘polluter pays’ principle is nothing new. The idea was to make manufacturers aware of the waste that their products generate, directly or indirectly, by making them pay towards reversing the damage.

This has been applied relatively successfully around the world for years, with the support of the OECD and the European Commission.

Factories were forced to think about the amount of packaging they generated and the pollution poured into waterways and the air.

The Commission went one step further and introduced the Waste Electrical and Electronic Equipment directive in 2003, realising that this was a category of waste which was easily quantified – and one which was growing. It basically covers anything that could be plugged into a wall.

All member states were supposed to transpose the WEEE directive into national law by 2004 and actually did so by 2006. Brussels was not happy with the way Malta interpreted it and issued first a formal notice and then a reasoned opinion.

However, Malta had anyway pre-empted WEEE by introducing the eco-contribution in 2004. The government had its heart in the right place but what did it actually achieve? The tariffs did not make sense, bearing no relation to the price of an item (or the way that price has changed over the years) or to its recycling cost. It does not distinguish between environmentally-friendlier versions of goods. It is an administrative burden. And to add insult to injury, the government is bringing in €7.8 million from it – but one has to ask how much of that money is actually being spent on recycling?

There is little wonder that the business community hates the tax.

Over the years, its impact became more and more insidious – mostly because it is a ‘Malta-only’ tax. If you as a consumer buy something

online, you don’t pay eco-contribution. If you buy that exact same thing from a Maltese agent, who has had absolutely nothing to do with its manufacture, he has to charge it.

If you as a business bring in a container of washing machines via Grimaldi, you (should) go to Ħal Far and pay eco-contribution. If you bring them in an unmarked van and are not stopped as you come off the catamaran, you can get away with not paying.

So we have a tax which defies common sense, does not promote greener purchasing, is a disadvantage to legitimate Maltese traders, and hasn’t translated directly into more recycling or less waste – and if and when the WEEE directive if correctly applied, some products will have both taxes applied to them.

The eco-contribution could be revised to bring it up to date. The tariffs could be tweaked. Enforcement – or market surveillance as it is euphemistically called – could be stepped up. But will that be enough? Doesn’t it make more sense to abolish it completely?

The business community has said over and over again that all it wants is a level playing field, whether it is playing against illegal traders in Malta or overseas online suppliers. Sooner or later, Malta will have to take WEEE seriously and meets its targets.

This was already acknowledged in the Waste Management Plan for the Maltese islands 2014 – 2020, which described the ‘double whammy’. The government promised to do something about it in the last Budget and the Environment Minister said the time has come for government to keep its promise.

A study on the revision of eco-tax was launched at the beginning of this year. There are only 11 days to go till the Budget. Let’s hope that the government takes the bull by the horns and does the right thing.

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BUSINESS OPINION

To save or not to save...

Malcolm Bray Economic theory sheds interesting insight as to why people save.

Households save because of their desire to smooth their consumption. It makes sense for people to have a stable lifestyle. This basic observation dates back even to the times of the Bible – remember when Joseph advised the pharaoh to encourage storage during the seven years of abundant crops to make up for the subsequent seven years of famine?

According to the theory of consumption smoothing, people should borrow when they are young and when their income is low. During middle age they should then repay the loans and save for their old age, something which is made possible as a result of their higher income. During old age they should then run down their savings, at a time when their pension income is low. It is optimal for people to behave in this way. Consumption patterns should be based on people’s lifetime income and not be limited by their current income.

Although the pattern of savings should follow this path, there are also structural features which would tend to reduce the necessary amount of savings compared to decades ago. Indeed, a financially sophisticated economy gives people more confidence in their ability to borrow and hence diminishes the need of one of the motives for savings, namely for precautionary purposes.

An interesting issue which has been largely ignored is the return on people’s savings. So far the focus has been mainly on the protection of savings – ensuring that if someone has saved a given amount, at least he is guaranteed that an equal amount of money back. In economic terms this is, however, a false guarantee. What matters is the real value of money and not the nominal amount.

If you save €1 today and someone promises you to give you €1 again in 30 years’ time, it should be immediately obvious to that person that he is making a raw deal, because in the meantime the purchasing power of money would have been largely eroded.

Furthermore, in terms of risk allocation, if savers are not also guaranteed a fixed return, they will face the risk of uncertain returns.

Standard theory suggests that it is optimal for risk to be borne by the party which is more able to absorb risk. This is why the fact that financial institutions in Malta offer long terms savings plans whose returns are largely variable – rather than fixed – is a deficiency.

“Any threat that the pension income will not be sufficient in future is not credible: this cohort will be strong enough to vote for higher pensions”

Moreover, the benefit of having financial institutions take a leading role in pension plans is due to their ability to diversify risk better than an individual could and in this way obtain a better risk-return combination.

But if financial institutions end up building portfolios dominated to a large extent by Malta Government Stocks, this would defeat the purpose, since an individual can easily replicate such portfolio at a much lower cost. When households buy MGS, they buy at the announced price while financial

institutions bid for the remaining amount, which in general translates into a higher price, and thus a lower return.

Do people need tax incentives to encourage them to save? A liberal economist would argue that people don’t save enough because they are convinced that they will be bailed out in future. The arithmetic supports this argument. In future, pensioners will be a significant proportion of the Maltese population, and hence of the electorate. In 2013, people aged 60 plus were already almost a quarter

of the total population. In future they will undoubtedly be a strong lobby group. Any threat that the pension income will not be sufficient in future is not credible: this cohort will be strong enough to vote for higher pensions.

Viewed in this way, that is why international watchdogs such as the EU Commission and the International Monetary Fund occasionally sound the alarm and emphasise the need to act now on pension reform.

This type of reasoning also casts some doubt on the efficacy of voluntary pension schemes.

The forthcoming introduction of the third-pillar pensions in Malta, which basically means the possibility for people to benefit from tax deductions if they commit themselves to regular saving in predefined financial instruments, will be an interesting economic experiment to gauge the extent to which economic incentives alone are sufficient to change behaviour. Those who are financially literate will be able to assess the benefits and costs of foregoing current consumption for higher pension income in future, and act accordingly. But what about those who are less financially literate?

Will they be able to make a wise decision? Informed decisions presuppose adequate knowledge.

There needs to be adequate and unbiased information campaigns to explain the issues at stake. If such campaigns and tax incentives fail, the only remaining solution would be mandatory saving through second-pillar pensions.

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STOCK MARKET REVIEW

BOV reduces dividend payout ratio

Edward Rizzo The September 2014 annual financial statements of Bank of Valletta plc were published shortly after the close of last Friday’s trading session.

Market participants have now become accustomed to the procedure that the two large banks immediately call a meeting with financial analysts to explain the financial statements in greater detail. This year’s meeting with BOV’s chairman and top management was also eagerly awaited since it came only a few days after the publication of the results of the Asset Quality Review and the stress tests conducted by

the European Central Bank and the European Banking Authority.

During the 2013/2014 financial year, the BOV Group registered a pre-tax profit of €104 million, representing a decline of 10 per cent over the previous year. It is true that this is the lowest profit achieved in the past three years but it is probably also true that profits are above market expectations given the challenging environment in which the banks are operating.

Core profitability (excluding fair value movements on the bond portfolio and returns from the insurance activities) was actually 2 per cent higher at €87.9 million. This implies that the reason for the profitability decline was the average returns from financial markets compared to the very positive impact during the previous year.

As a result of the calmer situation across global financial markets, fair value gains of €9 million during the last financial year are 48 per cent lower than the previous year and, likewise, the share of profits from insurance activities dropped by 42 per cent to €5.2 million.

The most remarkable figure in the financial statements is the growth in the deposit base. During the past 12 months, BOV attracted a further €900 million in deposits. This represents a 14 per cent increase in the deposit base to €7.1 billion but, unfortunately, the loan book only increased by 5 per cent to €4.1 billion during the past financial year.

While, on the one hand, this surge in liquidity may be taken positively, the reduction in the loan to deposit ratio to only 57.9 per cent compared to 70.2 per cent in September 2010 is not a good indicator for the bank’s shareholders. During the meeting it was explained that only a quarter of new deposits are being converted into new loans with the additional liquidity available for investment.

This is one of the many challenges being faced by the bank given the very low interest rate environment.

The dividend recommendation is probably what interests most shareholders. The final dividend to be approved at the annual general meeting on December 17 of €0.0925 per share represents a 22 per cent decline from last year’s final dividend. The total

dividend in respect of the 2013/2014 financial year of €0.135 per share (which includes the interim dividend of €0.0425 per share distributed last May) translates into a dividend yield of 6 per cent before tax based on the recent share price.

The post-tax dividend payout ratio dropped to 42 per cent compared to a ratio of around 50 per cent during the past several years.

BOV’s chairman John Cassar White explained that the European Central Bank and the MFSA want banks to retain more capital and distribute lower dividends compared to the past. The chairman noted that nowadays dividend distributions need to be discussed and approved by the regulator on a periodic basis.

As such, the chairman clarified that although the dividend payout was reduced from 50 per cent to 42 per cent during the latest financial year, this cannot be taken as a new standard policy. This therefore creates more uncertainty for investors since over the past several years, BOV shareholders had become accustomed to a distribution of half of the annual profits in any year.

At the start of the presentation, BOV’s chairman gave a very detailed and clear explanation of the AQR and stress test findings and the subsequent discussion with the ECB on the treatment of the findings. The investing public deserves such transparency and other companies should follow suit when communicating to the public at large via company announcements and when meeting financial analysts.

Investment decisions should only be taken based on a comprehensive understanding of a company and, as such, top management of issuers of listed securities (whether equities or bonds) should do their utmost to assist financial analysts in their obligation to assist the market.

The chairman confirmed that the AQR conducted by the ECB found that BOV had under-provided by €10.6 million (after tax) and the non-performing loan ratio increased to 18 per cent following the detailed review process. On the other hand, the review also indicated that the bank had also taken Contined on page 18

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STOCK MARKET REVIEW

Banking sector facing period of change Continued from page 17 excess provisions in the past especially in the mortgage sector. The extent of the over-provision was €16.4 million. However, Mr Cassar White stated that these two figures cannot be offset against one another. The chairman also explained that BOV had a lengthy conference call with the ECB before closing off this year’s financial statements on possible adjustments that may be necessary as a result of the AQR findings.

Mr Cassar White stated that the ECB did not want BOV to write off the €10.6 million in the financial statements as the model used in the AQR was not strictly aligned to accounting rules. Despite this decision, BOV transferred this shortfall from distributable reserves to undistributable reserves. However, this adjustment did not have any impact on the profitability of the bank.

The chairman also indicated that all the banks across the EU are still awaiting guidelines from the ECB on the manner in which such findings should be treated.

This figure is also likely to change since it is based on the

situation as at December 31, 2013.

As such, once the rules are established by the ECB, this will be run through the actual data and any adjustments would then be reflected in the financial statements of the current financial year to September 30, 2015.

Moreover, the chairman clarified that the findings of the AQR in respect of the under or overprovisioning to date and the level of non-performing loans arose from a different methodology used by the

bank as opposed to that established by the ECB for this exercise. The ECB will also be coming out with clear guidelines on what constitutes a non-performing exposure and this may require an adjustment on the internal model and as a result a different provisioning policy.

Since the stress test indicated that BOV is well capitalised even in the adverse scenario, BOV does not require additional capital immediately and the annual bonus share issue together with the additional

profit retention through lower dividends will be sufficient for the time being. However, this is bound to change in the years ahead due to increased capital requirements under Basel III rules as from 2018.

Due to the low interest rate environment which is expected to prevail for several years and increased regulatory pressures to retain higher capital, the return on equity across the banking industry is being negatively impacted. BOV is no exception and the post-tax return on equity dropped to 11.5 per cent.

BOV’s chairman stated explicitly that the banking sector is at the start of a period of change under a new regulatory regime. Investors need to realise that in all probability, the golden years for the banks with very high returns on equity and the liberty to distribute high dividends to shareholders is a thing of the past.

He also commented that “the banking sector will be safer but less profitable” and, as a result, with lower dividends for shareholders. This may take time for some investors to come to terms with.

Edward Rizzo is a director at Rizzo, Farrugia & Co (Stockbrokers) Ltd.

Rizzo, Farrugia & Co. (Stockbrokers) Ltd (RFC) is a member of the Malta Stock Exchange and licensed by the Malta Financial Services Authority. This report has been prepared in accordance with legal requirements. It has not been disclosed to the company/s herein mentioned before its publication. It is based on public information only and is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The author and other relevant persons may not trade in the securities to which this report relates (other than executing unsolicited client orders) until such time as the recipients of this report have had a reasonable opportunity to act thereon. RFC, its directors, the author of this report, other employees or RFC on behalf of its clients, have holdings in the securities herein mentioned and may at any time make purchases and/or sales in them as principal or agent, and may also have other business relationships with the company/s. Stock markets are volatile and subject to fluctuations which cannot be reasonably foreseen. Past performance is not necessarily indicative of future results. Neither RFC, nor any of its directors or employees accept any liability for any loss or damage arising out of the use of all or any part thereof and no representation or warranty is provided in respect of the reliability of the information contained in this report. © 2014 Rizzo, Farrugia & Co. (Stockbrokers) Ltd. All rights reserved

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NEWS/APPOINTMENTS

FROM LEFT: MICHEL MACELLI AND PETER BUGEJA

6PM announces two appointments

Grimaldi waives fuel surcharge Grimaldi Group has decided to remove the fuel surcharge that it had introduced last July.

A few weeks ago, The Sunday Times of Malta had asked why the surcharge was being retained even though the cost of oil had dropped dramatically since then.

Sullivan Maritime, which represents Grimaldi in Malta, said yesterday that the so-called Bunkering Adjustment Factor would be removed as from November 10.

The group clarified that, in line with its policy, the BAF was never used to speculate on the market but was applied as an index to cover a “small part” of operational costs due to the increasing price of the Brent.

“Once the company consumed all the bunker destined to Malta’ services, which had already been

bought at higher prices, and once the trend of Brent price became stable, Grimaldi was able to take this decision.

“It also avoided a last BAF adjustment even though the currency adjustment factor has partially eroded the benefit produced by the decrease in the cost of Brent cost,” it noted, explaining that the bunker was bought in dollars.

“The dollar/euro exchange value has dramatically decreased during last weeks falling down from €1.34/$ to €1.24/$; of course on a big amount, fluctuations like this mean huge losses. This should make it clear that we considered it correct to cancel the BAF adjustment to support the market,” Grimaldi said.

On June 23, Grimaldi had announced that since Brent

had reached $115 per barrel, it was increasing the BAF on some of its departures, keeping it unchanged on less popular trips in an effort to encourage a shift to these.

The BAF, which varied from €260 to €480 depending on the route, was increased by a flat rate of €50.

Asked at the time whether it would take a stand on this issue, which affects the bulk of Malta’s trade, the Malta Chamber of Commerce, Enterprise and Industry had said: “Malta’s competitiveness has its topmost priority on its agenda. It has repeatedly made this point in a number of fora, both locally and at a European level.

“In the light of this, the Chamber is following developments closely.”

Michel Macelli will be taking over the role of chief operating officer at 6PM while Peter Bugeja has been nominated to the recently set-up role of customer success director.

Mr Macelli joins 6PM after serving as chief financial officer at Vodafone for 20 years. Mr Macelli’s mandate at 6PM is to manage the Operations Division and

to assist 6PM grow in terms of outlook, discipline and governance.

Mr Bugeja joined 6PM Group as operations director of 6PM Ltd, a post he still holds besides also being a director of EmCare Ltd. In 2011, he was appointed the group’s chief operating officer. In his new role Mr Bugeja will be responsible for the continuous development of customer relations.

Huber re-elected to Eurochambres’ board John Huber, a council member of the Malta Chamber of Commerce, Enterprise and Industry, was reelected director on the Eurochambres board. He was also elected to form part of the organisation’s budgetary committee.

Eurochambres represents over 20 million businesses in Europe through 45 members and a European network of 1700 regional and local chambers.

Joint CEO for IHI International Hotel Investments has split the chief executive officer role between Joseph Fenech and Simon Naudi.

Mr Fenech will be taking care of corporate affairs while Mr Naudi will look after develop-

ment, while retaining his role as chief executive officer of CHI Ltd, the hotel operating arm of IHI. The company also appointed Joe Galea as chief financial officer and Neville Fenech as director of finance.

COO for Lombard Bank Lombard Bank has appointed Eugenio Farrugia as its chief operations officer. His previous role as

chief officer for ICT will be taken over by Anthony Zahra, who will now be the chief information officer.

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BUSINESS UPDATES

Start-IT-up Starting a business is a big step that is not for the faint-hearted.

Entrepreneurs who take this step are usually driven by a strong sense of purpose and have a tenacity that steers them to take up the challenge and dominate the niche that they have identified.

Start-ups are driven by passion and by purpose, and they need to be extremely wise with their investments and choices especially in the areas of IT and security – two independent yet very interrelated areas that enable businesses to operate smoothly, keep constantly connected and ensure that their online and international presence continues to flourish despite their current size and resource limitations.

The delicate balance that needs to be struck between choosing a provider that will simply get the job done versus choosing a provider that will understand, consult and support the start-up in its current phase and future growth is a daunting task that, just like starting up in the first place, requires nerves of steel. It is the choice between a short-sighted technical approach and a more long-term partnership with a reliable and trusted provider.

It is the choice between a pure technical supplier or a trusted partner who can appreciate the start-up’s vision, share its drive and support its growth. www.ptl.com.mt

50 years of excellence Ta’ Marija restaurant in Mosta celebrated their 50th anniversary on Saturday, October 25. The Maltese cuisine restaurant hosted a charity dinner in aid of the Malta Community Chest Fund to mark its milestone.

President Marie-Louise Coleiro Preca honoured the event with her presence and over €2,000 was collected.

At the event, the Muscat family hosted a wonderful evening taking guests through 50-year journey of exquisite Maltese cuisine, which brought with it a plethora of

artists, folklore dancers, foreign singers and local musicians who have bejewelled Ta’ Marija’s history. Live entertainment was provided by Enzo Guzman and Tony Camilleri, Paul Curmi Folklore Dancers and Ta’ Marija’s delightful trio playing mandolins and guitars.

Ben Muscat Jr, who runs the restaurant along with his mother Maria, says, “we want to thank everyone who has supported us since my father and mother started out in 1964. This is a tribute to their hard work and our

loyal clientele over the past five beautiful decades. There is no better way to express our heartfelt thanks than to give back to charity.”

The award-winning restaurant is today the leader in Maltese and Mediterranean cuisine, offering sumptuous dishes in welcoming surroundings, complemented by an exceptional service and a place where you can dine, dance and sparkle all in one place.

Ta’ Marija Restaurant, Constitution Street, Mosta. Tel. 2143 4444. www.tamarija.com

HSBC launches Malta’s first real-time online foreign exchange service Commercial customers of HSBC Bank Malta have more reasons than ever to conduct their electronic banking on HSBCnet [www.hsbcnet.com] thanks to the addition of a new foreign exchange service, Get Rate. In a first for banking in Malta, thousands of the bank’s customers are now enjoying an enhanced user experience when making foreign exchange payments, as Get Rate provides real-time exchange rates straight from the heart of the bank’s

global trading floors in London, Dubai, New York and Hong Kong.

With the fully-optimised Get Rate service, customers no longer need to call at the bank for exchange rates to conclude the transaction before the day’s close. Get Rate presents live rates from 2am Monday to 11pm Friday, in line with global markets’ opening hours.

The bank also launched HSBCnet Mobile for commercial customers.

HSBCnet Mobile gives business

customers the ability to view account balances as well as prepare and authorise transactions while on-the-move. The app also supports the booking of foreign exchange rates using Get Rate.

Meanwhile, HSBC has also improved the way it processes foreign currency payments. Payments in four major currencies will now be processed on the same day with no extra cost. All other currencies are processed the next working day.

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BUSINESS ??UPDATES

A proud tradition within the building industry

Roger Barker is the keynote speaker for MFSA workshop on company services providers The Institute of Director’s Malta Branch (IoD) chairman James Satariano has announced that IoD, in conjunction with the Malta Financial Services Authority (MFSA) and the Malta Institute of Management (MIM) are holding a workshop on November 13 at the MFSA on ‘Why corporate service providers have no choice but to raise their standards in Malta’.

Roger Barker, the director of corporate governance and professional standards at the Institute of Directors UK, will be the keynote speaker for the event and his delivery will focus on a topic of national importance: ‘Transparency and trust: maintaining confidence in the integrity of companies in the UK and Malta’.

Mr Satariano says: “Malta’s reputation as an international financial centre has been assisted by being a well-regulated jurisdiction under the exemplary chairmanship of Joseph Bannister, which applies global standards upon which clients and investors alike can rely.

“Malta has been independently assessed by a number of supranational bodies, including the IMF, which concluded that Malta’s financial sector regulation and supervision are of a high standard and comply well with international standards.

“Other assessments have placed Malta in the top-tier of onshore EU finance centres, and on the international ‘white list’ of jurisdictions

ROGER BARKER

maintained by the OECD. We have to ensure that proper standards are maintained – our reputation depends upon it, as does our economy.”

Michelle Buontempo, deputy director of the Securities and Markets Supervision Unit at the MFSA will provide an overview of the regulation of CSPs in Malta, and Anthony Cremona who leads the Trusts and Foundations team at Ganado & Associates who will be

covering how the CSP regime arose as a result of article 36 of the third EU anti-money laundering directive. Edwin Ward, CEO of Ogilvy & Mather Malta will moderate the event.

To register for the CSP’s workshop kindly contact Secretarial Services by e-mail ssl@go.net.mt or 2133 6507, IoD members and MIM members benefit from a reduced fee of €35 while non-members may attend at €45.

mantic nostalgia with a more reliable sense of authenticity which makes these culinary charms extremely popular.

This is just one extra reason to drop by at Abraham’s Vini e Capricci in the limits of Xewkija, which is fast becoming a reference point for regional goodies cele-

brating Italy and our islands’ respective gastronomic delights.

Vini e Capricci,Wines & Whims,Gozitano Agricultural Village,Mgarr Road, Xewkija, Gozo – tel. (+356) 2156 3231, (+356) 2156 0952. www.abrahams.com.mt/vinie-capricci/

Island goodness It is no secret that Gozo has its very own flavour. Life seems to have more charm in Gozo, colours are more vibrant, time slows down and the air feels fresher. Its seas look bluer, turfs greener and food, most would agree, definitely tastier.

One could argue that this is a mere perception since in most cases, non-Gozitans enjoy the isle as tourists and everything feels nicer when on holiday. Yet, when it comes to its agricultural products, there is little doubt that Malta’s sibling has tremendous potential for producing high quality greens and derivatives.

This is what Ogygia is all about.

It seeks to capture nature’s luscious goodness in its Gozitan offerings. Anything from mushroom pâté, peppered cheeselets and crunchy galletti to go with them, to capers, gozo salt, olive oil and

kunserva as condiments all have their bit to add to one’s favourite local dishes.

Foods with a healthy tradition have rediscovered a magnetic charm, as many of us seek the dish or delicacy which respects the way our forefathers ate more closely.

They bring together a sense of ro-

The family behind CME Finishes has a long and proud tradition within the building industry, having worked within related trades for over four decades. This has given the company a keen eye for products that offer superior quality and value for money.

All of CME Finishes’ installers and fitters have received extensive training on all the flooring, doors and apertures the company installs. Allowing customers to take advantage of their specialised knowledge right from quotation stage, they will make recommendations and offer advice to give you a clear picture of what you’ll be getting.

PVC windows and doors offer you a large number of advantages over other materials. Made from chlorine (derived from salt) and ethylene (derived from crude oil), PVC is quickly becoming the construction material of choice because it is easy to manufacture and can be used in a wide range of applications. PVC is often chosen as it provides better thermal and acoustic insulation over aluminium apertures. In fact, CME Finishes’ apertures can provide up to 70 per cent more insulation than traditional glass windows, meaning your home, office or shop will stay cool in summer and warm in winter. Perhaps most importantly, it will also help to reduce those expensive energy bills.

CME Finishes, 264, St Thomas Street, Fgura. Tel: 2180 7000.

Email: info@cmefinishes.com; www.cmefinishes.com