32 European Business Magazine Autumn Edition 2018

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Rino Solberg Offering Governments Innovvative Solutionss To Eradicatte Poverty In Africa

E.Jay Saunders Leeaaving His Mark On The FFiintech Industry

Bogota/Invest Saint Lucia The New Gloobal Investment Hubs

Artificial Intelligence The impact of soocial media on our purcchase decisioons?

Free Trade Zones / Sustainable Shipping / World Economic Forum / Craft Beer Industry / Transparency / Electric Car Market / Greek Economy / Blockchain Technology

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Publishers Note


elcome to another edition of European Business Magazine. The Autumn issue is traditionally the biggest of the year, where we preview the World Economic Forum which takes place in January in Davos, Switzerland. No doubt one of the most influential meetings in the calendar, where world leaders in business and politics come together to influence the most critical issues affecting the planet. Addressing global issues such as climate change to severe poverty, the World Economic Forum brings a stark focus to these issues via the attending media but also has the capability to effect real change. This year the main theme of the event is Globalization 4.0: Shaping a Global Architecture in the age of the Fourth Industrial Revolution. The WEF’s agenda is that this ‘revolution’ will take place in what is described as a period of unprecedented uncertainty, fragility and controversy. A very interesting topic which we discuss at length in this edition. In other matters, Brexit becomes even more of a quagmire than originally expected and as we have said from the start, is looking even less likely to happen. Throwing a spanner into the works is the Advocate General for the European Court of Justice, who during the last week has said that Article 50 can be revoked without needing permission of all EU members. Put basically, the UK can unilaterally abandon Brexit, stopping the process of exiting the EU. From a business perspective, Brexit has affected a few key areas in the UK, notably a lot of the banks and financial institutions are threatening to set up their HQ’s in other European cities away from London which you would assume would have an impact on confidence for investors . The figures tell a different story . FDI into the UK has perversely increased from 2017 along with GDP, while employment rates remain at a record

high. The London housing market has taken a hit with average house prices dropping ten per cent,along with the pound’s valuation. As a publisher I consistently said there would never be a dull moment with Brexit, but it is getting to the point where I wish minds would align and we could be done with it. Within this edition of European Business, we have some great topics. Featuring Rino Solberg on the front cover, who, after a successful career in business has now turned his focus to helping eradicate poverty in Africa through forestation. Another interesting entrepreneur with an in-depth interview is E. Jay Saunders, CEO of DSS, who is improving financial inclusion by helping individuals gain access to the financial services they need. His company has created two powerful tools — SafetyNet and Wowlet, both products looking set to reshape the financial world. We also explore the connection between Artificial Intelligence, consumerism and social media - a world which will be dominated soon by exactly that. We discuss the pound depreciation, the Greek Economy, Free Trade Zones and The Chinese and European car market. Our two areas of focus for FDI are St Lucia and Bogota. We discuss these very interesting regions, where investment is beginning to flourish. A read as ever we hope you enjoy.

Publisher Nick Staunton Editor Katie Winearls Deputy Editor Anthony Gill Associate Publisher Brad Adams Features Editor Patricia Cullen Head of Production Marija Hajster Head of Design Vladimir Mladenovski Subscriptions Manager Rebecca Hill Head of Business Development Paul Matthews Advertising Sales Brad Adams Tara Duckworth Advertising Sales Tara Duckworth, Mike Ray, Andy Ellis, Mark Holburn Contributing writers Patricia Cullen, Richard Fitzpatrick, Bala Murali Krishna, Shilpa Meen, Argee Laraya, Aimee Ni Mhaolcraibhe, Gordana Ristic, Jonathan Hooker, Jose Ignacio Latorre Head of Digital Stephen Scott Photographer Ben Fisher NST Publishing Ltd, 19 Leamington Spa (studio 1) Leamington Spa,Cv324tf, UK

Nick Staunton Publisher

The information contained has been contained from sources the proprietor believes to be wholly correct however no legal liability can be accepted for any errors. No part of this publication can be reproduced without consent of the publisher.

Table of Contents

12 Latest News and Briefings, Technology, CEO and Movements 20 World Economic Forum Davos 2019 - Globalization 4.0 22 Eu-Us Trade Deal: Zero Tariffs And Zero Deal

56 Meeting Europe’s Air Quality Objectives 58 Italy Is In Real Trouble: Can Eurozone Handle The Italian Budget Crisis? 60 Winners And Losers Within The Eurozone Investment Climate 62 Is Shipping Unaware Of Hong Kong And Brussels?

24 The Impact of Social Media on our Purchasing Decisions

64 Bio: Henning Gramann

27 Trend Towards Transparency

65 Free Trade Zones: Location Game Changers For Businesses

34 The Pound Depreciation; Effects On Uk Businesses

67 Sohar Port: Free Trade Zones

36 Rino Solberg Tell Us About His Way To Fight Poverty And Corruption In Africa

70 Europe’s Love Affair With Craft Beer 72 Greece - Is The Crisis Finally Over?

39 Eradicating Poverty In Africa - Opportunities Within Reach

75 Opening A Brick & Mortar Store

43 Juan Gabriel Pérez - Executive Director Of Invest In Bogota

84 Teemu Moisala, Ceo Of Futurice

82 The Electric Car Market: Europe Vs China

46 Turks & Caicos: An Ocean Of Opportunities For Investors

86 New Rules On Shipping Emissions: Do We Really Need Them?

48 Roderick Cherry - Ceo Of Invest Saint Lucia

88 Lithuania’s Opel Driving E-Commerce Entrepreneur

52 Saint Lucia – Best Island In The Caribbean For Business And Pleasure

90 Disrupting The Financial Sector At Its Best

54 Investing In Paradise

96 Drowning In Data

92 European Start Ups

E. Jay Saunders


The High Flying Entrepreneur From Turks And Caicos Who Is Leaving His Mark In The Global Fintech Industry

Reaching New Heights


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Angry Protests in France


haos in France reached new heights last . Approximately 36,000 people took part in about 1600 protests across the country, and while the turnout was lower than the previous two weekends, it got more intense in Paris, where protesters clashed with the police, torching cars and burning barricades. 8000 demonstrators gathered to show their anger and dissatisfaction towards rising fuel prices and President Macron’s policies regarding it. Chaos did not end without consequences, as more than 400 people were arrested and almost 140 were injured.

Macron has admitted that the protests were a “test to the strength of a country, a people, and its government in its ability to keep on its path, without ceding to demagoguery.“ He also tweeted that he will “always respect the protest“ and “will always listen to the opposition“, but added: “I will never accept the violence.“ The protests in France have inspired similar movements in Belgium and Canada.

The New Case Of Brexit


his week (4rth Dec) there was another spanner thrown into works of the ongoing saga of Brexit. It was revealed that the UK can stop Brexit by unilaterally revoking the Article 50 notification. Campos Sanchez-Bordona, European Court of Justice (ECJ) advocate general, told the EU’s top court it should allow the UK to withdraw its notice of intent to leave the bloc. Although his opinion is not the final word , the ECJ tends to follow the advocate general’s stance in its final rulings. The news has been seized on by the remain camp and those campaigning for a second EU referendum. Meanwhile, those supporting the prime minister’s Brexit deal have said it adds urgency to the need for Leave-supporting MPs to back Theresa May’s agreement in a House of Commons vote next week. Mr Sanchez-Bordona commented on the issue when a case brought to the ECJ by a cross-party group of Scottish politicians, which was heard by judges at the Luxembourg court last week. He said on Tuesday (4rth Dec ) the ECJ “should, in its future judgement, declare that Article 50 TEU [Treaty of the European Union] allows the unilateral revocation of the notification of the intention to withdraw from the EU,

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until such time as the withdrawal agreement is formally concluded”. This must be done in line with a member state’s “constitutional requirements” and not as part of “an abusive practice”. Mr Sanchez-Bordona further commented that the dispute is “genuine” and the question of whether Article 50 can be revoked “is not merely academic, nor premature or superfluous, but has obvious practical importance and is essential in order to resolve the dispute” As you can imagine both sides have come out fighting and time remains to see what happens within Mrs May cabinet and whether they put a vote to Parliament or not .

Privatefly is Acquired by Directional Aviation, Creating One of the World’s Largest Providers of Digital on-Demand Private Jet Travel


ithin the OneSky family, PrivateFly will join forces with on-demand broker Skyjet PrivateFly has been acquired by OneSky LLC, a Directional Aviation company. The online booking platform will join forces with OneSky’s existing brokerage Skyjet, to create one of the world’s largest digital platforms for on-demand private jet charter. As the first business model to offer private jet booking end-to-end when it launched in 2008, PrivateFly has seen continued high sales growth over the last decade. Initially UK-focused, it has since developed multiple channels and customer bases worldwide, through localised platforms, and a multilingual team. Skyjet has been a pioneer in aviation technology for more than 20 years, with a strong foothold in the US, and offers one of the most popular and highly-downloaded private jet booking apps. PrivateFly’s co-founders Adam Twidell and Carol Cork remain with the company and will lead the combined entity, which will operate offices in both the United States

and Europe. They intend to leverage the extensive infrastructure and assets available within the OneSky family of brands, which also includes Sentient Jet and Flexjet. “We are delighted to welcome PrivateFly to the OneSky and the Directional Aviation family,” said Kenn Ricci, Principal of Directional Aviation. “PrivateFly’s co-founders, Adam Twidell and Carol Cork, are true innovators who recognised early on how important mobile capabilities and on-demand digital bookings are in the charter space, and they will continue to play a critical role in the company’s future. Pairing PrivateFly with Skyjet, OneSky’s current digital on-demand charter broker, brings together two unique, innovative companies that are in different geographies to support OneSky’s vision of a world-leading on-demand charter operation.” Adam Twidell, co-founder and CEO of PrivateFly commented: “We are proud to be joining OneSky, part of Directional Aviation, which incorporates every aspect of the private aviation industry in a way that no other company can. This is a key strategic moment for PrivateFly that opens up new opportunities for our loyal and growing base of globe-spanning users, leveraging the power not only of Skyjet but also of the other OneSky companies.” Andrew Collins, the President of OneSky’s on-demand private jet charter organisation Skyjet and jet card provider Sentient Jet added: “With this transaction, and the combination of PrivateFly and Skyjet, we are realising the digital part of OneSky’s vision in the on-demand charter space. Nobody provides instant private jet travel at the touch of a button with this degree of expertise, allowing people to travel in the way that best meets their needs. needs.”

LEAD: 50 Models for Success in Work & Life “When the leader gets better, everyone gets better.”


Models for Success in Work and Life is like a coach or mentor who gives you space to reflect and provokes you to action to reach your vision and achieve your goals. It offers the very best leadership thinking and practice, enabling readers to find their purpose and thrive as they both self-coach and mentor others. This new book, written by a team of respected authors in their field, will help users grow as a leader in a dynamic way that goes right to the heart of their purpose and dreams. Going well beyond traditional, fixed

planning processes, which are out of date as soon as the ink dries, or the temporary ‘high’ of having completed a leadership development course, LEAD helps readers recognise the complexity of the challenges they face and navigate these effectively and flexibly. LEAD can be applied directly to any leadership situation and will make a huge, lasting impact upon how people lead themselves, their teams, and their organisations. Filled with enduring principles, inspiring stories and practical tools, the authors bring their own fresh perspectives to help readers:

• Map the journeys that they want to make in work and life • Navigate through life’s twists and turns to success • Grow themselves and others as leaders europeanbusinessmagazine.com 13

‘A Strategy Decision’ for Qatar

GSK to Buy Oncology Biopharma Tesaro


K’s drugmaker, GlaxoSmithKline (GSK), announced it will buy oncology-focused US biotech Tesaro for 5.1 billion dollars and sell a number of assets to Unilever, which caused immediate drop in its shares for more than 7 percent. This marks the first major purchase by GSK since company’s new CEO, Emma Walmsley, took charge last year. The deal, which is expected to close early next year, gives GSK access to Tesaro’s PARP inhibitor Zejula, a treatment in ovarian cancer, currently approved in the US and Europe. Zejula comes from a promising new class of medicines called ‘Parp inhibitors’ and is known to be very effective in treating patients with a BRCA gene mutation. E. Walmsley believes that GSK’s move will help to identify many more women who can benefit from the treatment and added that “The acquisition of Tesaro will strengthen our pharmaceuticals business by accelerating the build of our oncology pipeline and commercial footprint, along with providing access to new scientific capabilities.“

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fter nearly sixty years of membership in the oil cartel, Qatar is pulling out of OPEC to focus on its gas ambitions. Country’s state oil company, Qatar Petroleum, announced this decision in a series of tweets, mentioning Qatar’s plans to develop and increase its natural gas production. Saad al-Kaabi, country’s energy minister commented on the news, saying that “Qatar has decided to withdraw its membership from OPEC effective January 2019. It was not an easy decision.“ He also noted that this decision was not linked to a political and economical boycott of Qatar imposed in June 2017 by its Arab neighbours, including OPEC members Saudi Arabia, United Arab Emirates, Bahrain and Egypt. Qatar pumps about 600 thousand barrels of oil a day and is considered to be one of the smallest cartel’s oil producers. However, country is the world’s largest exporter of liquefied natural gas, and S. al-Kaabi added that Qatar “will make a big splash in the oil and gas business soon.“

Canadian Legalisation Plunges Cannabis Stocks


ctober 17, 2018, marked an important day for Canada, as on this day adult recreational marijuana use has become fully legal here. After months of debating, Canada finally joined such US states like California, Massachusetts, Maine, Alaska, Colorado, Washington, Nevada, Vermont and Oregon. However, sector continues to lose its ground, as marijuana stocks suffer broad losses: after first 5 days of legalisation, the biggest cannabis exchangetraded fund, ETFMG Alternative Harvest ETF, fell 9,5 %. Aphria went down for 5,9 %, Canopy Growth — 4,1 %. Some analysts suspect that one of the reasons for the volatility in cannabis stocks is that although many US states

have legalised marijuana, it still remains illegal at the federal level. This is the main reason why investors in cannabis startups tend to be cautious, as there’s always a possibility that the Justice Department could decide to make a move on states that allow sales of medical marijuana.

Bad Time for Bitcoin


raders and analysts are confused: after starting November well above 6000 dollars, Bitcoin suddenly crashed at the end of the month by 37 %, marking its worst drop since April 2011. This means that world’s largest cryptocurrency is now down more than 70 percent since the start of 2018, and 80 percent from

its all-time highest point which was recorded late last year. Just a few months ago — in September and October — situation looked stable, as Bitcoin showed a steady hover and traded near 6400 dollars. Michael Moro, CEO of the Genesis Global Trading, commented on the situation, saying that “It’s unclear if this is a bottom or a brief period of

consolidation before next move down, but buyers are still maintaining some cash on the sidelines in case it does go lower.“ Bitcoin’s drop had an impact on other cryptocurrencies as well: Ethereum, second-largest cryptocurrency, dropped to a two-month low, while Litecoin and Ripple experienced drops of around 17 percent. europeanbusinessmagazine.com 15

Preliminary exhibition programme 2019 13 April through 8 September 2019 | opens on Friday, 12 April, 7 p.m.

Unconfined Horizons – Jewellery from Humboldt’s Travel Routes Born 250 years ago, the scientist Alexander von Humboldt is regarded as one of the last universal geniuses, whose thinking and actions laid many foundations for our modern world view. During the 90 years of his life, this world citizen set out on two major expeditions: through South and Central America, and through Russia as far as the Chinese border. Influenced by the ideals of the Enlightenment, he was convinced that people differ from one another only in terms of their education or culture, and that they are all equally destined for freedom. »The horizons of his mind were unconfined,« as the Humboldt expert Ottmar Ette emphasizes. For Humboldt, genuine education was synonymous with being able to perceive the interrelationships between things. Correspondingly, his fields of research were widely diversified. His importance for us in our day and age is due to his keen observation and scientific analyses, wedded to a profoundly humanistic approach. The exhibition will be showcasing a wide variety of artefacts and jewellery created along his travel routes, complemented by texts and illustrations from the scientist’s oeuvre. 13 April through 23 June 2019

Parallel exhibition: »Expedition« | Vocational College for Design, Jewellery and Utensils

Within the context of the »Unconfined Horizons« exhibition, the Vocational College for Design, Jewellery and Utensils at Pforzheim’s Goldsmithing School will be exhibiting new works, inviting visitors to take an excursion of creativity. Taking inspiration from the great explorers of the world and their travels, some 70 students from the three class levels embarked on their own individual expeditions, translating their creative ideas into imaginatively designed objects. Admission € 6, reduced price € 3.50, admission to both the permanent an special exhibition € 8.50 19 October 2019 through March 2020 | opens on Friday, 18 October, 7 p.m.

A Newly Ordered World – Jewellery from the Napoleonic Era Napoleon Bonaparte reorganized the European world in many respects. 2019 will mark the 250th anniversary of his birthday, an occasion that inspired Pforzheim’s Jewellery Museum to organize a special exhibition spotlighting the new kind of jewellery and fashion characteristic of the Napoleonic era. Back then, the Neoclassical »style of the Revolution« and the decorative Empire style spread all over Western Europe well into Russia. The moral concepts developed during the Enlightenment called for an aesthetic inspired by reason, which met the taste of an increasingly powerful, self-confident and educated middle class, and influenced all areas of culture – starting from architecture, painting, furniture, garments and jewellery all the way through to literature and music. The visual arts were expected to stimulate the emergence of an intellectual aristocracy to break with the tradition of hereditary aristocracy. Over the course of Napoleon’s imperial reign, the Empire style unfolded its representative splendour to perfection. Including several pieces created by Chaumet, Napoleon’s court jeweller, the exhibition will also be showcasing jewellery worn in his social environment. Admission € 6, reduced price € 3.50, admission to both the permanent an special exhibition € 8.50 13 July through October 2019 | opens on Friday, 12 July, 7 p.m. Gold and Silver

Jewellery and Vessels Created by Ulla and Martin Kaufmann Permanent exhibition | Modern Collection

Ulla and Martin Kaufmann have been creating jewellery and vessels for almost fifty years now. Their early creations are characterized by abstract floral shapes, later ones by a classically modern formal idiom, and those created in the past few decades reflect their in- depth involvement with the sculptures created by Richard Serra or Eduardo Chillida, for example. They both are gold- and silversmiths, and have been sharing an atelier in Hildesheim since 1970. A hammered metal strip plays a central role in their works, some of which are of unusual design, and whose exteriors, interiors and interstitial spaces always highlight the interplay of form and function. In addition to many other accolades, Ulla and Martin Kaufmann have won the Bavarian State Prize in 2018 for their project entitled »Cubes in Motion«. The exhibition will be providing a representative overview of the couple’s comprehensive oeuvre. 16 europeanbusinessmagazine.com


European Business Magazine gives the low down on some of the recent reshuffles amongst the highbrow in the business world INSTAGRAM HAS A NEW BOSS Facebook announced that Adam Mosseri will take over as the head of Instagram, following the unexpected resignations of Instagram’s co-founders Kevin Systrom and Mike Krieger at the end of September. Facebook bought the company 6 years ago for 1 billion dollars. A. Mosseri has joined Facebook back in 2008. He has been Instagram’s head of product since earlier this year and previously led the company’s News Feed division. Interestingly, News Feed is often called ‘the most important single product at Facebook’. The big challenge for A. Mosseri will be to keep Instagram’s momentum going. He will oversee all functions of the business and will recruit a new executive team, including a head of engineering, head of product and head of operations. Adam Mosseri

Ramon Laguarta

SIGNIFICANT CHANGES IN PEPSICO PepsiCo has a new CEO: the board of directors has unanimously elected Ramon Laguarta to take over. Indra K. Nooyi, who has held this position for more than a decade and reached strong performance numbers, grounding company in ‘Performance with Purpose’ philosophy, is stepping aside. As of October 3, R. Laguarta has become the 6th CEO in PepsiCo’s 53-year history. Since September 2017, R. Laguarta has worked as President of PepsiCO, overseeing global operations, corporate strategy, public policy and government affairs. PepsiCo’s product portfolio includes a wide range of enjoyable foods and beverages, including 22 brands that generate more then 1 billion dollars each in estimated annual retail sales.

FASTENING THE SEAT BELT AT AIR FRANCE҃KLM Air France-KLM, the fourth Benjamin largest European airlines Smith by number of passengers has a new man behind the airplane’s yoke. Benjamin Smith, who has formerly worked as President at Air Canada, is replacing JeanMarc Janaillac. However, it looks like the new CEO can expect to encounter some turbulence, as after the board of directors announced his appointment, unions in both France and the Netherlands complained that an outsider would not defend national interests or preserve wage levels and work conditions. But expert analysts at British aviation say that B. Smith knows where he’s going and is ready to face the number of tasks ahead of him, having in mind Air France-KLM’s disappointing performance numbers despite its strong and recognisable brand.

A NEW FLIGHT PLAN FOR AIRBUS French engineer Guillaume Faury is a new CEO at Airbus. He will replace Tom Enders on April 10, 2019, and already has a first challenge waiting for him in the new position: which is managing the potential fallout from Brexit. Airbus is headquartered in Toulouse, France, but has about 15 thousand employees and significant production facilities in the UK. G. Faury already knows his way around Airbus, as before taking charge in Airbus’ Commercial Aircraft division, he led the company’s helicopter business. He also did turns as a senior manager at Peugeot and Eurocopter. Airbus secured 1109 aircraft orders in 2017 — nearly 200 more than Boeing. It now has nearly 7400 aircraft orders pending, making the timely delivery of planes a top priority. Guillaume Faury

FRESH APPOINTMENT AT BONDUELLE Mary Bonduelle Fresh Americas, the newest business unit Thompson of Bonduelle, announced the appointment of Mary Thompson to the CEO position, starting October 8. She will lead the dayto-day management of the company and develop strategic vision and approach for profitable growth, giving consumers across the US more ways to get fresh vegetables and plant-based foods. “My vision is that we continue to grow profitably, creating greater success for our customers and new opportunities for our employees and the communities in which we operate,” M. Thompson commented on her new position. New CEO comes to Bonduelle Fresh Americas with more than 25 years of experience leading various business segments at agribusiness leader Cargill.

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Latest Technological Gadgets 2018 Moodo — the Smart Aroma Diffuser

Everyone has their personal favourite aroma. Keeping this in mind, Moodo, one of a kind IoT aroma diffuser, managed to take scents to the next level.

The Moodo project was funded on Indiegogo last year, and got really successful. This is the only diffuser that allows you to shape and customise scents according to your mood. It offers a wide selection of unique and high quality fragrances, and can be loaded with up to 4 Moodo scent capsules simultaneously. Depending on what you like — and what mood you are in at that moment — you can pick one of the pre-set mixtures proposed by the Moodo app, or use the free app to mix 4 fragrances and create your own unique scents. Moodo fragrances were created by expert perfumers and are produced exclusively in Grasse, France.

Amazon Echo Dot (3rd Generation) One of the biggest Amazon hit’s, Echo Dot, is back: and now it’s bigger, better, and much louder. With a new speaker and design, Echo Dot is a voice-controlled smart speaker with Alexa, perfect for any room. Whatever you want — music, news, information — Echo Dot is right there to give it to you. Just imagine: you can use it to create calendar events and reminders, check weather and traffic, ask for sports scores, movie showtimes, restaurant working hours, and so on. You can even switch on the lamp before getting out of bed, turn on the coffee machine or dim the lights from the couch to watch a movie. Oh, and you can stay in touch with your family and friends in over 150 countries, as Echo Dot also features Skype calling. Compared to the 2nd Generation, newest Echo Dot is improved in nearly every way, starting from sound and ending with design, including an even more smarter Alexa. 18 europeanbusinessmagazine.com


Would you like to have an opportunity of brewing fresh craft beer anytime anywhere? MiniBrew, a fully automatic brewing machine, allows you to do just that — whenever you want to. Product was inspired by a vision of quality home brewing that would be both simple and accessible. This is the first fully automatic beer brewing machine, which is both elegant and easy to use. You can make beer with MiniBrew simply using ready-to-brew ingredient packs that

are prepared by craft breweries from around the world. All you need to do is select the recipe, add the ingredients, start the “mashing“ process, and then let the machine do its thing. The process of brewing takes about 3-5 hours, with fermentation lasting anything from 4 days for a lighter beer, 2 weeks for a stronger beer and 4 weeks to the extremely heavy ones. MiniBrew allows you to get about 1,3 gallons of beer with each brewing.

Samsung Galaxy Watch New watch and fresh branding — Samsung decided to shake things up and instead of continuing with its previous Gear branding, newest watch is directly connected with company’s Galaxy smartphone and tablet line. Newest Galaxy Watch has improved battery life, and Samsung says that it should provide “several days““ of use on a single charge. Besides that, it has many amazing features and tools. Samsung added some new health-oriented tools, including heart rate monitoring to build a baseline for each user. So when it detects that your heart is racing, it’ll prompt you to relax. It also tracks fitness and allows users to pick their activity.

Galaxy Watch is water resistant and comes with GPS so you know where you are and where you’re going. Oh, and you can even make payments with it!

Samsung Galaxy Watch is easily personalised, and company added many different face designs and colourful straps so that everyone could find the combination that works best for them. europeanbusinessmagazine.com 19

World Economic Forum Davos 2019 Globalization 4.0


very January after the Christmas trees have been disposed of for another year, the most powerful figures on the planet will be heading to the snow ridden Swiss mountain resort of Davos for the annual World Economic Forum (WEF) meeting, to discuss the most important issues the planet faces. Peter Taberner reports. Presidents, prime ministers, and business leaders across the globe are usually in attendance. Last year Donald Trump was the first sitting American president to be present at the gathering in almost two decades. Yet the conference is not a closed shop purely for politicians and moguls to be heard, as the celebrity circuit also has played its part, in 2018 actor Cate Blanchett, musician Will.i.AM, and Sir Elton John all participated.

WEF Objectives 2019 This time around in 2019, the main theme of the event is to focus on Globalization 4.0: Shaping a Global Architecture in the age of the Fourth Industrial Revolution. The WEF’s agenda over this ‘revolution’ is to take place in what is described as a period of unprecedented uncertainty, fragility and controversy. Davos will attempt to usurp the culture of crises management, and build a future in a constructive and collaborative way. ‘Transformation’ is the word that the WEF believes outlines the current geopolitical, economic and environmental position on a global scale.

The world of sport was also represented, as Manchester United and Spanish international footballer Juan Mata presented his ‘Common Goal’ project.

We are now entering into a new phase of a Fourth Industrial Revolution, that is created and moulded from advanced technologies from the physical, digital and biological worlds.

Professional players who sign up to the scheme are to pledge 1% of their reported high salaries, to be donated to global social development causes.

The question that the WEF is asking is that will the arrival of Globalisation 4.0 result in these changes being acknowledged, leading to fresh worldwide opportunities.

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Overall, the full programme in Davos will concentrate on a series of ‘Global Dialogues’. They will review geopolitics and the ‘multiconceptual’ world to understand major ongoing changes over international relations. Also, the aim will be to drive candid conversations on future cooperation to encourage wide support for diplomatic efforts on key global fault lines. Discussions are also planned over the future of the economy, to unravel what the main principles are to be for improved economic and social decision making. This is an area which need to be clarified in the eyes of the WEF, to reflect the structural changes that will be an integral part of the Fourth Industrial Revolution. Alongside these talks will be a review of financial and monetary systems, ensuring that they are more resilient, and that they are flexible enough to embrace new technologies such as crypto currencies. Dialogue will also take place on industry systems, and how the Fourth

Industrial Revolution will provide new opportunities. In particular, how the revolution can design and enhance the delivery of services in health, energy, communication and transport. New principles for emerging technologies are also to be defined, such as artificial intelligence and gene editing. Cybersecurity will be examined to ensure that the spine of all digital innovation is secure, with an emphasis on risk resilience of key environmental systems such as the climate and the ocean. Human capital will be revisited in how relevant that it will be in the transition to a more societal humanistic focus, as opposed to one based on consumption. Finally, participants will be invited to air their views on how global institutions which were formed in the 20th century, can now evolve in a new political, economic and social context. Professor Klaus Schwab, the founder and chairman of the WEF, believes that the international community must join together to build a shared future, by the same token as in the aftermath of World War II.

In a recent article on the WEF next year, he wrote: “Globalization is a phenomenon driven by technology, and the movement of ideas, people and goods. Globalism is an ideology that prioritizes the neo liberal global order over national interests.” The full list of attendees to the WEF 2019 will not be released until just two weeks until the gathering. More than 250 political leaders are expected to arrive in Switzerland from the G20 and other nations. They will be accompanied by heads of international organisations, to enter into talks facilitated by the WEF’s Informal Gathering of World Economic Leaders. Chief executive officers and chairman of the WEF’s 1000 Partner and Member companies, who are active participants of its International Business Council amongst business related forums, will also be in Davos. Other visitors to the WEF will arrive members of other Forum communities such as the Global Future Councils, and the Forum of Young Global Leaders and Schwab Foundation for Social Entrepreneurship. All of the meetings it is hoped will be carried out in the collaborative ‘Spirit of Davos’.

History of WEF The first Davos summit was arranged in January 1971, from what Professor Schwab originally called the European Management Forum. It was a non for profit foundation based in Geneva, and initially drew business leaders from Europe and beyond, in the attempt to catch up on the United States’ management practices. The meetings were based in the stakeholder approach that has come to symbolise the WEF, where business managers would take a panoramic view of their businesses ranging from clients to employees. After the hyperbole of the collapse of the Bretton Woods exchange rate mechanism, and the Arab-Israeli war in 1973, a year later for the first time political leaders were invited to Davos. Eventually in 1987 the European Management Forum became the WEF, where the annual meeting now had a broader remit in that it was to provide a platform for dialogue. A year later the Davos Declaration was signed by Greece and Turkey, averting a certain war. Other milestones followed, as North and South Korea held their inaugural ministerial level meetings at Davos in 1989. At that same gathering, West German Chancellor Helmut Kohl discussed German reunification with his East German counterpart Hans Modrow. In 1992 a new zenith was reached, when President De Klerk and Nelson Mandela met in what was their first joint appearance outside of South Africa, a landmark in the country’s transition. Whatever happens in the Swiss Alps in January, it’s a meeting that has a great history to live up to. europeanbusinessmagazine.com 21

EU-US Trade Deal:

Zero Tariffs and Zero Deal


ctober the 1st marked an important date . The United States signed a new agreement with Mexico and Canada and it covered new rules for automakers, dairy farmers and its labor unions. Trump commented that , “It’s not Nafta redone, it’s a brand-new deal.” As the mess that started in the summer between US and EU regarding the trade deal is still not over and not in any bit clearer, the question remains, what about Europe? Rasa Butrimaite reports. On October 16, there was more news .The USA also announced its intention to negotiate three separate trade agreements with Japan, EU and, UK. It turns out that the US plans to start negotiations with Japan first, and as US trade representative Robert

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Lighthizer said, “As soon as practicable, but no earlier than 90 days from the date of this notice.” When it comes to Europe and the trade agreement, Trump notified the Congress that US intended to begin official trade talks with EU, however, it seems like that was just it for now, as no date for formal negotiations had been announced. Back and forth or simply chaotic — these are some of the ways you can describe what’s been going on between US and EU, as they were trying to make a deal on trade and tariffs this summer. Firstly, the situation worsened in June, when Trump’s administration decided to add steel and aluminium tariffs to EU. Secondly ,Trump also threatened to impose a tariff of up to

25 percent on all imports of cars and car parts into the US, having in mind Germany and its big automotive companies.Brussels reacted to this move quickly by imposing tariffs on 3.25 billion dollars’ worth of iconic American products in exchange, mainly Bourbon Whiskey and Harley-Davidson motorcycles. Then to just add more spice to the tit for tat , just a month later, in July, things looked promising once again, as US and EU managed to cut a deal and agreed not to impose new tariffs on each other. Trump and European Commission President Jean-Claude Juncker met at the White House and discussed the situation, although apparently the question about tariffs on cars had been left out of the

conversation. Trump promised not to impose any new tariffs on the EU while the two sides were undergoing trade negotiations.The actual overall agreement that Trump and Juncker managed to reach at that time looked pretty good. Essentially what came out of these talks is that the US and EU vowed to work towards zero tariffs, zero non-tariff barriers and zero subsidies on nonauto industrial goods. Just as things seemed to calm itself between the two giants, the situation got out of hand once again nearing the end of August. After months of going back and forth, Trump declared that he wanted to see all tariffs removed from all industries — agriculture, steel, aluminium, and medical equipment.

European Trade Commissioner Cecilia Malmstrom responded by saying that, “We are willing to bring down even our car tariffs to zero, all tariffs to zero if the US does the same.” Trump’s responded a few hours later by saying, “It’s not good enough. Their consumer habits are to buy their cars, not to buy our cars. The European Union is almost as bad as China, just smaller.” In addition to this declaration, Trump, once again, threatened to hit European car imports with a 25 percent tax. In his speech at Charleston, West Virginia, Trump announced, “We are going to put a tax of 25 percent on every car that comes in from the European Union.” When you actually think about it, this should not come as a surprise to anyone as Trump has often declared the unfairness of the low taxes on cars imported into the US, blaming them for the decaying state of the American car market. His anger it appears is directed specifically towards German cars. In 2017, German automakers sold 1.35 million cars in the US alone, and Trump commented on this by saying that, “When you walk down Fifth Avenue, everybody has a Mercedes-Benz parked in front of his house, how many Chevrolets do you see in Germany?” In May, the US Department of commerce even launched an investigation of automobile imports to determine whether they threatened to impair the national security of the country. It’s a pretty hard task to predict what actually will come next with regards to the US-EU trade deal, as just when it looks like a certain milestone has been reached, the situation suddenly turns upside down once again. In order to know more facts about the future and possible outcomes, Germany’s government commissioned a report by 5 German economic institutes. It showed that Germany, as well as the rest of the EU, would be plunged into severe recession, immediate job losses and production cuts if the US would live up to Trump’s words and add tariffs. Experts say that the recent trade agreement between US, Mexico, and

Canada may have a significant impact on Europe as well. One thing for sure is that it can definitely make life difficult for German car companies as they happen to produce in Mexican assembly lines before selling to the US. Soon after Trump’s administration announced about this new trade deal, the numbers started going haywire: The Euro fell by 1.3 percent, the Stoxx 600 Autos & Parts index fell by more than 10 percent wiping out almost 40 billion dollars of the sector’s market value, German stocks index DAX.GDAXI fell by 4 percent, and European stocks fell by 1.4 percent. Additionally, shares of BMW AG and Daimler AG went down by almost 17 percent. There was visible damage in Europe from these trade wars was mostly seen in the automotive, technology and mining industries. Interestingly, through all this , the Americans have been opposed to the tariffs, and the Republicans in Congress have attacked Trump’s decision since the very first day the mess started. However some industries have been positively affected .Since the first tariffs hit the US, steel and aluminium prices have gone up while home builders also reported higher prices for metal goods. As all of Europe awaits the next move from the US regarding this trade war, it is worth noting what Trump said all the way back in 1990. This was when the Playboy magazine interviewed Trump and asked him about his first action if he ever became president. His response reveals it all quite well: “Many things. A toughness of attitude would prevail. I’d throw a tax on every Mercedes-Benz rolling into this country and on all Japanese products, and we’d have wonderful allies again.” Difficult to predict exactly what will happen next but what we do know is that trade war has the capability of hurting employees, consumers and investors instantly — in both the EU and the US . The old saying “you scratch my back and I will scratch yours “ maybe not such a bad thing after all! europeanbusinessmagazine.com 23

The Impact of Social Media on our Purchasing Decisions


ocial media permeates our lives. The moment we wake up, the first thing we check is our social media profiles. Social media is not just about having conversations with our network, it’s also about e-commerce. Argee Layara reports. There is a clear psychological idea in action when it comes to social media and e-commerce. According to Sam Decker, CEO, and co-founder of Spredfast, “The psychology is that people don’t want to do things alone. They want to know that they have made a smart decision and others are making that decision as well.”

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Social Media It’s the reason why social media influencing is a real career nowadays as social media influencers are tasked with persuading their audience to buy products of brands that can afford to hire them. A recent study by Mckinsey shows that a small group of influencers are responsible for a big chunk of online sales for particular shoes and clothing lines. The study found out that 5% of the influencers drove about 45% of the online referrals. This shows that businesses have to accord due diligence when enjoying the services of social media influencers.

Consumer Purchasing Decision A recent research done by Nielsen found out that social media sharing accounts for 54% of the information used by consumers to make the decision to purchase a product. This means that social media platforms play a major role in influencing the purchasing decisions of consumers. According to a total retail survey conducted by PwC in 2016, 45% of the respondents said that online reviews, comments, and feedback impact their shopping behavior.

Videos, in particular, are potent. According to a report by Brightcove, The Science of Social Video, Turning Views into Value: videos on social media have a positive impact whether it relates to the consumers’ perception of the business, their view of the products and their final purchasing decision. Their study showed that 74% of consumers say that there is a direct connection between watching a video on social media and their purchasing decisions. Almost half of those surveyed said that they made a purchase after watching a branded video on social media while nearly a third considered making a purchase. This means that brands have to continue investing in video creations and polishing them to suit the tastes of their audience. It’s not just social media influencers who can influence our purchasing decisions; our very own network of family members and friends can make us purchase something based on their recommendation. It’s hard not to be intrigued about something

when someone we care about raves about it online through social media. Research by Harris Interactive shows that 71% of consumers say that reviews from friends and family usually influence their buying decisions. The main reason for this is that many people are still distrustful of brands and advertising in general.

Algorithms Social media feeds are driven by algorithms and for social media platforms like Facebook and Instagram, posts that get heavy engagement appear at the top of the news feeds. As a result, sponsored posts by different brands and posts by social media influencers that have great social media presence can bring significant attention to particular products and services which can then heavily influence their online purchases. According to a study made by Ram Bezawada, associate professor of marketing in the UB School of Management, the popularity of a social

media post had the greatest effect on purchases. He said, “A neutral or even negative social media post with high engagement will impact sales more than a positive post that draws no likes, comments or shares. This is true even among customers who say their purchase decisions are not swayed by what they read on social media.” The takeaway for companies and brands here is that social media should be used to build relationships with customers. A dedicated fan base and community will have a positive impact on revenues and profits.

Millennials For millennials, the power of social media is very evident as this is a generation with spending power and more importantly, has grown up doing research and pretty much everything else online. Instagram is a great platform for retail finds with a recent survey showing that 72% of millennials buy fashion and beauty products based on what they see on europeanbusinessmagazine.com 25

their Instagram feed. It is critical for a business to be able to accurately identify those influencers that millennials clearly respect and look up to for recommendations.

User-generated content Aside from basic photos and videos from brands and social media influencers, another thing that drives engagement and online purchases is user-generated content. Gartner research has recently found out that 84% of Millennials make a purchase based on stranger created user content. According to entrepreneur Andrew Molz, “Seeing a product in use or simply reading personal stories from other consumers clearly has a big influence on millennials.”

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This suggests that brands should encourage their followers to share their reviews, stories, images, and other user-generated content. Engagement is the key, and not the mass promotion or advertising of the product.

The Future Ahead The social media landscape continues to innovate and transform itself. Machine learning and artificial intelligence continue to improve and weave themselves into the fabric of social media intelligence. Social media is here to stay because people will always enjoy sharing something about them. Businesses need to keep up with this changing landscape so that they can

continue harnessing this tool for the success of their businesses. They also have to monitor how consumer behavior is changing for the different generations particularly, the millennials and the up and coming Generation Z. At the end of the day, the focus must always remain on the consumer. Adrian Parker, VP of Digital Marketing for the Patron Spirits Company says it best: “Social media has transformed the way we do business by focusing on consumer needs and empowering users. Many of us forget that the true head of social media is our customer and they ultimately want to be in control. No one wants a relationship with a tech platform. The technology is the enabler and it’s best when it’s invisible.”

Trend towards Transparency


he digital revolution has changed how we live and work, driving a number of different industries, and particularly the financial industry, to demonstrate unparalleled levels of efficiency and transparency. Age-old rules were designed to protect incumbents, deter disruption and maintain the status quo, but any company, no matter how powerful, who fail to comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) legislation, face hefty fines and risk huge damage to their reputation.Patricia Cullen Reports The regulatory environment has become less predictable and increasingly unforgiving in recent years - and it’s no longer sufficient for companies to merely have control regarding staff costs - they also need control vis-à-vis third parties working on their behalf. Banks in the UK are required by law to comply with AML legislation and KYC C requirements to prevent criminals and terrorists from using financial products or services to

store and move around their money. Consequently, regular AML and KYC checks should be an integral part of the compliance management system of every regulated business. There is huge potential for corporate ruin for not following protocol, and in the EU, legal persons can acquire financial penalties of approximately €5m or 10% of total annual turnover, according to the AMLD, which, for corporates with consolidated financial accounts, could spell the end of the group. How does a financial institution know someone is who they say they are, and what processes and protection can it obtain to make certain? Organisations simply cannot afford, financially or otherwise, to make an error and conduct business with risky individuals, so companies must know with whom they are doing business with – be it a consumer, a contractor or a thirdparty vendor. Due diligence checks aren’t just for banks however; most businesses could profit from organising background checks on users and

providers, and technological investment here is crucial. To survive the regulatory environment destined for 2019, companies would benefit from an in-depth understanding of the potential threat that clients may represent, in a bid to reduce operating expenses, uncertainty and risk. Cutting costs is also high on the agenda in 2019, and although protecting your business from perilous contacts, deals and transactions that may never happen, may seem like an avoidable expense, it could in fact end up saving you in the long run. For example, Barclays got fined £72 million in 2015 by the UK’s Financial Conduct Authority (FCA) the largest penalty the FCA had ever handed out. There are many tech-savvy solutions to help companies meet their internal KYC C and AML obligations, and DSS’ SafetyNet will help ease the burden of manual processing and deliver automated and accurate information on subjects of interest. Companies can get an in-depth understanding of europeanbusinessmagazine.com 27

the potential risk that those clients may represent and go on to make informed, educated decisions. It’s not adequate to just check your customer on a once off basis, you need to have a programme that recognises your customer indefinitely, and has an ongoing monitoring function, as emerging, 28 europeanbusinessmagazine.com

innovative tech benefits businesses, but also empowers criminals. Two very important events took place a decade ago that transformed the world of corporate communications. Firstly, the market was shaken by the escalating financial crisis and secondly, the first Apple iPhone was

launched. Ten years on, and banks and financial institutions are finding KYC more confusing than ever. Consumers increasingly live their lives online, providing a growing amount of data about themselves to social media platforms and the companies that maintain them. A large majority of companies

launched, its membership reaches almost 40 nations, and among other tools intended to entice countries toward financial transparency, FATF’s blacklist for nations that do not uphold its standards, is to effectively cut them off from the international financial system. The list of companies that must comply with the FATF’s KYC C recommendations includes banks, securities firms, insurance companies, foreign exchange dealers, money remitters, casinos, lawyers, accountants, real estate agents, dealers in precious metals and stones, and trust and company service providers; and over 180 countries have committed to implementing and upholding the recommendations. Customers want transparency. Businesses know this and many of them talk about the need to be more transparent with their customers, but this is difficult when businesses often aren’t fully transparent with themselves. Consumers must be guaranteed that they are conducting business with established financial institutions that are abiding by the law. Likewise shareholders must be confident that their investment is in worthy hands and that returns aren’t going to be eaten away by charges for violations. SafetyNet is the 2017 winner of the A-Team RegTech “Most Innovative Compliance as a Service Solution” Award, due diligence (EDD) cognitive search and crime prevention tool. The way and the level that it uses artificial intelligence breaks new ground for this industry and it uncovers patterns and networks around subjects-of-interest with such depth, and with such speed, that no human professional could compete . SafetyNet helps companies comply with KYC C and AML rules and regulations by using an artificial intelligence engine to assist companies, helping them spot and mitigate risks before they become threats. are not as transparent as they could be in their operations, even in the wide-open, convenient landscape of today’s digital world. However, there is a strong drive for businesses to be transparent in a range of internal processes, a goal that has only risen in importance, and will continue to do so

as businesses can play a crucial part in deterring economic crime and guarding consumers’ interests. The Financial Action Task Force (FATF) was chartered in 1989 by the G7 countries to monitor money laundering and terrorist financing around the globe. In the years since it was

Economic crime, identity theft and cybercrime are having a major effect on society and the benefits of corporate transparency highlight why, in 2019, honesty is definitely the best policy. Currently, business threats may be more complex, but the solutions don’t have to be. http://semosancus.com/ europeanbusinessmagazine.com 29

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E. Jay Saunders The high flying entrepreneur from Turks and Caicos who is leaving his mark in the Global Fintech Industry.

DSS was established in 2014. Now, as almost 4 years have gone by, you are receiving International awards in FinTech. What were the main challenges that company had to overcome to get here?

Domus Semo Sancus (DSS) has recently won 2 ACQ5 Global Awards: company got the 2017 International Company of the Year (FinTech) award, and you, as the CEO, picked up the International Game Changer of the Year award. This is truly impressive. What are the main goals for the company now, in 2018 and for 2019. EJS: Every time we receive an award, it validates what we’re doing. That we should keep focusing on “Making Lives Better”. As for our main goals for 2018 and 2019, we have several items on our roadmap that we’re excited about rolling out. Features that will further save our customers time and money. We’re closing out 2018 strong in terms of sales, better than expected, and we expect the trend to continue in 2019. To accommodate the projected sales growth, and to continue to provide a high level of customer service, we will be hiring additional staff in 2019.

EJS: DSS is a Caribbean technology startup, ffounded in the Turks & Caicoss Islands, and we’re very proud of our roots. Unfortunattely, there are so few Tech startups in this region, that there is no ecosystem in place that we can tap into. Venture capital is nonexistent, so finding funding is difficult. To overcome that, I self-financed DSS 100%. Thankfully it’s now at the point where it’s generating revenues and covering its costs, but it took a few years and lots of personal sacrifice to get here. DSS is committed to closing the divide between the banked and unbanked by helping individuals gain access to the financial services they need. Company has created 2 powerful tools — SafetyNet and Wowlet. They’ve even been named as the products that are “set to reshape the financial world“. Can you explain to us more this statement? EJS: There are approximately 1.7 billion adults in the world that are unbanked. That’s larger than the

population of China. It is estimated that banking the unbanked will generate approximately US$380 billion in new revenues for financial institutions. With our tools, financial institutions are now able to bring the unbanked into the formal banking sector, and when that starts to happen in earnest, major disruptions will take place in the global banking sector. Are there any plans in the future to release more products that complement each other like SafetyNet and Wowlet? EJS: SafetyNet is integral to all our products, and we expect that to continue with our future products. As for Wowlet, it’s a product and an ecosystem, and we have plans to roll out many complimentary products and services within Wowlet’s ecosystem. SafetyNet.ai — an award-winning cloud based enhanced due diligence (EDD) cognitive search and crime prevention tool. How did it come to life — what’s the story behind it? EJS: Before we can make Wowlet available to the global unbanked, we need to minimize the chances of it being used for nefarious reasons. First, and foremost, we need to know who our customers are, and not just collectively, but at an individual level. The Know Your Customer (KYC) guidelines are set by the Financial Action Task europeanbusinessmagazine.com 31

Force (FATF) – the inter-governmental body that sets the standards around combating money laundering and terrorist financing. Over 190 countries have signed up to the FATA guidelines. Since our intention is to make Wowlet a global product, we needed a screening tool that could cover the globe. Unfortunately, there wasn’t one available, and so we built SafetyNet.ai. It was originally meant to be our in-house KYC screening tool for Wowlet, but as other organizations started expressing an interest in using it, we decided to commercialize it. How does it help to prevent crime? EJS: SafetyNet helps organizations conduct enhanced due diligence screening on their customers, allowing them to get a good understanding of the potential risk that each customer represents. With SafetyNet’s machine learning and pattern recognition capabilities, along with its ability to search through structured and unstructured data, organizations can quickly detect and prevent crimes such as identity theft, money laundering, and terrorist financing. SafetyNet Safe City (designed specifically for law enforcement) goes even further with built-in linked analysis and object recognition capabilities, which helps law enforcement detect and solve crimes within hours rather than days. Wowlet. It’s described as a pre-paid digital wallet designed to encourage financial inclusion and help bridge the e-commerce divide. It’s built on top of SafetyNet. 32 europeanbusinessmagazine.com

There already are a few options of digital wallets — what do you think makes Wowlet unique? EJS: Wowlet’s ecosystem is being developed to be as convenient as the prepaid mobile phone ecosystem is today. From a commercial point of view, Wowlet’s feature set will be second to none, its customer experience will be best-in-class, and its pricing will offer the best value for money. Notwithstanding its commercial strengths, Wowlet’s main strength will be its regulatory advantage, as it will be tightly integrated with SafetyNet, allowing it to meet the stringent KYC/AML recommendations of the FATF. With approximately 200 countries committing to the FATF recommendations, we expect Wowlet to be in a very strong position when it launches in late 2019. How does it work? EJS: Wowlet will be available as both a cloud-based app and a mobile phone app, which will allow customers to engage with it through their mobile phones or on any device with a modern browser. It will support the cashing in (via bank transfer, credit/debit card, or with cash) and cashing out of funds. With Wowlet, customers will be able to conduct financial transactions such as transferring funds to other Wowlet customers, paying bills, and sending/ receiving remittances. What aspects do you think are the most important ones for Wowlet platform to be successful globally?

EJS: Before Wowlet can be deployed globally, it needs to be able to meet the FATA guidelines, which makes regulatory compliance its most critical success factor. However, to succeed commercially, Wowlet will need to be convenient, easy to use, and affordable. The success of DSS is linked to the highest quality databases, which also means that company has to invest a significant amount of its budget to this. What other investments are important to DSS? EJS: Our databases are very large, and they’re growing by tens of thousands of records per day, but that’s still far from where we want to be, which is growing by over a million records per day. To support that type of growth, we’re investing heavily in Internet Search and Storage technologies. We don’t want our applications and customer experience to be negatively affected as we ingest more and more data, and so, we’re also spending a lot on database optimization and local searching technologies. However, none of that matters if we’re not producing reliable results, and so our most significant investments are in Artificial Intelligence technologies – mainly Natural Language Processing, Sentiment Analysis, Machine Learning, and pattern recognition. De-risking and financial inclusion. These terms are frequently used while talking about SafetyNet, Wowlet and DSS in general.

How do other players in the FinTech field react to them? EJS: We haven’t seen any other FinTech companies trying to address the issue of de-risking. I think that’s mainly because the countries that are feeling the pain of de-risking are not the ones producing FinTech companies. The affected countries are doing the best they can, which is trying to address the issue through dialog. What about financial institutions and banks around the world — what reactions do you get from them? EJS: We’ve only been around for four years, and organizations are only now finding out that SafetyNet produces some of the highest quality results in the industry. As more and more financial institutions and banks realize that with SafetyNet’s insights, that they can reliably apply risk mitigation measures down to the client level with a high degree of precision, we will see the de-risking of whole regions become a thing of the past.

clients come from these industries. We also have a lot of Governments as clients – particularly Financial Regulators. Can you say a few words about the future? How do you think DSS will look like 5 years from now? EJS: In 5 years our staff size and global footprint will be much larger. We’re opening office in at least 2 new countries next year, which will increase the number of countries with a DSS office to 4. In 5 years, that number will be at least 10. While we’re mainly known for SafetyNet today, in 5 years, we’ll be mainly known for Wowlet, which by that time will have more than a million customers using it.

What do you think are the main challenges for this business and company ahead? EJS: Right now, our biggest challenge is finding quality data that will allow us to scale up, but without negatively affecting the quality of our results. While we expect to always have this challenge, once we roll out Wowlet, we will take on a different set of challenges (e.g. regulatory, consumer customer support, and the build out of the ecosystem) as we go from being primarily a provider of products and services to financial organizations, to being one ourselves. However, with 1.7 billion adults still unbanked, we have more than enough incentive to overcome the challenges towards “Making Lives Better”.

What are the main clients DSS is working with right now? EJS: The category of companies that are mandated to meet the FATF recommendations are Financial Institutions, Accountants, Credit Institutions, Solicitors, Tax Advisors, Insolvency Practioners, Trust Service Providers, Casinos, Automotive Dealers, Jewelers, Charted Surveyors, and Estate Agents. Any business that fall into one of these categories is a potential client of SafetyNet, and many of our europeanbusinessmagazine.com 33

The Pound Depreciation ; Effects on UK Businesses


rexit’s uncertainty still undermines the efforts of politicians and economists in the UK. After an extended period, the British experienced a moment of slight recovery, clawing itself back at the end of the last year. However, uncertainty remains, and the pound continues to decline with the current value being 1.28 USD and 1.12 EUR. How does this affect businesses in the UK? What can we expect in the following period? Will the UK face even greater uncertainty and economic downturn or will the pound recover again?

The pound depreciation as an aftereffect of Brexit Following the results of the Brexit referendum, the pound dropped 16.5% against the US dollar until the end of 34 europeanbusinessmagazine.com

2016, the lowest level of the pound in 31 years, due to high uncertainty in the world economy caused by Britain’s decision to leave the EU. Soon after, the UK faced high inflation that further contributed to the

decline in economic activity of the UK. Many businesses have been challenged, having to adapt to the situation, hoping it will not last. Unfortunately, this has not been the case, and the prognoses are not good.

The pound depreciation effects on UK businesses In the short-term, the decline in currency increases import prices and reduces export prices, which stimulates the consumption of domestic products, and thus the growth of domestic production. However, in the long-term, there is a reciprocal response from other countries, which leads to inflation that diminishes the purchasing power of the population and causes an increase in interest rates. That is precisely what happened in the UK with high inflation mainly caused by increased prices of imported raw materials and petrol, which also increased rates of other products and reduced all important macroeconomic parameters. In June 2018, the index of UK company shares declined by 1%, the consumer prices index hit 2.5%, and the trade deficit fell from £12.5bn to £11.4bn. In addition to this, wages growth did not follow the price growth, putting consumers in a very unfavourable position, leading to a decrease in production volumes and an increase in unemployment, which further reduced the purchasing power of the UK population. On the other hand, due to the pound depreciation, the UK stocks are now more attractive for purchasing. However, due to the considerable uncertainty of Brexit and political disagreements in the UK, investment growth in the UK is not as high as expected, affecting an already low productivity growth of UK businesses. It’s true that although some businesses suffer losses when the pound falls, some also experience positive effects. For example, UK manufacturers that export or cooperate with exporters have an increased sales volume due to the weak pound boosting export activity. We also see foreigners gladly coming to the UK, because their currency is more valuable than the pound, which makes their visit to the UK much cheaper than before, highlighting that tourism and related industries can benefit from the situation. For instance, Scottish hotels recorded a 5% increase in revenue, while in the rest of the UK it was

slightly lower - 4% in Wales, 2.2% in Northern Ireland and around 2% in England. It has also been noted that the number of European business flights to the UK has increased by almost 10% between July and August 2018 compared with the same time last year. Similarly, the UK boating industry has recorded a revenue surge to its highest level in the last ten years. Again, due to a weak pound, sales rose 3.4% to reach £3.1bn in last year, and it is estimated to continue to grow. Primary buyers are from abroad, where sales increased by 4.7% last year, as the pound depreciation has enabled them to buy boats at much lower prices than in recent times. Companies that export their goods have found similar results. Some have increased profits by a third, such as Norbrook Holdings, the Newry-based pharmaceutical firm, with profit rising by 36% to £49 million in the last year. Companies that export luxury cars have also had a great year due to lower prices of their products in foreign markets. So, it’s clear to see that while some companies experience adverse effects due to a weak pound, others benefit from it. In any case, in 2018, the UK economy experienced its slowest growth rate in the last five years. It was just 0.1% per quarter compared to 1.2% GDP of growth rate at the same time the previous year.

What can we expect in the following period? Although the presented data about the UK economy is not encouraging, no one can say for sure what will happen in the next period. Whether the crisis will continue or not, according to many, depends on the Brexit deal. If Britain quits the bloc without a deal, there is no doubt of another, higher depreciation of the pound. In this case, the pound will potentially fall to 0.88 euros by the end of 2019, and this will not be good news for the British economy which would see a new price increase and a slowdown in economic growth until the UK and EU confirm an agreement. Despite the downfall of the pound in the short-term, those who have included the Brexit risks in the estimation of the British future predict a bright future for the pound in the medium and long-term period, claiming that some UK economic data has already been improving this year. Therefore, there is still hope for the UK economy to stand on its own feet and see the pound recover, and while currently, it may not appear this way, viewed from a wider angle - leaving the EU could be a good decision after all. When uncertainty declines, UK businesses will have many more business opportunities than now. Until then, UK businesses and citizens need to find a way to survive tough times.

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Rino Solberg tell us about his way to fight poverty and corruption in Africa TThe serial entreprneur who changed his career path from focusing on profit to helping eradicating poverty in Africa. We ask him why Better Globe Forestry believe they have the key to eradication of poverty and corruption in Africa.

Rino Solberg - can you share with us what is it that you and Better Globe Forestry do? I am the Founder/Chairman of Better Globe Forestry in Kenya, and we are pioneers in planting high-quality mahogany trees (2 million) in the arid and semi-arid land (ASAL) of East Africa. We have been doing this for the last 14 years, with great success. The Governments in Kenya and Uganda use us as an excellent example of how to eradicate poverty and corruption and, having successfully run the pilot project for 14 years, we have proven strategies that work to eliminate poverty and corruption, which we are now willing to share. 36 europeanbusinessmagazine.com

We have been working closely with The World Agroforestry Centre (ICRAF), Kenya Forestry Research Institute, Kenya Forestry Service, National Forestry Authorities and several universities in Africa and abroad for over ten years and believe we have the best resources and references in the countries where we work. How did you get involved in the pilot project? In 2004, when I was 60 years old and a successful serial entrepreneur of 40 years, I decided that I would like to shift my focus from running businesses for profit, to dedicating

my energy, time and money supporting the people who most needed my help in Africa. This would give me the opportunity to make a meaningful contribution to the world – rather than simply being the richest guy in the graveyard! In my view, the best way to eradicate poverty is to create change and teach people from the ground up, how to build self-sustainable communities. It was necessary to develop a business model that would benefit approximately 70% of people living in Africa, mainly small farmers, and support them in making a better income. We wanted to teach the farmers about long-term work investments and help

them plan for a sustainable future, instead of living season to season. Working together, we decided to start a tree planting program and agreed that a high-quality mahogany tree would be the best kind for the market. To do this, it was necessary to source a fully-grown tree within the last 20 years. We spent two years finding and testing the right tree which would unlock the opportunity for the farmers. Then, in 2006, we found the right tree; it was called ‘Mukau.’ Following this, we started the process of poverty eradication through “Social Entrepreneurship - The Better Globe Way,” after which, I wrote a book about the project, with that title. Can you please explain how it’s possible to eradicate poverty with trees? Due to the significant demand for high-quality tropical timber, tropical mahogany trees of high quality generate good profit, which is the “engine” behind the business. We can generate money for everybody, from the low-income farmers to those who finance the trees in the

first instance, as well as earn revenue to cover operational costs. This is also where sustainability comes in. Too many farmers in Africa are selling the same product with huge competition. They have not understood that a market is driven by supply and demand, and often keep planting the same product they have farmed for generations, even though there is a limited market for it. We form fifteen-year-long partnerships with our farmers, under contract. This partnership gives them access to microfinance and other incentives as we continue to support them. In the fifteenth year, we have a buyback agreement on their trees at 10% above the market price at any given time. We can do this because our goal is to eradicate poverty, not to maximise our profit. What is your long-term goal with the company? Our vision is, “to eradicate poverty and corruption in Africa”. Our mission is, “by Social Entrepreneurship plant as many trees as there are people

on this planet and thereby finance a sustainable implementation of the vision.” Of course, we are aware that the challenge of total eradication of poverty in Africa is an enormous task, and that it still hasn’t been possible in Europe, but we are hopeful that in supporting one family at a time, we will eliminate millions of families’ poverty over the next 40-50 years. How do you think you might be able to help others benefit from the pilot and the exemplary model you have created? I could help my Norwegian Government, or any other Government, eradicate poverty and corruption within Africa if they supported it. Unfortunately, politicians do not want to be “untraditional”, and do not believe in “Social Entrepreneurship”. They prefer to spend money directly to a charity, which only gives a marginal effect, such as “protecting” the rainforests. Let me explain with two examples: 1. The Government spends Euro 100 million preventing the rainforest

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from being destroyed in Brazil, Indonesia or Africa. This has no guarantees and is almost impossible to control with minimal effect on the climate. It gives no money back to the Government; it’s merely an “environmental feelgood gift.” 2. The Government spend Euro 100 million buying 1,886,792 “donation packages” from Better Globe, offering a transparent “charity investment”. ● Allowing 3,773,585 mahogany trees to be given to farmers in Africa, to enable them to work towards the eradication of poverty. ● Offering Euro 2,830,188 of microfinance loans to families in need, which has shown to have the potential of eradicating poverty for more than 50 thousand families in Africa. ● Offering Euro 2,830,188 to Child Africa, for the education of children and eradication of corruption. ● Providing 943,397,500 litres of water to farmer families in the drylands of Africa. We implement all the above in a 100% transparent way, to support low-income families as they work towards a self-sustainable future. In addition to this, there would be 3,773,585 mahogany trees, which the Government owns for the duration of 15 years, giving Euro 377,358,500 back to the economy in the 15th year. Now, that is a win-win-win deal. A win for the Government and indeed a victory for farmers an children in Africa as well as a substantial gain for the environment. One person would be assigned the role of following up on all activities, including reporting, throughout the 15-year contract. We believe this offers 100% transparency and has proven to be low-risk for all those involved. How can you attract investors and more funding for this initiative? As we are a “Social Entrepreneurship” company, we are not looking for traditional investors looking for an “exit” in three to five years. Our 38 europeanbusinessmagazine.com

preference is to work with people and companies over the duration to support the eradication of poverty and corruption in Africa, openly and honestly. The opportunity is to invest in the longer term. We would like to engage with like-minded people who are keen to get involved, and we can be contacted directly at rino@betterglobegroup.com Lastly, what are the key benefits for everybody involved, long-term? The long-term benefits are tremendous because the aim is to make farmer families, who are currently barely surviving, sustainable for the rest of their lives.

The planting of trees captures large amounts of CO2; hence they will help to make a tremendous difference in both the local and global environment. Another critical factor to consider is; the education of one child allows growth and opportunity for the future of generations. He or she will continue to support their own children and grandchildren in their education, placing value on the system of building a better, self-sustainable future. Working with Better Globe Forestry for 14 years and running Child Africa for the last 27 years, has given us proof that this system works.


frica, the second largest continent in the world is home to many important natural treasures — oil, petroleum, uranium, gold, salt, copper, silver, cocoa beans and iron to name a few. However, data shows that one in every two people on the continent lives in extreme poverty. Numbers are horrifying, as about 240 million people go to bed hungry every night, and not having enough food kills more than 50 percent of African children before they reach the age of 5. Poverty in Africa is associated with a number of factors, and they are all connected. But not just connected, they have strong impacts on one another. Corruption and poor governance, limited employment opportunities, poor infrastructure, poor resource usage, wars and conflicts that seem to never end — these are the main reasons why poverty in Africa continues to be such a big problem. International community intended to find ways of helping Africa and provided funds: US alone sent 500 billion dollars as aid to Africa in planning long term benefitting programs. However, mismanagement in the continent is also one of the reasons why people live so poorly here. Most of the money was spent on various schemes that generated no benefit to the people or the continent. On the contrary: instead of providing financial aid, medical facilities and basic necessities like fresh water, jobs and electricity, investments were used on highways and low grade construction of dams. In order to fight poverty, it is necessary to have strong institutions. However, governments in Africa are not only corrupted and embezzle the state money, but are very poor in planning processes. As a result, programs, that are designed to fight poverty cannot be fully implemented, as the funds somehow end up in the bad hands. The irony of it all is that Africa is home to many natural resources. Agriculture is a big part of people’s lives here, and 80 % of African people are farmers. However, these people are also the poorest ones in the continent. Due to politicians not paying enough attention to the development of rural areas, many farmers are still doing it the traditional way — just like hundreds of years ago, meaning that there are no modern farming techniques around.

Eradicating Poverty in AfricaOpportunities Within Reach

It can be hard to understand this in this day and age of modern technology but the reality is that rural areas in Africa have barely seen any improvements at all which means that they have no chance to fight drought, buy better seeds, fertilisers and pest control. At this point, it’s important to mention infrastructure, which is extremely poor in Africa. Africa’s food import bill is worth 35 billion dollars every year, and the region loses another 48 billion dollars from food that is wasted post-harvest because of poor roads, inadequate storage and poor access to markets. We have one more number for your right here: each year, Africa also loses 68 billion dollars due to depleted soils and degraded land. Not worth to think what could be done with these saved resources? A long list at at that . To start with , the empowerment of more women, end hunger, achieve food security, improve nutrition, combat climate change, create jobs and promote sustainable agriculture, leading to the attainment of the global goals mentioned in the 2030 Agenda for Sustainable Development and Agenda 2063. Africa’s Progress Report “Grain Fish Money: Financing Africa’s Green and Blue Revolutions“ addressed the same issue a few years ago, and Kofi Annan commented on the situation, stating that “Africa’s farmers and fishers need their governments to demonstrate more ambition on their behalf. African governments must now scale up the appropriate infrastructure and ensure that financial systems are accessible for all.“

This means that simply raising agricultural productivity in Africa is not enough — governments need to do more. We are talking about achieving food security, which can be attained through focusing on the nourishment of vital ecosystems. Amina J. Mohammed, former Minister of Environment of Nigeria, noted that “Optimising food production by embracing an ecosystem-based adaptation approach to agriculture can boost yields in Africa by up to 128 percent. And it does not require enormous resources.“ Investing in ecosystem-based, adaptation-driven agriculture and its linkages to sustainable commercial value chains could boost farmers’ incomes and create up to 17 million jobs while catalysing an agriculture sector that is expected to be worth 1 trillion dollars by 2030. President Macky Sall once said that “Africa is a land of opportunity…business opportunities are there, growth is there and the population is there.“ The Truth is that it is all there. But Africa will not be able to achieve growth and seize opportunities, unless governments create the right market conditions and take care of infrastructure. Agriculture is at the heart of these challenges as well, as a big part of Africa’s transformation lies in the continent’s rich soil. Vibrant and prosperous agricultural sector might be the first answer to a question of how to reduce poverty and boost economic growth in Africa. europeanbusinessmagazine.com 39


– Reaching New Heights

As we get ready to welcome 2019, European Business Magazine looks to what Colombia - a sustainable destination for FDI in IT, infrastructure & public transports, with an economy that is growing by 2–3% - has to offer. Emerging market bulls are hailing it as a rising star and anticipating its currency to be amongst the global greats in 2019. Nick Staunton reports 40 4 0 europeanbusinessmagazine.com eu e urro ope pean anb bu usi usi sin ne ess ssma mag gaazziine ine ne.cco om m


raditionally, Colombia was renowned as a safe investment location for coffee, oil and more recently the nation has benefited from an exploding tourism industry. In 2017, there were 6.5 million tourists - almost double the number that visited in 2011, and currently, the country is a regional leader in software development and agro-industrial services. All this productivity and positivity is thanks, in part, to the welcomed political and economic turnaround in the last decade. The business community has hailed Iván Duque’s election as the new president of Colombia as a mark of continuity for the business-friendly policies of his predecessor, Juan Manuel Santos. The country offers one of the best business environments in Latin America and is amongst the most competitive countries in the region. According to the World Bank’s 2018 Doing Business survey, Colombia has the fourth-best business environment in Latin America after Mexico, Chile and Peru, and was named ‘Country of the Year’ in 2016. Outdated perceptions of violence and corruption have long since been forgotten, not least because Juan Manuel Santos received the Nobel Peace Prize in 2016 after an agreement was reached with the armed rebel group, the FARC. He achieved what many Colombians had yearned for for decades: trading violence for democracy, allowing Colombia to reach its maximum potential without the burden of war.

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The continued implementation of Colombia’s peace agreement, alongside the government’s structural reform agenda, is good news for investors. Economic activity in Colombia is supported furthermore by an increasingly favourable global environment and rebounding commodity prices, all helping to increase exports. Colombia is a stable place to operate, invest and do business in, reflected in the 2017 FDI inflows which stood at $14.5bn. According to central bank figures this is up by 4.8% from a year earlier, and on its way back to the record levels of over $16bn seen at the height of the 2013-14 commodity boom. According to the OECD, Colombia is going from strength to strength, and the time is nigh to invest. It recognised the economy as one of the most resilient to the recent fall in the price of raw materials and regarded the country’s macroeconomic framework as one of the most solid in the region. The economy is projected to further increase by over 3% as attractive investment incentives including lower interest rates, stronger infrastructure spending, lower corporate taxes and higher oil prices, all point to a sturdier market. Colombia’s ongoing infrastructure projects will create high demand for project financing, logistics, water treatment, oil and gas exploration, railway construction, transportation equipment and mass transit systems, amongst other lucrative opportunities. Colombia is a relatively large country and location is vital when considering where to invest. The four destinations with the highest international air connectivity are Bogotá (726 flights a week), Medellín (130), Cali (67) and Cartagena (65). Bogotá - the powerhouse of Colombia - holds nearly ¼ of the country’s GDP, and is, undeniably, the political, economic and cultural centre. It hosts an increasing number of expats from many countries and is a welcomed choice for staff relocation. The city’s continuing optimism is reflected in new luxury hotels (including two Four Seasons properties), highly unique restaurants and a dynamic cultural scene to complement its ever-increasing popularity 42 europeanbusinessmagazine.com

and commercial status. It has built its reputation as an investment destination through a strong and diverse economy and is home to almost half of all of Colombia’s medium and large businesses, holding a 36% share of the country’s international trade. Anticipated economic growth and quiet corporate confidence will allow the city to continue to develop its workforce, especially in the creative industries. The first line of the city’s metro rail project will begin construction in November 2018, and Bogotá is also expanding its bus rapid transit system. The capital boasts more than 1,500 foreign capital companies and expects to attract $250 million in foreign investment contracts this year, according to the city’s investment agency, Invest in Bogota. Bogotá was also recognised in the ‘Major American Cities of the Future 2017/2018 FDI Strategy’ category which assesses cities with over two million inhabitants and the region continues to have one of the highest economic growth rates in Latin America. Rubbing shoulders with Chicago, New York, Montreal, Los Angeles and Miami, which held the top five positions, it is gaining traction. Offering a talented and well-educated workforce for slightly cheaper prices than in Europe or North America, this location is one that keeps on giving. Through the Strategic Plan 2017-2020, more companies will use

Bogotá as an export platform, and the anchor companies that are transforming the city, will only increase current investment, supporting an additional 160 investment projects throughout the city. Between 2007 and 2017, Bogotá received approximately US$19.272 billion in FDI, with investment projects mainly centred in Business (15%) and Software & IT Services (14%). It is home to highly qualified talent and the continued opportunities for commercial growth are endless. Consequently, the number of multinationals that have decided to start operations in Bogotá has increased steadily, and by 2017, 1,850 projects had arrived in the city. Looking ahead to 2019, join successful companies like Convergys, We Work, GAES, Systra, Castem, HBO and Amazon Web Services, and put down your business roots in Bogotá. Invest in Bogota supports investment in the capital, offering free advice and information, and will assist companies eager to expand in the city. Tourism, pharmaceuticals, healthcare and life sciences are amongst the sectors prepped for growth, bursting with potential and ready for your investment. As Bogotá continues to progress, its transformation into a smart city is well underway. https://en.investinbogota.org/

executive directoor of Invest in Bogota talks to us about all things Bogota, a reelatively new haven for investment for international invvesttors and why it is atttracting such global interest from m inteernational business.

You’ are one of the heads of communications for Invest in Bogota. What are the biggest challenges you face to promote Bogota as an area of business? JGP: Bogotá faces the constant challenge of competing with the main capitals of Latin America and the world to attract investment. That is why we must continue using the strengths the city has and promote its best attributes to differentiate from their competition. In addition, taking advantage of the job that has been done, the city must remain in the “top of mind” of international investors, who recognize Bogotá as one of the main destinations for investment in the region. Also, considering that Colombia is part of the Pacific Alliance, Bogotá should position itself as a gateway for Asian countries to Latin American markets. In your opinion, what projects were the most interesting/important ones for the agency? JGP: The strategy of Invest in Bogota is focused on attracting value-added

companies that export from the city and improve the working conditions of the inhabitants of the city. As part of our work, from Invest in Bogota we have managed to attract investments from more than 45 countries in the last 2 years. In 2018 we have the goal to accompany the arrival of at least 40 foreign investment projects to the city. We have recently accompanied companies such as Amazon, that announced its arrival in Bogota with a customer service center in which it will employ more than 600 people and in which it will promote work modalities such as work at a distance. That is the type of investment that positively impacts an industry. In areas as infrastructure, Bogotá has important projects ahead that represent business opportunities for USD13 billion. The projects include transportation systems, a water treatment plant or a new airport. All these projects are part of the work we do here. We help the city find global investors that can help build the infrastructure that Bogotá needs.

Where is your most important market globally - is it focused on Spanish speaking countries or English? JGP: Over the past 10 years, from 2007 to the first semester of 2018, Bogota - Region received more than US$ 21.200 million of direct foreign investment in new projects (greenfield) and expansion. There are more than 1,000 projects of companies from different countries, generating an estimated of more than 118,000 new jobs. For this period, three countries concentrated on half of the new FDI and expansion projects that Bogotá-Region received: United States (26%), Spain (16%) and France (7%). However, our strategy includes several markets from Europe, America and Asia. In your opinion, what are the major attractions for global business to come to Bogota? JGP: Bogotá has been recognized over the last years as one of the best cities of Latin America to do business. The city has built its reputation as an europeanbusinessmagazine.com 43

investment destination in the region due to a workforce of more than 4.6 million people, a strategic location and a robust economy that also surpasses the countries of the Region as Ecuador, Paraguay, Uruguay or Bolivia. These factors have contributed to the city receiving some 930 investment projects for more than 20,000 million dollars between 2007 and 2017. Additionally, the city has the first airport of the region in terms of air cargo movement and the third in passenger traffic, strengths that lead international companies to come to the city and, in many cases, make Bogota the center of regional their operations. How has Bogota changed business wise in the last five years - there is a big start up community with very talented tech people. How has this come about? JGP: Talent is one of the Bogotá’s most important strengths. A young and qualified workforce of more than 4.6 million people guarantees the scalability of any operation. The 128 institutions of higher education that the city has, enroll thousand students and graduate more than 158 thousand professionals and technicians per year. Additionally, Colombia has one of the most efficient labor markets in Latin America.

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In the technology sector, the city has become an important player, with international companies that have established their regional hubs in the city, that has approximately 84,000 graduates of engineering professionals related to the IT sector over the past 15 years. Can you say a few words about the future? What does it look like for Invest Bogota and how will the city deal with transport issues and what is the situation with the proposed project for the Metro? JGP: Bogotá’s current infrastructure projects will bring a positive change

for the city. The improvement of transportation systems is also accompanied with new housing and industrial projects that will keep making Bogota a key destination to invest. For the coming years, Bogotá has a defined north in terms of productive development, which is marked by the Smart Specialization Strategy of the city. This is an exercise through which the Chamber of Commerce of Bogota, the Mayor’s Office, the private company and the academy have defined an integrated agenda of productive development collectively constructed for the transformation of Bogotá and Cundinamarca based on knowledge and innovation.

Surrounded by its marvellous scene,

THE OMNIA, remain never to be forgotten. This is THE OMNIA.

THE OMNIA, Zermatt – Switzerland, Phone +41 27 966 71 71, www.the-omnia.com

Turks & Caicos:

AN OCEAN OF OPPORTUNITIES FOR INVESTORS 46 europeanbusinessmagazine.com


historically low tax environment, a stable economy, a pro-business climate, and one of the globe’s stand-out investment prospects for 2018. A place that experiences an influx of nearly 283,000 visitors each year, and where investors see remarkable returns on their investments. Yes, it’s Turks & Caicos; a wonderful place where the Government is actually committed to cutting the cost of doing business and has a number of incentives available to new investors. It is also known for its high-quality properties, and is often

referred to as “a rising star in real estate investment”. A unique combination of the world’s most beautiful beaches, luxurious estates, and neighbourhoods offering increased privacy accompanied by the fact that there are no annual property taxes and no capital gains tax, constitute the major, incontrovertible reasons why it attracts so much attention. Recently, as more and more Europeans, Canadians, Americans and the world’s elite, including celebrities, continue to show interest in the island within the Carribean, property values have begun to increase. Turks & Caicos Sotheby’s International Realty released its newest real estate report in April, showing that TCI’s real estate sales got off to a “flying start” in the first quarter of 2018 with a total sales volume of 63.06 million dollars as compared to 54.3 million dollars in the first 3 months of 2017. Construction of new luxury villas the main reason behind this. Re/Max Real Estate Group Turks & Caicos co-owner, B. MacPherson, remarked that a record numbers of people had been contacting his company for information about listings and investing in Turks & Caicos real estate adding that “in particular, we’ve seen a strong demand for highend properties that include new construction, as well as existing homes and vacant land.” Foreign investors already see Turks & Caicos as a safe, solid, and stable investment, another reason why the prices have gone up this year: TCI’s real estate average sales price increased by 49 percent to 900.763 dollars for the first quarter of 2018,

up from 603.675 dollars during the same period the previous year The Hon. S. Robinson (Premier and Minister of Finance)commented on this by saying that “the economy is strong, and we continue to have a number of investors who are flying here. Turks & Caicos Islands is about to experience the biggest investment and construction boom in the history of these islands.” A few months ago, in September, Turks & Caicos Islands Government also reported that the country’s fiscal and financial performance continued to improve, with an operating surplus of 52 million recorded in the halfyear report for 2018-2019. S. Robinson noting “the better than expected revenue performance and lower than expected expenditure performance” were the major contributing factors to the improvements. One of the newest and biggest projects in TCI is an impressive 100 million dollar Amended Development Agreement with Vista Development Ltd. The new project, a five-star resort on Grace Bay Beach is set to begin by late 2018, and it will emphasise on the use of local contractors and provision of employment during the development phases. Last year, the principal investment promotion agency for the islands, Invest Turks & Caicos (Invest TCI) launched a new “Shovel-Ready” initiative targeted towards attracting more local and foreign investments into the economy. A. Musgrove, the CEO of Invest TCI, revealed that so far the results were great saying that “the investors’ interests had indeed met expectations, which further signals the ocean of opportunities that exist for investors in the TCI.” europeanbusinessmagazine.com 47

European Business Magazine meets


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There are some idyllic spots in the world and one region as we all know is the Caribbean. Some say the jewel in the crown is Saint Lucia. It is one of those idyllic islands surrounded by pure beauty but is now becoming ripe for global investors and some very interesting investment opportunities.

You’ve just become the new CEO of Invest Saint Lucia (ISL). What was the first challenge that you’ve had to overcome as the new CEO? Thanks, Nick. Let me say first of all, how grateful ISL is for this opportunity that the European Business Magazine has presented to us to get our message out there in the European Market. If I’m being honest, I’d say my biggest challenge so far has been catching up on the wealth of information that is available on the Agency. The organisation has so much history having been founded close to fifty years ago. Although our mandate has changed from asset management to one focused primarily on investment promotion and facilitation, we have, and continue to play a very substantial role in the development of the country. As I mentioned in one of my first interviews as CEO, the work of Invest Saint Lucia is perhaps the country’s best kept secret and I’m eager to get these facts out in the public domain. What are the most important qualities for your everyday work in this position? I am a team player with a very democratic style of management. I

strongly believe that the best way to get the team dynamic flowing is to be all inclusive, all embracing, particularly when it comes to decision-making that will affect the overall goals and objectives of the Agency. The greater the participation of staff, the higher the job satisfaction, the more successes we record. In addition to that, I’ve always been one who thinks outside the box and who can adapt to any given situation if I believe it’s to the benefit of ISL and Saint Lucia in general. The market changes often and we must be prepared to make the necessary adjustments to achieve our mandate. Those investments that we consider significant this year, may not be relevant to our development goals next year, and so we have to continue to be proactive as it relates to our targeted promotions. The traditional methods of marketing Saint Lucia’s investment potential have worked to a certain extent but may no longer be the best way to stand out to our targeted investors. Given my background in marketing and experience in the tourism industry, I am of the view that Invest Saint Lucia will benefit tremendously from the effective use of digital marketing as well.

In April, Invest Saint Lucia won the AIM Award for Best Investment for Latin America and the Caribbean. Experts shortlisted ISL after gathering information on the most interesting worldwide investment projects contracted or commissioned during last year. It’s an amazing award! In your opinion, what projects were the most interesting/important ones for ISL last year? Saint Lucia welcomed the opening of a number of new hotels and also saw some major reinvestments in the areas of Tourism, Manufacturing and Outsourcing. While these had the desired impact of job creation and keeping Saint Lucia top of mind in the external market, I believe that the excitement may have been generated by the multi-million-dollar projects, specifically those earmarked for the south of the island – an area that has the potential to be developed into the mecca of tourism and entertainment. We anticipate that most, if not all these projects will come to fruition in early 2019, particularly given the redesign and reconstruction of the Hewanorra International Airport, the staging of an inaugural international thoroughbred race and the launch of at least two major hotel projects.

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Saint Lucia has always been categorized as a world class tourism destination, having won numerous awards over the years. In the last four years, there’s been greater recognition about the quantum and quality of investments that we’ve been able to bring to our shores. Development of your country is an important objective for you as the CEO of ISL. You’ve mentioned that it is your intention to play a major role in this aspiration. How are you pursuing this goal? Well first and foremost I have a great team that is consistent at creating awareness and keeping the island top of mind in the market place by proactively promoting Saint Lucia as an ideal investment location. We will continue to facilitate existing and potential investors – local, regional and international - who we believe support the island’s development goals through overall wealth creation, social equity and environmental sustainability. ISL has always maintained a close working relationship with its affiliate agencies, especially those that play a role in investment facilitation. This approach will determine whether investments fail or succeed. Yes, I want to see Saint Lucia develop into one of the most sought-after investment locations; want to see it remain as one of the world’s top tourism destinations; want to see everyone who decides to call Saint Lucia home, enjoy a remarkable quality of life. Therefore, I will do my utmost during my tenure to work with the team to influence the way business is conducted and encourage policy changes that will create an efficient and effective business environment, so that the right combination of investments is established on Saint Lucia. You’ve once said that “Invest Saint Lucia must be a world class promotion agency and business enabler”, emphasising that your main focus is strategic promotion of the organisation. In your opinion, what are the main challenges that the Agency faces while following this goal? 50 europeanbusinessmagazine.com

As I mentioned earlier, ISL believes that all Government Ministries and Agencies involved in facilitating investments must work in tandem to bolster our efforts. I am of the view that ISL’s policy advocacy efforts as well as our seat on the Ease of Doing Business Task Force are critical to influencing policy changes and legislative reforms, that are geared towards creating a more enabling environment for investors. I think this is a huge factor in improving our ease of doing business ranking, which is, in my opinion, perhaps the biggest challenge we have to overcome as an investment promotion agency. One of Invest Saint Lucia’s strategies, besides promoting externally,

is also actively promoting investment opportunities locally. So far, how is this strategy working out? Very well actually. As a matter of fact, a quick look at our homepage banner will reveal a campaign to get Saint Lucians who have real estate projects, business proposals, project concepts or products available for investment, to provide ISL with this information to garner interest, which we anticipate will materialize into sustainable investments. In addition, we will soon be launching a business incubator project targeted solely at the local small, micro and medium level entrepreneurs who are looking for subsidized office space to operate their businesses. We have a number of local entrepreneurs who have a

eco-friendly sites and attractions including the world-famous Pitons, Saint Lucia is quickly becoming an emerging jurisdiction for regional and international Headquarter Operations. Our strategic location facilitates regional and international market access for goods and services and this has always been a key selling point for investors. Some of our other attributes as an investment location include the fact that we’ve always enjoyed a free and stable economic and political climate; we have a skilled and trainable workforce; reliable infrastructure and advanced technology; and allow for the free repatriation of profits. Saint Lucia has had a strong history of attracting and protecting investments. In fact, over the last half century, this small, vulnerably economy has been able to attract and facilitate hundreds of investors – both local and foreign. ISL’s facilitation efforts have resulted in an injection of over USD $2 Billion in inward investment and generated an estimated 20,000 in sustainable jobs. Some of these businesses have added tremendous economic and social value to Saint Lucia and continue to contribute to the sustainable development of the island. Saint Lucia is not only a great place to visit or do business, it’s also a great place to live through the Citizenship by Investment Programme (CIP). vested interest in the manufacturing sector. In fact, we’ve facilitated the sale of quite a number of factory shells to local entrepreneurs in the last ten years. ISL recently recognised the efforts of Johanan Dujon, creator of Algas Organics which is a company that converts Sargassam Seaweed into organic fertilizer. We’re also working with a local recycling and waste management company interested in purchasing one of our shells.

physical infrastructure like roads and bridges as well as soft infrastructure such as contact centers. We encourage investments in new and existing green technologies from entrepreneurs who are environmentally conscious, and whose operations are beneficial not only to their bottom line but also to the sustainable development goals and socio-economic advancement of Saint Lucia.

What local and regional investors are you most interested to attract on board?

In your opinion, why should investors show interest and invest in Saint Lucia? What are the main attractions for this?

We proactively target three main sectors including tourism, manufacturing and infrastructure which includes

Quite apart from being an award-winning tourism destination, renowned for romance and adventure;

Can you say a few words about the future? What does it look like for ISL in 5, 10 years? What are the main goals for the nearest future that you — as the CEO — are most excited about? Well Nick, having boasted of five decades of successes, I anticipate that ISL will continue on this trajectory to become one of the leading investment promotion agencies in the region. I’m motivated by the enthusiasm of the team and our common goals and when it comes to our future, I think our Vision Statement puts it succinctly: ‘ISL will be a purpose-driven, vision-focused IPA having enabled USD $1.5 billion in direct investment, resulting in sustainable jobs and economic linkages between and among the various sectors.’ europeanbusinessmagazine.com 51

Castires harbour


ny visitor to the 238 square mile island of Saint Lucia will understand, from first glance, why it is known the world over as a premiere tourism destination, capturing the coveted title of World’s Leading Honeymoon Destination by the World Travel Awards for a tenth time! Whether one enters by air or sea, one cannot help but be captivated by Saint Lucia’s mountainous beauty, lush rainforests and its endless shoreline of palm-fringed beaches. But don’t think for one minute that this island, renowned for the hospitality of its people and its iconic twin peaks - “the Pitons” – a UNESCO World Heritage site, is only famous for its beauty and splendor. Saint Lucia is in fact the only country in the world with the most Nobel Laureates per capita – the late Sir Arthur Lewis who won for

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Economics in 1979 and the late Sir Derek Walcott who won for Literature in 1992. This Eastern Caribbean island with a population of approximately 173,000 people of diverse ethnic and religious backgrounds, continues to receive global acclaim as a choice niche market destination, among high-end tourists in particular. Saint Lucia’s wide range of accommodations includes world-class five-star resorts, all-inclusive resorts, niche/eco-tourism, chic boutique properties, luxurious holiday villas as well as health, wellness and spa retreats. Culturally rich offerings include the bustling marketplace in Castries, the capital city; quaint fishing villages along the coastline; and annual events such as the Soleil Summer Festival – which includes the popular Saint Lucia Jazz Festival as well the Roots and Soul and Creole Heritage.

Historically, Saint Lucia is known as the “Helen of the West Indies”, a comparison of the island to Helen of Troy, who, according to Greek mythology, was considered the most beautiful woman in the world. This perhaps explains why Saint Lucia changed hands 14 times between Great Britain and France before France relinquished possession of the island to Great Britain in 1814, 165 years ahead of the island’s independence in February 1979. Historical remnants as well as artefacts of early Amerindian inhabitants still exist and form part of island tours for the hundreds of thousands of cruise and stay over tourists who visit annually. Saint Lucia is just four hours away from North America and an eighthour flight from Europe. The island’s international airport is serviced by major airlines flying to Europe, the United States and Canada with connections to other destinations.

Margiot Bay

Pitons Award-winning deep water harbours located in both the northern and southern parts of the island, provide quality facilities for cruise ships and modern heavy-duty equipment for cargo. Saint Lucia is also home to two yacht marinas including the IGY Rodney Bay Marina, which serves as the finish line for the annual Atlantic Rally for Cruisers (ARC) now in its 29th year. The island offers prime real estate including green field properties earmarked for tourism development; agriculture and aquaculture farming; industrial development and housing – validation as to why Saint Lucia was recently voted Best Caribbean Island to Invest. Moreover, the island’s prospects for growth and development are boundless, given the number of projects that are either proposed or currently under construction. Investor confidence is rife and given Saint Lucia’s strong history of attracting &

protecting investments, there are no limits to what can be realized. Since Saint Lucia’s independence, the executive, legislative and judicial branches of Government have nurtured stability within the economy through the enactment of policies and legislation aimed at protecting investors and their customers. This is further evidenced by the fact that Saint Lucia was also identified as one of the countries outside the US, where companies will most likely locate within the next five years. A burgeoning middle class, political and economic stability, an industrious, well-educated workforce, and quality infrastructure are some of the considerations cited, when it comes to investing in Saint Lucia over other islands. Through the efforts of its investment promotion agency, Invest Saint Lucia (ISL), the Government has adopted a more targeted approach in relation to

investments, ensuring that potential investors are environmentally conscious and socially responsible. Invest Saint Lucia is focused on stimulating and attracting investments in three key sectors, namely tourism; manufacturing; and infrastructure and their respective sub-sectors such as eco-tourism, smart manufacturing and Business Process Outsourcing. Saint Lucia boasts of political and economic stability; freedom to repatriate profits; regional and international market access based on our strategic geographic location; modern and reliable infrastructure and advanced technology. Despite these competitive advantages, the Government is constantly working towards enhancing the investor experience by putting in place additional reforms and incentives to improve the business environment. Learn more at www.investstlucia.com europeanbusinessmagazine.com 53

Investing in Paradise lear blue waters, a warm climate and swaying palm trees have become synonymous with the picture perfect image we all have of the Caribbean. It will come as no surprise then, that it is one of the fastest growing tourist destinations on the international stage. Furthermore, the investment landscape in this region is also looking attractive for 2018 and beyond. This growing global attention is echoed in an increase in flights to many Caribbean destinations, where the islands offer diverse opportunities for investors, ranging from traditional forms of investment in tourism, logistics and manufacturing to the more creative industries like music, animation and film. The Caribbean has also maintained a healthy property market where other regions have struggled and boasts a number of internationally renowned outsourcing firms. From the thriving rainforest in Grenada to the rocky backdrop of the Blue Mountains in Jamaica, average economic growth in the Caribbean is expected to top that of Latin America, hitting 3.9% in 2018, up drastically from 2.1% the year before. And more specifically, Jamaica and St Lucia are two of the main islands to watch; Jamaica had a record 4.3 million tourists last year and it continues to enjoy a reputation as one of the top-ranking global destinations for international investments. According to the World Investment Report 2017, Jamaica, the largest English speaking nation in the Caribbean, was the leading recipient of foreign direct investment (FDI) inflows among the English-speaking Caribbean and small island developing states group. The Jamaican economy shows several signs of growth for 2018, and it is ranked 1st in Latin America and the Caribbean on the World Bank Doing Business Report in reference to starting a business. The country climbed up 8 spots in the Global Competitiveness Index to 86 out

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of 144 countries for 2015/16, and continues to improve its incentives for foreign investors, helping to accommodate international players interested in gaining a foothold in this lucrative hotspot. Incentives for foreign companies include payment facilities, grace periods for tax payments, duty-free imports and a simplified income tax system, amongst others. Not far away is is the island of Saint Lucia. It has quickly positioned itself as a high end, boutique destination. This year it won an award for “Best Caribbean Island to Invest In“, surpassing several other Caribbean Islands. The top reasons to take into consideration when investing here include political and economical stability, an industrious and well-educated workforce, and high quality foundational infrastructure. Besides, what really attracts investors here are the laws in St. Lucia which have been streamlined to make the process of buying property here quick and easy. At this time, Saint Lucia offers 4 exceptional investment opportunities: Fond D’Or in Dennery with investments ranging from 150 to 200 million dollars, Dennery Industrial Estate with 1 to 1.5 million dollars investments, Sun Dreams Estates at Gros Islet with 15 million dollars investments and Boutique Waterfront Resort Development in Marigot Bay is a project with 3 million dollars investments. The American-based magazine “Site Selection“ also identified Saint Lucia as one of the countries outside the US where companies will locate within the next 5 to 10 years from On ne to wat a ch ch may a be be Tur u ks ks and d Caico aico ai os wh whicch is one isllaan nd wh her ere e investors are seeing some great returns on their investments. It is also where the Government is going to be reducing the cost of doing business and has a number of incentives available to new investors .As well as being referred as “a rising star in real estate investment,, itt is on one is one island laand d tha hatt is i on th the e ri r se se. e.

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Meeting Europe’s

Air Quality Objectives


ass disruption and transformation — these are the words that currently describe the automotive industry best.Plenty of traditional automotive companies have quickly — and massively — expanded, competition has grown, and innovations have entered the field. Companies like Apple, Uber, Google, IBM, Intel and other tech giants are investing billions in this industry, hoping to change the automotive game. Various start-ups are also taking their roles, and just last year Frost & Sullivan, a market research and analysis firm, reported that an impressive number of over 1700 start-ups along with technology companies are expected to disrupt and transform the automotive industry as we know it. If you’re wondering about money, well, we have a few numbers for you right here: in the world economy, the automotive industry generates more than 2.5 trillion dollars in revenue per year. This industry also represents Europe’s largest private contributor, Research and Development (R&D), with more than 62 billion dollars being invested in it annually. These numbers are more than impressive, but they are also a part of the problem. According to the Global Carbon Project’s report, published in November 2017, following a stable three-year period, global CO2 emissions are set to rise by 2 per cent. The main reason for this is an increased global usage of fossil fuels. Interestingly, although Europe usually leads the way when it comes to environmental protection, the USA has reacted to the situation the quickest: besides adding limits on air

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pollution and CO2 emissions for cars and trucks, the USA has also set a mandate for manufacturers to build a certain number of electric vehicles. Given that improving air quality and reducing CO2 emissions are important objectives for Europe, European environmental activists urged that the EU should follow the USA’s example. One of the biggest arguments for this was that it would motivate automakers to innovate and find new, unexpected solutions in the automotive industry. Naturally, the need to meet new standards means, cleaner cars will be developed, making vehicles more affordable and saving the environment at the same time.

So, in targeting one of Europe’s top priorities, the battle against climate change, the European Commission proposed adding stricter carbon dioxide limits for cars and vans from 2021 up until 2030. This strategy is projected to have a few key stages, bearing in mind that average emissions of new cars in 2030 will have to be 40 per cent lower than in 2021. Given this would be a long-term strategy, the intermediary target of 15 per cent would be expected to be reached by 2025, making sure that the industry is “driving” in the right direction. Car makers that fail to hit the desired targets will face penalties of up to

110 dollars for every gram of CO2 above the acceptable limit. However, it’s not all that simple. European automakers have strongly resisted every new proposal about adding limits to CO2 emissions. The European Automobile Manufacturers’ Association (ACEA) caught the attention of the decision makers’, emphasising how important this vote truly is — not only for the environment but also for the future of the whole EU automotive industry. The situation became more complex once Erik Jonnaert, General Secretary of the ACEA spoke out, saying that “Our industry is committed to making the shift to zero-emission

vehicles. However, this transition should be gradual, rather than abrupt. The more aggressive the CO2 reduction targets are, the more disruptive the socio-economic impacts will be, especially in member states and regions where the sector’s share of industrial output is high.” In other words, a reminder that the automotive industry is responsible for more than 10 per cent of manufacturing employment in four out of ten of Europe’s regions. E. Jonnaert also noted that future CO2 reductions mostly depend on the development of electric vehicles, whose market uptake remains rather weak and fragmented across the EU, representing only 1.5 per cent of EU car sales last year. That’s why, according to him and ACEA, the timeframe proposed by the parliament is not feasible. However, clean transport advocates see nothing wrong or impossible here, according to them, E. Jonnaert’s warnings are fear-mongering, and the automotive industry is more than capable of quickly developing more electric cars if needed. It turns out when it comes to electric cars, European citizens have a definite opinion. Interestingly, a recent poll by Ipsos Mori for the NGO Transport & Environment (T&E) showed that as much as 40 per cent of EU citizens say that it’s most likely that the next car they will buy or lease will be electric or fuel cell powered. What is more, about two-thirds of Europeans think that carmakers are not doing enough to sell electric vehicles by good marketing and pricing, offering a limited choice. Commenting on the survey, T&E’s spokesman Greg Archer said that “The clear message is that citizens expect their government to be far more ambitious about driving the shift to low and zero-emission vehicles than what the European Commission and the German government are proposing.” Recently, there was an incident when Germany’s Chancellor Angela Merkel unexpectedly came out strongly and publicly against rising the Commission’s 30 per cent proposed target.

Environmentalists reacted immediately to this, accusing A. Merkel’s government of making “a dirty deal” with automakers — offering to oppose raising CO2 target in exchange for them agreeing to pay for diesel vehicle retrofits. It’s true that the automotive industry is vital to the German economy, and numbers speak for themselves: it employs more than 800 thousand people, produces more than 15 million vehicles each year and is responsible for about 20 per cent of German’s GDP. Despite emission scandals, German’s automotive industry is still considered to be one of the most influential out there, which means that Germany’s resisting position in the vote can influence other countries greatly. Reacting to the situation, the Netherlands, Ireland and Denmark expressed a different point of view, proposing that the EU should adopt an overall target between 40 and 70 per cent. Denmark also announced that they are banning the sale of new fossil-fuelled cars in 2030, aiming to have more than 1 million electric or hybrid vehicles on its roads by then. The country’s Prime Minister, Lars Lokke Rasmussen noted that he’s “all for cars, but they shouldn’t ruin the environment.” Although Denmark has no car industry of its own, L. Lokke Rasmussen said that he is planning on joining forces with like-minded European nations to add pressure on carmakers to boost the supply of non-polluting vehicles. Nevertheless, the current situation remains very uncertain. Due to the newly suggested limit for vehicles being in the first major stage of the legislative process, to become law, it must first be approved by all 28 member states of the EU and by the European Parliament. It seems like a long way to go, but manufacturers have already started investing heavily in electric vehicles. When you think about it, modern and cleaner cars are the most critical element when reaching for improved air quality in Europe. And that’s just it — we can run, but we cannot hide from the situation. europeanbusinessmagazine.com 57

Italy is in Real Trouble: Can Eurozone Handle the Italian Budget Crisis?


n the recent weeks, the trade and tariffs war between Europe and the USA got a lot of attention and stole many headlines. It turns out that there’s one more thing for Eurozone to be concerned about: Its third-largest economy is in serious trouble. This is not just any trouble: Italy is under the spotlight for having another financial crisis. The country has been facing severe problems in the banking sector followed by an economic recession, and a mess in the private finance sector. Some say that Italy needs to finally wake up and fix its banks. However, like many other situations, this is easier said than done. On the 23rd of October, Italy faced its biggest test yet: the country’s coalition government, composed of the nationalist League and the populist Five Star, presented a budget draft that would increase Italy’s budget deficit to 2.4 percent of the economic input in the upcoming year, from a projected 1.6 percent that is expected this year. These numbers also mean that Italy’s public debt will most likely increase: a clear breach of EU fiscal rules that mandate how quickly governments reduce their debt.

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Italy’s government, however, insists that increased spending is necessary to boost growth and strengthen the economy. Unfortunately, nobody believes them, especially with the numbers showing an increased risk of raising Italy’s debt. European Union’s reaction was unprecedented: it rejected Italy’s 2019 budget draft, saying that its “deficit targets and wishful thinking about growth poses a serious threat to economic stability in Europe”, and requesting Italy to revise it in the 3 upcoming weeks. The commission had never rejected a budget before. Before the budget’s presentation for the 2019 meeting, the situation was getting really intense, and there were talks of Italy withdrawing from both the European Union and the single currency.

What would that mean for EU? J. McCaughan, CEO of Principal Global Investors, commented on this saying that, “An Italian exit from the EU and an Italian exit from the Euro would be a very, very painful event for the European and therefore world banking system. It could

require the biggest bank recapitalisation ever — bigger than the US in 2008.” These talks went on for more than a month, but Italy’s deputy prime minister, L. Di Maio, finally ended them, assuring the EU that Italy had no plans of leaving the single currency. However, he also added that Italy didn’t want to change its 2019 budget deficit target despite its rejection by the European Commission. As a result, there are a few likely scenarios that may occur in the 3 upcoming weeks: Italy’s position may result in the Commission taking a softer approach, or it may lead to an insistence on corrections to be made by Italy until both of the sides finally come to an agreement. To be fair, the problems faced by Italian banks started a long-time ago — in 2010, to be more precise — alongside the Eurozone government debt crisis, which did a lot of damage to all European countries. It exposed their weak spots and vulnerabilities. It struck Italy so hard that, its poor economic performance after the crisis, and a very high debt-to-GDP ratio, became a threat to its financial stability and that of the whole of the Eurozone. Compared to the other European countries, the situation was more

critical in Spain, Ireland, and Greece than it was in Italy. All this got worse at the peak of the 2011 financial crisis when Italian banks — especially the ones that operated across Europe — started to have difficulties. Experts say that the most severe impact came from the banks’ role as lenders to the government via bond purchases. They had one of the highest exposures among the major European countries. At the time, the Italian economy experienced a quasi-credit crunch that was mainly caused by a supply-side shock in the bank lending which led to the massive contraction in the country’s economy. Truthfully, it’s like a vicious circle: Italian banks still hold lots of the Italian government debt that is in danger of devaluation, and the Italian government relies on the banks to lend it money to carry on. To understand just what the future might hold for Italy and the whole of Europe, Deutsche Bank did a research. The bank’s team, alongside the famous strategist Jim Reid, examined all the possible global events that

could be catalysts for a new financial crisis; if and when one arrives. According to its results, Italy’s problems — both political and economic — are potential triggers of the next major financial crisis. J. Reid commented on the results by saying that “a country nearing an election and with high populist party support, with a generationally underperforming economy, a comparatively huge debt burden, and a fragile banking system which continues to have to deal with legacy toxic debt holdings ticks a number of boxes to us for the ingredients of a potential next financial crisis.” He later added that “If Italy does create a crisis, it will likely risk triggering an existential crisis for the economic area as a whole.” Banking analysts confirmed that Italian banks still have almost 400 billion dollars of gross NPLs — one of the highest ratios in the Eurozone. Moreover, Italy is considered to be over-banked. The Atlante fund managed to rescue the world’s oldest bank — Monte dei Paschi di Siena — from collapse, and also provide funds for several smaller Italian lenders. However, the problems in Italy’s financial sector remain.

Talking about economic situations, it is important to understand that in order to reach and maintain economic growth, a healthy banking system is needed. However, Italy’s banks have faced too many serious problems in the past few years from poor managing to various fraud scandals — which all took a toll on its stability. The most interesting question right now is, “can it be just a matter of time before Italy provokes another Eurozone crisis?” Unfortunately, if nothing is done, the answer to this one is “yes”. The worst thing is that this time the situation would be more problematic then it was with Greece or even Brexit. One thing for sure, Italy is much bigger than Greece, which makes it impossible for Germany to help out in this case, even if they wished to. Secondly, Italy has the capacity to blow up the European currency, while Britain…well, can’t. One thing remains clear: Eurozone needs to get ready for political instability, a collapse of banks and a crash of the euro — just in case.

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usiness confidence in the euro area is holding up with a stable amount of investment for the first two quarters of this year, but there are winners and losers between different sectors when it comes to attracting capital, European Business Reports. As revealed by recent Eurostat figures, the investment rate reached 23% in the second quarter, to match the first three months of 2018. The figures are in keeping with the steady 0.4% growth figures recorded by Eurostat, for the euro area from January to June this year, although this is a fall from 0.7% throughout last year.

Fitch Ratings would agree with what has been found by Eurostat, in its Western European corporate portfolio. They discovered that despite aggregate capital expenditure growth falling, overall business investment in 60 europeanbusinessmagazine.com

the euro area is likely to be solid. Alex Griffiths, the rating agency’s head of corporates, explained: “Our forecasts for 2018 show aggregate capex growth, in United States dollar terms, falling to 1.9% for western Europe, from 2.9% last year, and we see further deceleration next year.” “In this context, the steady business investment rate shown in the Eurostat paper is not surprising.”

midway through last year. Oil producers are thought to be confident that prices will remain above break-even levels, handing companies the incentive to invest in the sector. “Generally, the investment climate has been positive for European companies over the last couple of years,” Griffiths added.

Although, which sectors are receiving the investment in the current climate, and which ones are losing out and not drawing in potential investors? The oil and gas sectors are enjoying an increased level of investment, as oil prices are climbing again after becoming depressed since the second half of 2014.

“The oil and gas sector is the single largest contributor to the capital expenditure growth in our portfolio. In the sample, utilities’ continual need to invest has also led to steady growth.” “Some chemicals groups have seen a pullback in investment following industry M&A‘s, with companies often substituting buying existing capacity for building new capacity.”

Currently, Brent Crude oil is trading on average around the $80 per barrel mark, the price has risen steeply since

Fitch’s portfolio review also concluded that telecoms investment would peak this year, with probable small declines

next year and in 2020. The expected gradual slowdown is thought to be a consequence of ending the initial phase of 4G deployments. More positively, 5G spectrum auctions this year and next are set to boost investment in the industry. While construction across Europe continues to boom, it is anticipated that financing this sector will increase this year. In retail, many companies are jostling for position in a saturated market, with intense competition from outlets such as supermarkets. They face an increase in spending for online solutions, but Fitch believes that this development will secure continued investment. Business Europe, a confederation which comprises 34 national business federations as its members, believes that all sectors have benefited from increased investment. The organisation credits the rapid digitalisation of euro area economies for the investment hikes, as companies are lining up to take advantage of this climate. Speculation into areas such as machinery and equipment significantly declined during the 2008 financial crises, and so far, have not recovered.

reflected: “To further boost business investment, we must work on improving our business environment in Europe, and remove remaining barriers for cross-border investment.” “Stepping up work towards the completion of the Single Market is one important example in this regard.” “Business investment depends on expectations of future growth; it is essential to increase the EU’s underlying growth potential which remains too low.” He added: “Further reforms at both national and EU level, particularly to reduce rigidities in product and labour markets, are required to raise long-term growth.” Looking the future, there are more obstacles that the euro area will have to navigate around to achieve that potential growth. Chinese demand is crucial to spurring euro area goods sales, and a major driver of commodity prices. Any weakening of this demand could pose a serious knock-on effect for many sectors. Fitch expects Chinese GDP to accelerate at a healthy pace of 6.1% for next year, which is only a mild slowdown of 6.6% this year. The ever-looming uncertainty of the international trade system, such as

the ongoing spat between the United States and China, could also result in a severe blow to European trading partners. Brexit is sure to cast a shadow over trade relationships and investment, especially if there is a no deal Brexit, leaving many sectors up in the air about what happens next. Yet Caixa Bank remains positive about the euro area in its latest monthly economic outlook for October. It found that the growth slowdown for the first half of this year was down to weakening external demand, reflecting flagging demand for goods and services on a global scale. While domestic demand was the main area of growth in the euro area, which came as a result of a hike in investment. The bank’s composite Purchasing Managers Index, measuring business confidence, fell by three decimal point in September in comparison to August. However, it expects that the euro area will expand over the coming quarters, due to favourable financial conditions and strong performances in the labour market, leading to more spending on goods and services. The euro area faces many challenges in the short to medium term future and needs to show resolve, but the foundations are in place to develop in the future.

In contrast, intellectual property products investments were not damaged in the whirlwind of the crises, and have since seen a rise in investment. Its share of the growth in European nations’ GDP grew, highlighting the importance of digitalisation and the broader knowledge-based economy within the euro area. The Eurostat figures also revealed how investment levels in the euro area have continued to lag behind pre-financial crises investment. The latest quarterly total of 23% investment may be above the early 2009 figure of 21% at the peak of the crises but is below the 24% to 25% of capital spending before the meltdown. Now the euro area faces a challenge to reach the investment capacity of 2007 before financial institutions began to cave in. James Watson, Business Europe’s economics director, europeanbusinessmagazine.com 61

Is shipping unaware of Hong Kong and Brussels? By Henning Gramann, CEO of GSR Services GmbH


erformance of shipping is continuously discussed in various ways and from different angles. At IMO and EU for many years safety and security were in the focus. Now environmental aspects become increasingly important. But while recently exhaust gas cleaning and ballast water management amongst others were dominant, new requirements and deadlines concerning ship recycling seem to be simply overlooked by shipowners.

Many believe that the Hong Kong Convention (HKC) of IMO and EU Ship Recycling Regulation (EU-SRR) apply only to old vessels and don´t see the cradle to grave approach of legislators. The aim is to support safe and sound recycling by identification of hazardous materials on-board which might cause harm to workers or the environment during recycling of ships. While HKC has unfortunately not entered into force yet, the EU-SRR has in 2013. Both legislations focus on two main players, shipping industry of which 62 europeanbusinessmagazine.com

the Inventory of Hazardous Materials (IHM) for ships is most important, and ship recyclers which have to obey a big range of health, safety, environmental and management aspects.

Time constraints for ships It may come as a surprise for all EU flagged and EU visiting ships above 500GT when after 2020 Port State Control officers will ask for a ship specific certified IHM, the key requirement for shipowners. Newbuilds already have to be equipped with an IHM today when being EU-flagged. Once prepared and certified the IHM has to be maintained by the owner. Development of an IHM for an existing ship is not very time consuming or costly, in case the task is laid in the hands of experts which work with properly accredited laboratories. The IHM has the status of a technical file, which incorporates a lot of responsibilities, and what might seem to be a

bargain in the beginning when comparing offers for an IHM development can become quite costly when ownership changes and the IHM is found to be inaccurate. Experience, accuracy and applying the guidance provided by IMO, EU and the association IHMA e.V. is the only practical and effective option for playing safe. Classification societies, which act as certifiers of the IHMs, are not always helpful. While some have proper knowledge others seem to still be unaware or certify any kind of list independently on how or by whom it has been prepared. What basically is not a difficult task for an expert becomes a pressing issue for any stakeholder when the dimensions are considered. Between 30.000 and 40.000 ships are obliged to have a certified IHM by the end of 2020. Even when expert resources triple annually, which is difficult to achieve due to the specific nature of the job, only half of the ships

addressed can be served. Theoretically every day more than 60 IHMs have to be developed and certified for meeting the deadline in December 2020. Probably far less than 10 IHMs are prepared daily and the clock is ticking. Big owners started securing available resources, but many will remain unprepared when deadline kicks in and the penalties for not complying are not fixed yet. As a matter of fact, the European Commission will not extend the deadline as EU-SRR has entered into force in 2013, theoretically plenty of time for the industry to plan for their compliance.

The “unwanted sustainability” Ships transport more than 90% of all globally traded goods. Even though it causes a huge environmental impact, the effect of each tonne of transported product is much less than that of any other mode of transportation.

But also the biggest ships reach their end of life one day and need to find a proper final destination. With the economic crisis from 2008 has also come the overcapacity in many market segments, causing a huge demand for ship recycling which will continue for a few more years at least. Where can these 500+ giants due for recycling every year go to? The so-called beaching method is applied by the vast majority of ship recyclers but heavily criticised internationally. Beaching means that a ship is being run on the beach for being taken apart later. This is applied in developing countries like Bangladesh, Pakistan and India which have a market share of roughly 80% of the global ship recycling market (by tonnage). Not only do the natural conditions of the beaches differ from soft and muddy (Bangladesh) to solid and hard-standing (Pakistan), also the standards applied and hinterland infrastructure available are different. Whereas in Bangladesh and Pakistan a few have started upgrading and possibly still need some more time, in India at least half of the operational recyclers (of a total ~135 yards) have improved and all of them have access to a well-developed infrastructure in the hinterland with regards to waste management and also trading of materials. The latter is helping greatly to achieve a superb reuse and recycling ratio which is much higher than in many other recycling destinations. A project arranged and supervised by us has achieved a reuse and recycling ratio of 98.8%. Some improvements are still needed with regards to e.g. hospitals as local ones are quite basic. However, as a frequent visitor to India I have witnessed substantial improvements over the last 3 to 5 years in many yards and the green yards we´ve helped developing have a capacity of ~150 ships per year. Some do the minimum to get some kind of certificate from the certifiers around and others are simply progressing more and more. Obviously, judging the quality of ship recycling by the method or destination is not appropriate anymore. The individual facility has to be looked at and it has to be made very clear that they are

already working according to HKC and / or EUSRR in contrast to many shipowners. Generally the improvements made are still not recognized by the public and it might take some more time to distribute the good stories and educate outsiders on the differences which can be found behind the neighbouring doors. No doubt, for the improved recyclers the bad image out there is frustrating and also used by those not improving as an excuse, that it doesn´t matter what they´re going to do, it will not be appreciated anyway. This situation is supported by the NGO Shipbreaking Platform whose campaign repeats general criticism and questions the internationally agreed new standards. Even worse, they still call for banning beaching in these developing countries. Basically this is negatively affecting a widespread improvement in the developing ship recycling countries. It has to be noted that around 400.000 people directly and indirectly make their living out of this in India. What if beaching is banned in the developing countries? Other destinations which have better images like China are either closed by a government decision from end of 2018 or, in case of Turkey, are paying only around half for end of life ships. On top of this, EU ship recyclers can only handle smaller ships and offer unattractive price levels. Without economically viable alternatives for owners selling to beaching yards is nearly the only option, but wrong in the public view. Some owners only go for best price and with this accept bad practices. Even if they would be more selective and accept a slightly lesser income when selling ships for recycling to the good yards, they might still be criticised. In the end, the improved yards have invested but are not fully utilized. They compete for getting any “green ship” for recycling and often fail, as they are able pay 2 or 5% less than their sub-standard competitors. It´s time to recognize the modern face of Alang and expose sub-standard practices at all ends, alternatives are existing. This would be the right signal and pave the way to good practice. europeanbusinessmagazine.com 63

BIO: HENNING GRAMANN Henning holds a degree as Environmental Engineer (Diplomingenieur, Dipl.-Ing.) and is engaged in various fields of maritime environmental protection since the year 2000. He started his career with GAUSS mbH in Bremen, a research institute for environmental protection and safety in shipping, as a specialist in maritime waste management and maritime environmental protection. Later he was a environmental officer onboard a German cruise vessel and responsible for implementation of a comprehensive environmental compliance plan. In 2005 he joined Germanischer Lloyd and in his position as Global Head of Practice - Ship Recycling he was responsible for developing and establishing all ship recycling related services of Germanischer Lloyd and 64 europeanbusinessmagazine.com

development of Hong Kong Convention at IMO. Additionnally he´s national coordinator for ISO ship recycling management systems standards (ISO 30000 ff). Henning is an internationally recognized expert for all aspects of green ship recycling and has established Green Ship Recycling Services (GSR Services) for supporting all stakeholders for their cost effective preparation and fulfilment of Hong Kong Convention and EU-SRR. His services cover all stakeholders, from suppliers and manufacturers to shipyards, shipowners and ship recyclers including development of SRFPs, IHMs, and legally compliant recycling preparations for owners. Henning has received manifold international awards for his achievements in the ship recycling industry.

Contact: Henning Gramann Phone +49 (0) 4135 3178950 Mobile: +49 (0) 172 4286 861 e-Mail: henning.gramann@gsr-services.com


Location Game Changers For Businesses


ree trade zones are being established all over the world — be it in Dubai, Indian Ocean, Jamaica, Caribbean Sea or Latvia. Generally aiming at stimulating regional development by attracting foreign investors, free zone areas are becoming increasingly attractive for establishing new businesses in strategic locations globally and at the same receiving very favourable corporation tax rates . As a result companies that are located in free trade areas tend to have great advantages over their competitors. European Business Magazine Reports.

Also referred to as “a state’s economic viability barometer”, a free zone is a territorial enclave located outside

the customs area of a particular country. All barriers that could potentially impede free trade are removed here — and neither duties nor taxes are levied in free zones — as these areas primarily promote trade. Besides guaranteeing enormous savings on transport and exportation into other countries, free zones also provide accessibility — one of the main subjects which attract businesses from all sectors and all countries — encouraging them to settle there. Free zones can also be used to improve a state’s economic situation — and that’s exactly what happened with Latvia back in 1997. Back then, Latvia’s economic situation was called “catastrophic”, and in

search of ways to improve it, the first free zone in the country was established. This decision turned out to be a good , to say the least.By 2001, various companies had invested 50 million dollars there, and now this free zone attracts as much as 7 million dollars per year. As there are so many free trade zones around the world, Ray O’Driscoll, director of the Shannon Group, which oversees Ireland’s Shannon Free Zone — the world’s first free trade zone established in 1959 — noted that “Companies are attracted to free trade zones for multiple reasons, not just one. The successful zones will be the ones that innovate with the business environment that they provide.” europeanbusinessmagazine.com 65

Talking about successful ones; just a few days ago, on November 8th, winners of the FDI’s Global Free Zones of the Year 2018 awards were announced. However, there were no surprises: for the 4th year running, the United Arab Emirates’ DMCC has seen off all other competitors and has been crowned once again. Looking at numbers , they were quite impressive .Almost 2000 new businesses were established in this free zone in 2017. Additionally, DMCC finished the year with 14805 companies and more than 61700 employees. Notable investments of 2017 include Saudi Arabia based transportation and logistics company Bahri Group as well Deliveroo ,Hasbro , American Express and Colgate-Palmolive. Entrepreneurs love the United Arab Emirates, and there are many reasons for that: a great strategic location at the heart of the world’s largest and fastest emerging markets, a government that is committed to developing and supporting businesses, a low tax system, and free zones — which happens to be unofficial — but perhaps the biggest reason of all. There are 45 free zones across all of UAE offering great benefits: 100 percent foreign company ownership, and allowing businesses, and companies to take back revenues and profits back to their home countries. Investors also love that UAE’s free zones provide easy incorporation processes, fewer restrictions on staff recruitment, high-quality infrastructure facilities, and utilities , at low prices. Furthermore, most of the UAE’s free zones only require a minimum paid-up capital, for both corporate and personal income taxes to be waived for up to 50 years from the time of start-up. Another important award was granted to Mark Geilenkirchen, the CEO of Sohar Port and Free zone , who just received the Energy Supply Chain Manager of the Year 2018 Award. Established in 1992, Sohar Port is currently one of the major ports in the Middle East which links the Far East within the Arab region. 66 europeanbusinessmagazine.com

Investors have shown enormous interest in Sohar Port, and its development project. There are solid reasons for this as well: Sohar Port and free zone are proud of consistent growth numbers both in 2016, and 2017, with an average of over one million tonnes of cargo handled by the port every week in 2017. One of the major highlights for Sohar Port last year was the establishment of a 40-hectare food cluster, which means that it is now capable of handling a capacity of 500 tonnes per day. At this particular point, it would be normal to think that all free zones around the world provide impressive outcomes seeing that the most successful examples mentioned have demonstrated the ability of creating huge wealth, a significant number of jobs, and become a starting point for industrialization ,especially in developing countries. However, there’s always an upside and a downside to everything in life. There is no doubting that over the last two decades, the number of free trade zones has gone up significantly, but we can’t overlook the fact that not all outcomes have been as great as the ones mentioned above. Some free trade zones have been criticized due to really poor management. As a result, they have failed to increase exports, and subsequently, did not provide the much-needed benefit to the host country. For example FTZ’s in Jordan, Syria and Egypt are the most common examples of this . They failed to attract much foreign investment and are essentially storage and warehousing areas now. In

other cases, they formed avenues for money laundering and drug trafficking as was the case with Panama’s FTZ, as was Aruba When talking about the future of free zones, experts tend to have different opinions. Some predict that their popularity will diminish soon — especially due to an increasing number of trade pacts globally. Others say that innovations and a certain trend in zone specialization — which is really strong in the US right now — should guarantee the success of free trade zones in the future. Ray O’Driscoll, thinks that “classic“ FTZs will have problems, but the ones that will stay in hand with innovation might be alright. Flexibility and cost effectiveness are strong leverages to any business, but there’s one more important thing. Many people usually imagine free zones as tax havens which offer many financial incentives in order to attract foreign investments. This stereotype has been around for as long as we can remember. Well, yes, you won’t need to pay corporate tax or income tax, nor will you have to worry about import or export duties — which are enormous benefits — but that’s not all. One of the key advantages of establishing your business in a free zone is that as an owner, you will have ready access to the valuable knowledge, expertise, and opportunities of collaborating with other related operations in that area which is vital as necessary infrastructure, facilities, and sensitive information are simply analogues for “true game changers for any business”.



ou’ve been working in SOHAR Port for 2 years now — and you’ve just received the Energy Supply Chain Manager of the Year 2018 award – congratulations! What are the main goals for you as a CEO of SOHAR Port? What specifically do you see as the most important ones?

Free Trade Zones for its many benefits have been experiencing an upward spiral in use from global multinational businesses in the last few years and for many reasons. European Business Magazine catches up with Mark Geilenkirchen, CEO of SOHAR Port, the leading free trade zone in the Middle East.

Thank you. The award recognition is a real reflection of the efforts devoted not only by the entire SOHAR team, but the close working levels of cooperation with our tenant companies and industries. In essence, the award is as much for their professional efforts across the entire energy supply chain. I think my main goal as

CEO of Port of Sohar is exactly that: make sure that my team excels and that our cooperation with our tenants and customers keeps growing and professionalising. I like to think of our team as the maintenance team of a Formula 1 car. You need to do the whole maintenance of a car in seconds and you need to europeanbusinessmagazine.com 67

cooperate fluidly. Every person in the team is important: whether it is the manager or the one holding the car up, or the one carrying the flag: they all make or break the performance. That is the way we have to cooperate within Sohar Port too because that is the only way we can deliver an ultimate experience to our tenants and customers. Furthermore, one of my main goals is the energy/product optimisation in our port: making sure that the companies work together and optimise their business from an energy point of view. This will make them better performing: environmentally but also financially. Think about using the (by) product from one company as the feedstock of the other. I will make sure the product gets from on to the other by providing pipelines/storage etc. Together we can make the whole performance of the port stronger. One of the strategies for SOHAR Port in 2018 was to promote the theme of “Smarter Thinking“, referring to streamlining operations and improving efficiencies. Why is this strategy so important to SOHAR Port? Like said in the previous answer, SOHAR Port and Freezone continues to explore the possibilities for ideas and innovations that can transform productivity and efficiency at SOHAR. Subsequently, we also work towards implementing as many of these, wherever we see possible. There is a strong impact of technology and digitalisation on the manufacturing and supply chain management. Forms of ‘disruptive’ technology are beneficial to our strategy as it drives operational and environmental improvements, and also to the society as a whole. We try to use proven techniques, but then in a new way. And we are also using students from Oman and Dutch universities to help us: it will smarten them and us. You have a lot of experience in different areas: business, consulting, logistics. You’ve even worked as a school 68 europeanbusinessmagazine.com

lecturer. Are there any particular skills that you need more than others while working in SHAR? I am very curious and that helps in this job. This because I do see many different industries and I am busy with extremely different discussion throughout the day. So you need to be curious and interested in everything. And that is something I certainly learned being a teacher. Or maybe I became teacher because I am interested. Also, in my view, the qualities of an effective leader, as well as being original and authentic is very important. It involves encouraging collaboration within your internal team and external partner network to come up with out-of-the-box thinking, or come up with solutions or creative ideas that were not thought of in the first place. This also involves making key decisions to gauge an overall situation, and especially knowing when to measure risk in a commercial context. The ability to inspire and motivate others to accomplish objectives, for the betterment of SOHAR as a whole is also another important quality. Team members and employees look to management for guidance and support, and when effectively briefed and engaged, for instance, in new projects or developments, this collaboration ensures a much higher rate of success for everyone at SOHAR. Additionally, this approach makes every individual, regardless of their role, feel like they are an invaluable asset to the team, forming a stronger bond through teamwork. Another requisite is the ability of effective communication which I mentioned the importance of previously. Alongside having a clear strategy and execution, effective, open, and transparent communication is vital across all levels of our organisation. Doing so consistently encourages others to follow suit and reinforces our trustworthy reputation with stakeholders. Bottom line, and as a whole, being able to effectively delegate and control tasks, a commitment to excellence, hard work, and leading by example, are all major skillsets we

need for our business to succeed. The ability to foster a workplace atmosphere that is both friendly and professional; promoting excellence and efficiency, both internally and externally are enshrined in our SOHAR workplace ethos. SOHAR Port is now the primary challenger port in the region. Number of port operations are growing, and there has been huge investments in automation. What innovations/ technologies are the most important ones for SOHAR Port right now? There are many examples, but I can give you a few which highlight our commitment to innovation. We recently signed a memorandum of understanding (MoU) with Netherlands-based Strukton International

the port and free zone is conducted in a sustainable manner, and in strict compliance with national and international environmental standards. Can you give us a few words about the future? How do you think SOHAR Port will look like 5 years from now? In your opinion, what are the main prospects for it that you are excited about? We are charting our own course to develop and grow SOHAR Port and Freezone. It is possible to conclude from our yearly growth delta and consistent growth, that we are emerging as one of the prominent supply chain and logistics hubs of choice in the region.

for the development of a wastewater treatment plant at the port. The technology will use the new Verdygo modular technology for efficient and environmentally responsible wastewater treatment. This is quite a new technology, and it will allow the plant to rapidly scale operational capacity and deliver sustainable options for wastewater reuse for industry or greenhouses, making a considerable reduction on traditional water and energy demands at the port and free zone. Another example is the recent implementation of distributed air quality monitoring network (AQMN) spread across the port and free complex. The new network aims to enhance the environmental management in the area by continuous monitoring of the

impact of the operations on the environment including water, soil, and air. The AQMN is in line with the Ministry of Environment and Climate Affairs’ (MECA) goal to enhance environmental monitoring at SOHAR Port and Freezone and ensure adherence to best in practice air quality standard. The network is part of a larger strategic program that was established in 2017 and deployed by the Port and Freezone, in close cooperation with MECA. The project consists of a network of fixed and mobile stations positioned at critical locations surrounding SOHAR Port and Freezone, which measure the ambient air quality surrounding SOHAR in real time. This is yet another of the key projects which will ensure that the development of

The SOHAR Port South Expansion will increase trade flows in Oman, allowing a greater number of vessels to directly call at the port, and welcome a greater variety of customers in the future. The added land area of ultimately 200 hectares at the port, will also support the creation of new and sustainable jobs in SOHAR. Due to close proximity of the SOHAR Port South Expansion to the bustling petrochemicals cluster, including the Liquid Berth and Tank Terminal, the expansion will be assigned almost exclusively for oil and gas-based investment. Also targeted for completion is our agro bulk terminal and food cluster, complete with a berth at SOHAR Port dedicated solely for food and agriculture products. The food cluster will include a sugar refinery under the private ownership of the Oman Sugar Refinery Company, and a governmental strategic food reserve facility controlled by the Public Authority for Stores and Food Reserve. Sohar Flour Mills have also signed an agreement to build a major milling plant at the port, as well as leased a 10-hectare plot within the Port area for the construction and management of 12 grain storage silos, each boasting a storage capacity of 13,000 tonnes. We expect the establishment of the food cluster to give a big boost to businesses within the free zone. europeanbusinessmagazine.com 69

Europe’s Love Affair With Craft Beer


t’s an early morning. A new flavour of craft beer is being presented at a local brewery in Philadelphia and there are queues of people stretching out hundreds of metres , just waiting .They are all standing there with just one goal — which is to taste the new beer. This is a common occurence in the US. And there at least 3 new breweries are opening in the US each day and have been for the past few years. The industry has been flourishing. This wave has come towards Europe, and in abundance ! Even the “traditional wine making countries“ like Italy, Spain and France — have thousands of breweries that are brewing the highest quality craft beer for very thirsty consumers. That old glass of Pinot Grigio or Prosecco is changing with new consumers looking for craft beer and there are plenty to choose from. Craft beer brewers sometimes joke that the whole craft beer culture has actually emerged as an opposition to traditional beer and its ordinary taste,

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and was meant to teach people how to actually feel the taste. The craft beer movement started during the Great Recession, particularly when lack of jobs created a new generation of so-called “necessity entrepreneurs“, who, lacking formal offers, opened small breweries. Growth in the European brewing industry has been particularly strong in countries with deep beer cultures and traditions ,Germany, Belgium and Czech Republic being the main ones. During the past 6 years, the number of micro-brewing businesses in Europe has nearly tripled, surpassing the 7 thousand mark for the first time in 2016 and close to 7,000 as we write Looking at the numbers , the US still remains in the highest position, being the single most innovative craft beer market globally. It is accountant for 17 percent of global craft beer launch activity last year. However, despite this, craft beer growth seems to be slowing down here.

At the same time, European craft beer market is very much in an upswing, demonstrating a steady growth for quite some time now. What is more, 6 out of 10 most innovative craft beer markets are now in an old Continent: UK (8 %, Norway (6 %), Spain (6 %), Italy (5 %), France (5 %; it is also the fastest-growing market for beer consumption) and Sweden (4 %). According to Mintel Global New Products Database (GNPD), in 2013, North America dominated the global craft beer industry: it was responsible for an impressive number of 52 percent of all craft beer retail launches, which included 4 percent of craft beer launches in Canada and 48 percent in the US. At that time, Europe was strongly lagging behind with just 29 percent of craft beer launch activity. However, it all turned upside down in 2017, when Europe’s craft beer scene has exploded. And this is not not being overdramatic! New craft beer product

launches more then doubled, experiencing growth of an impressive 178 percent. Jonny Forsyth, Associate Director at “Mintel Food & Drink“ said that “Our research suggests that Europeans are embracing craft beer because they are looking for new, more exciting offerings compared to their usual beer options, especially in markets such as Germany, where brewers and beer styles have remained unchanged for centuries.“ Technavio, a global leading market research firm that focuses on emerging market trends to help businesses identify opportunities and develop effective strategies to optimise their market positions, have also just released a report, called “Craft Beer Market in Europe 2017-2021“. And it looks like it’s just a beginning for European craft beer market, as it showed that the growth is expected to accelerate even more over the next 4 years, with a compound annual growth rate of over 11 percent by 2021. We have one more impressive number for you right here: European beer

market is expected to reach 203.83 billion dollars by 2023. It seems that European beer drinkers are open to suggestions now, as well as interested in trying different styles of craft beer. Around half of beer consumers in Italy (52 %), France (51 %), Germany (46 %) and UK (45 %) agree that craft beer is “worth extra money“. J. Forsyth noted that “Craft is the ‘new premium’ beer and our research indicated that consumers are happy to pay more for smaller-batch, more handcrafted options, rather than those that are mass-produced.“ And it’s ringing true: over the past few years, the higher priced brands in the beer industry were gaining more than the nominally priced brands both in terms of volume and revenue. With consumers differentiating products and willing to spend more on quality, craft brewers in Europe are now a few steps ahead over the well-established vendors. The UK, Belgium, Spain, Netherlands and France are considered to be the forerunners in this premiumisation trend that is waving across Europe.

Michel Moortgat, CEO of “Duvel Moortgat“, an independent Belgian brewer noted that “One major trend in mature beer countries is that people tend to drink less but better. That explains the rise of all these small microbreweries that produce niche and craft beers. The consumer realises there’s more to beer than just thirst-quenching. People are looking for different tastes, more variation, more specific aromas.” The reality is that consumers tastes have changed. Not just in what we are drinking, but also in our food, how our clothes are made, and so on. Nowadays, we are much more aware of how much we are spending, and really interested in whether the brand or company is worthy of our money and time. In search of authenticity and new, unexpected flavours, Europeans have fallen in love with craft beer. The whole beer drinking culture have changed: it’s about tasting, not just about the drinking now. And that is definitely a very solid ground for a solid long-term love affair.

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Greece - Is the Crisis

Finally Over?


fter eight years of financial crisis, Greece is slowly standing on its own feet again. While it cannot be said with certainty whether Greece has overcome all its problems, let alone how its future will look, given the magnitude of the crisis, there is hope - the worst has passed, and Greece now faces a brighter future. What caused the economic crisis in Greece, how did the Greek economy recover, what can we expect further, and most importantly, what can we learn from the unfortunate experience?

What caused the Greek government-debt crisis? It all began in 2009 when Greece’s budget deficit was more than 15% of its GDP. The highest public expenditure was pension payments that had absorbed 17.5% of Greek GDP. While public pensions in Greece were 9% underfunded, in other EU countries, it was only 3%. Furthermore, Greece

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had a highly inefficient government bureaucracy and used outdated methods of financial reporting and statistics. To resolve the problem, the Greek government released too many tenyear bonds that caused its bond market to collapse, disabling Greece from continuing with its debt repayment. The result was a total economic collapse.

The Greek government-debt crisis - a struggle for survival with the help of the EU and IMF (International Monetary Fund) Although some believed that Greece would overcome the crisis, others feared that it would devalue the euro and transfer its economic problems to the rest of the EU. It was widely expected that Greece would be excluded from the EU, while Greece hoped that the EU would write-off some of its debt. None of this happened; instead, the EU and IMF

decided to assist Greece to solve its economic problems. However, to receive EU and IMF assistance, Greece had to comply with stringent bailout conditions. The first was to reduce public spending and reform its government. It also needed to reduce its trade barriers and increase exports. The most crucial austerity measure was the reduction in pensions by 1% of GDP. To accomplish that, Greece needed to increase pension contribution from employees and limit early retirements. No one in Greece was satisfied with these measures. Employees were opposed to giving such large contributions to pensions, and most Greek households were mainly affected by the drastic pensions reduction, and that wasn’t all. The government also reduced other spending and increased taxes, shrinking the Greek economy by 26%. This triggered a series of new problems. Increased unemployment reduced the purchasing power of citizens, while reduced economic activity decreased budget revenues which helped to repay the debt. With riots breaking out, Greece had to persist in its intentions to get the country out of the crisis. There was no other way, no matter how painful it was for the Greeks.

very high, around 20% and an even more significant problem is youth unemployment at 43% which has caused the migration of thousands of young Greeks to other countries, mostly in the EU. The Greek debt of €320bn is also still a significant obstacle to its economic recovery and Greece needs to repay the international loans until 2060. However, the austerity measures put in place by the Government are an encouraging sign to investors that Greece will manage its debt, especially since its borrowing costs still stand at 4%, compared to 24% during the crisis.

What’s next?

The consequences of the Greek government-debt crisis Although the Greek crisis lasted almost as long as Odysseus journey, and Greece paid a ‘high price’ for it, the country has succeeded in overcoming the crisis scoring themselves another chance to thrive - only, this time, in a more economically-secure way. Today, after €275bn of financial support from international creditors in the past eight years, and many sacrifices, the Greek economy shows signs of a gradual recovery. As the Greek Prime Minister Alexis Tsipras recently said: “Greece is once again becoming

a normal country, regaining its political and financial independence.” Since August 20th, when the final bailout deal ended, Greece returned to financing its public budget by borrowing on financial markets and the current economic growth in Greece is now 1.9%, which is a great success after many years of struggle and losses. However, the crisis has had a tremendous impact on Greece, both economic and political. Four governments fell in eight years, wages have dropped by 20%, pensions and welfare payments by 70%, and the public sector has been reduced by 26% since 2010. Unemployment is still

Although there are substantial improvements in the Greek economy, it’s still struggling with important macroeconomic issues which have the potential to erode its efforts. The burden of considerable government debt at 180% of GDP requires that Greece must continue with further reforms in the future. On top of this, the country will be under constant supervision of creditors, the EU and IMF. Any sharp increase in interest rates, weak economic growth or missed budget targets will be an alert that Greece is potentially facing another crisis. However, there is one mitigating circumstance - a cash buffer of €24bn that will cover Greek funding needs until 2020. To get it, Greece has agreed to reach the primary surplus of 3.5% of GDP until 2022 and the average surplus of 2.2% until 2060. Will Greece have the strength to get back on track? Will the new challenges cause further problems? - This remains to be seen. It’s early days, but with sufficient parameters in place, there may be hope in Greece’s economic recovery. Given the adverse effects of the crisis, one that almost devastated the country, Greece faces a long period of recovery before its economy can function with ease. Nevertheless, the worst looks to have passed, and it appears that Greece is now moving steadily toward a much brighter future, while the rest of the world can learn many lessons from its bitter experience. europeanbusinessmagazine.com 73








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he race is on: Europe, the cradle of the car industry, and where it all started almost 130 years ago when the first automobile was invented is now trying to catch up with China, a place booming with startups in the automotive industry, where the car as we know is now practically being reinvented. The European emission scandal back in 2015 seriously damaged the industry’s reputation, finances, and public trust. As a result, sustainability became a market factor, and many countries with the biggest European cities — Paris, London, Dusseldorf and Stuttgart — introduced new regulations and frameworks limiting the

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Europe Might Need to Shift Gears If It Wants To Stay In The Game use of fossil fuel powered engines at the same time promoting electric cars. Let’s look at the numbers: in 2017, China secured seven times more investments in the electric vehicle manufacturing industry than the EU did (21.7 billion Euros to 3.2 billion Euros). Experts predict that if electric vehicles are imported rather than manufactured in Europe, the EU’s automotive industry might have to get rid of a quarter of its jobs by 2030. China is now the largest electric car market in the world; not only does it account for half of the global sales but is also the place where almost

two-thirds of the world’s manufacturing capacity for lithium-ion batteries reside. These two factors coupled with the fact that car companies can avoid heavy tariffs on imported vehicles, play a huge role in car companies building their electric cars in China. These are also the reasons why Tesla’s Chinese Gigafactory is responsible for building the new Model 3 and Y, which are scheduled to premiere in March 2019 and hit the production lines in early 2020. China is also seen as the leader of the EV battery technology. This is not good news for the European

automotive industry as major European battery companies are picking China as a place to invest in rather than the EU. For example, Lithium Werks, a Netherlands company, already has two factories in China, while the third one is already scheduled to open soon. CEO of the company, K. Koolen, commented on this move by saying that “the company is investing in China because the infrastructure is better and it’s easier to get the permits needed to build a factory.” However, in Europe, they’ve faced too many red tapes which stopped the process of investing: “In Europe, there’s a lot of hassle and a lot of procedures to follow. It takes a long time. The Chinese government has a long-term vision for the industry, while Europe does not.” European Commission tried to make things better and came up with a strategy that included encouraging companies to invest more in battery technologies through providing them with larger funding. However, it may not too little too late : V. Irle, co-founder of the Swedish research company EV-Volumes commented on the strategy saying that “it’s already too late for European companies to establish themselves as large-scale manufacturers of lithium-ion batteries as that train has already departed.” In 2001, China started the “863 EV Project”, which was a combination of a fuel cell, a hybrid EV, and a pure EV. Fast forward to 2018; an increase of 114 percent in the production of EV’s in China has already been recorded in comparison to the first half of 2017. Europe, on the other hand, is estimated to have just 1 percent of the lithium-ion batteries market. So why is Europe in such position right now? Why has catching up with China become such a big challenge? The answer is quite simple: In terms of computerization, electrification, and sharing of vehicles, China is way ahead. By now, it has already established seven times more investments in EV production than the EU has — and all this has happened in just one year. Experts say that the biggest reason why Europe has fallen so far behind China is the fact that EU’s

automakers took too long before they started to develop electric cars. V. Irle has a simple explanation for this one: “They didn’t take electric vehicles seriously because they didn’t like them. Until recently, many of the big players focused their resources on gasoline-powered cars.” China, on the other hand, has put in place targets for electric vehicle production, and offered incentives to buyers which have helped the industry boom. However, Europe doesn’t want to be left out of this game. Swedish battery maker Northvolt —which was founded by former Tesla executives — has promised to build Europe’s largest lithium-ion battery factory over the course of the next 6 years. Many EU members also have their own plans with regards to electric cars. Germany’s EV market doubled between 2016 and 2017 and is now the second in Europe. Norway took the first place since every second passenger car that was sold there in 2017 was an electric one. Croatia is proud of their very own — Rimac supercar. Additionally, Poland has launched a competition to come up with an entirely Polish made electric vehicle. The new EU regulations and emission standards mean that the European market will soon see even more electric cars come into the market: experts predict that the new rules could increase the sale of electric cars in Europe from 0.6 percent to a

higher single digit over the next 5 to 6 years. This fact puts Europe in the middle: it will most likely outpace the US, where the regulatory push has eased under the Trump administration, but it will also run short when compared to China, where the government is mandating more electric cars. The Chinese market already features an impressive number of 400 different types of electric cars. The European market only has 6. When you think about it, EU companies really do have it all: incredible know-how, expertise, R&D, and highly skilled professional workers. But while China has gone ahead to become the biggest electric car market in such a short period of time, Europe has been asleep on the wheel. Now, if it wants to catch up, it really needs to shift gears. As we’ve mentioned at the very beginning, Europe was the place where the car, as we know it, was born. However, now, as it’s being reinvented, the EU needs to embrace a new and dynamic strategy. Some analysts say that Europe’s last hope may be to take the same approach as it did with the Airbus in the aviation industry. The planemaker was created by merging a clutch of existing firms and is now the only serious challenge to Boeing in the US. Doing the same for the electric car market — or at least for electric batteries — could actually be a game changer for the EU’s auto industry. europeanbusinessmagazine.com 83

Teemu Moisala, CEO of Futurice 84 europeanbusinessmagazine.com

We turn our attention to Teemu Moisala Ceo of Futurice who recently stepped up to lead global digital innovation consultancy, Futurice. He talks to European Business Magazine about his ambitions for growing the company and how Futurice’s culture of radical employee empowerment has helped to turbocharge its growth

Can you tell us in a nutshell what Futurice does and the markets you work across? Futurice is an international consultancy which works with multinationals and smaller organisations on their most complex human, technology and business challenges. We help companies re-engineer business models and harness emerging tech to create value in a post digital world. We do this by helping our clients unleash innovation in a variety of different ways including agile software development, people-centred work culture and lean organisational change, as well as creating digital products and services that have real impact. Our work includes building an industry-first facial recognition system for hands-free check-in trialled at Helsinki Airport together with our partners Finnair and Finavia, and working with Fortum and Boond to develop Solar2Go, a digital platform pilot aimed at helping local solar companies offer affordable energy systems to households in India. We have offices in Berlin, Munich, Stockholm, London, Tampere, Helsinki and we recently celebrated the opening of our first office in Oslo. Futurice has had a tenfold increase in turnover in the last ten years. What’s been behind this rapid growth? When I first joined Futurice in 2008, the company had just one office with around 30 staff. We’ve experienced consistent year-on-year growth since then and we now have over 500 employees in five countries. Futurice is Finnish-owned and we Finns are low-key about our achievements. One of the secrets to our growth is that we are highly experimental: we constantly evolve our business proposition. Over the past ten years we have transitioned from tech consultancy to design to c-level advisory, working with clients including Ford, E.ON, Nordea Bank and Moneycorp. Our next evolution is to become an AI/data-driven business that we can

use to lead the way for our clients when it comes to embracing this new technology. A second key driver of our growth is our non-hierarchical culture of trust, transparency, freedom and responsibility. In keeping with our Finnish heritage, we encourage our people to make business decisions within clear limits, an approach known as “radical empowerment,” which is also adopted by famously agile companies like Spotify. We think this encourages greater individual accountability and a stronger entrepreneurial mindset. We also maintain a high level of transparency within the company, including weekly discussions on business performance where financial information is freely shared so that everyone has the information they need to make better day-to-day decisions. To boost collaboration and ensure knowledge is being shared, we hold weekly ‘skills conferences’ and encourage employees to “futuhike” to offices in different countries so they get the opportunity to learn from different teams. By maximising technological innovation, empowering employees and maintaining an open culture, we believe we’ve created a formula for rapid growth and happier, more fulfilled, teams. Whether it’s developing an innovation culture or harnessing emerging tech to solve a particular problem, our clients particularly value the fact that we roadtest the advice we give them, on our own business first. Futurice has an unusual way of managing leadership change – tell me a bit about it? While Futurice has a standard CEO/ board/senior management structure, the core leadership shares responsibility and has the flexibility to fulfil different roles as needed. For example, Tuomas Syrjänen our former CEO and co-founder now spearheads our AI initiatives, however before becoming

CEO, Tuomas held roles including heading up IT and sales. Similarly, before becoming CEO, I managed our Finland office. Other senior members of the team regularly rotate between internal and customer-facing roles. We think this shared approach to leadership helps to keep energy levels high and avoid stagnation. It also allows the business to deploy a culture of continuous learning, with people pushed to step out of their comfort zones and constantly grow and expand their knowledge and skills. What role has your former CEO Tuomas Syrjänen now taken on and what will his priorities be? We believe that AI is the next wave of transformation to sweep across our workplaces and our lives. From talking to a wide range of businesses, it’s clear there is a lot of uncertainty about how to get started and how to integrate the technology into a company’s ethics, policies and culture. Many companies don’t think they’re ready for, or capable of adopting AI some think of machine learning (ML) and AI as a technology they just buy. Tuomas’s new role is heading up our AI offer, which aims to enable clients to exploit the full potential of AI. This includes Futurice Exponential, an initiative within Futurice designed to help organisations - including our own - transform and improve how knowledge work is done. As the new CEO, what are your longterm plans for Futurice? Continuing our global growth will be a key priority for me. We’ve set ourselves some ambitious goals over the next five years to significantly increase headcount and grow the number of offices we operate both in Europe and beyond. We’re already experiencing increased demand from international customers and I believe there’s an opportunity to establish Futurice as one of the world’s most innovative and admired consultancies in our space. europeanbusinessmagazine.com 85


017 was a significant year for environmental regulations. However, this year is even more interesting. We are now seeing the finalised decisions coming into action: regulations for monitoring, reporting and verification of CO2 emissions for all vessels above 5,000 GT in the EU entered the arena last year, making 2018 the first year of reporting. Besides that, the world’s shipping companies are about to face some more changes, as the International Maritime Organisation (IMO) has set new regulations for the shipping industry that will take effect starting January 01, 2020.

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It’s been a hot topic for quite some time now, and some analysts say that this is going to be the most disruptive change to hit the shipping industry in its history. Although many people tend to overlook this, the shipping industry plays a huge role in our everyday lives. Almost everything that you can buy at a supermarket, think toys, electronics, power tools, materials, even computers and mobile phones — is shipped months ahead from ports in Shanghai and Hong Kong. However, there’s another side to this story. Cargo ships are significant sources of air pollution globally, and the shipping industry is one of the

world’s largest emitters of sulphur oxides, behind the energy industry. The heavy fuel oil (HFO) that is used by 80 per cent of the world’s shipping fleet is more carbon-intensive than other fuels and produces other greenhouse gasses and air pollutants — especially sulphur dioxide, which is responsible for acid rain. In 2013, the IMO had introduced the Energy Efficiency Design Index (EEDI), as a measure to reduce the CO2 emissions from the industry. With specific rules created, the IMO had instructed shipping lines to reduce their CO2 emissions gradually over a decade, mandating a 1 per cent annual improvement in the efficiency

of fleets between 2015 to 2025. Looking ahead, there is also a new global sulphur cap regulation coming into effect in 2020. After a week of negotiations, 173 countries that are a part of U.N. and the IMO agreed to cut emissions generated by shipping by at least 50 per cent below 2008 levels by 2050. The new rules, drawn up by the IMO, will ban ships using fuel with a sulphur content higher than 0.5 per cent unless a vessel has the equipment to clean up its sulphur emissions. Currently, the number that is permissible is 3.5 per cent. If a vessel fails to comply with these regulations, it will be up for certain

fines. For instance, their insurance can be stopped and become nonvalid, and they may find themselves being declared as “unseaworthy”, resulting in being banned from sailing altogether. Ship operators, refiners and fuel suppliers across the world are now dealing with the most critical questions regarding the situation, one of them being, what will happen to fuel prices because of these changes? Whilst the new regulations will bring positive effects on the environment, they will also create new challenges. To be able to comply with the new emission standards, ships will need

to use different versions of low sulphur fuels — the kind that many people use to fuel their cars. This means that the demand from the shipping industry will compete directly with the current demand for clean-burning diesel for both personal and commercial vehicles. Experts predict that higher demand for lower sulphur fuels will cause higher prices for oil products, including diesel, jet fuel and petrol. Martin Tallett, the president of EnSys Energy, a company that specialises in petroleum market analysis and projection, commented that “since the key clean products — gasoline, jet fuel and diesel — are closely related, when demand and pricing for one surges that also tends to raise prices of the others”. The International Energy Agency agreed on this, calling the lowering of the bunker fuel emissions cap “easily the most dramatic change in fuel specifications in any oil product market on such a large scale”. When Bruce Burrows, President of the Chamber of Marine Commerce, was asked about the shipping industry and new regulations coming into force, he dotted the “i’s” and crossed the “t’s”, saying, “similar to the airline industry, marine shipping is an international business and it is important that we have one global solution to the challenge of climate change. Marine shipping is already the most carbon-efficient way to transport goods, but given projections for increasing world trade, the sector recognises that more needs to be done internationally to continue that progress.” Although new regulations and reductions might seem a bit drastic at first, they have been set with the purpose of saving hundreds of thousands of lives each year, as well as bringing a positive effect on the environment. Health experts predict that once the 2020 sulphur cap takes effect, it will prevent about 150,000 premature deaths and 7.6 million childhood asthma cases globally each year. So, we believe, that is a mission worth supporting. europeanbusinessmagazine.com 87


Lithuania’s Opel Driving E-Commerce Entrepreneur


hen Benediktas Gylys first started building his online business almost 8 years ago, e-commerce in his home country was still considered a rather new activity. He was 20 when he first started out , he is now 28 old and at the age of 23 he made his first million.

As opposed to blowing it on fast cars and property Gylys went the other way and established a fund which supports projects that promote creativity, entrepreneurship and initiatives by young talents. It also supports science, innovation, and technology. In 2017, the Benediktas Gylys Foundation (BGF) spent 150 thousand euros supporting young talents and organizing various events in Lithuania, like the “Vilnius Invents 2017”. However, the road to success, and that first million, was not that simple. At first, Benediktas tried his luck in the food supplements niche — specifically focusing on the USA’s market. He started selling diet supplements used for slimming. However, it later went under the “prescription medication” tag and Benediktas lost almost all of his savings. He decided to invest 88 europeanbusinessmagazine.com

the only cash he had left into two supplements: one of them being a medical cannabis extract. And boy did he get successful! As the market was open to new players and Benediktas managed to get a good foothold and developed a very prominent position within the market. Now, besides cannabis extracts, he also sells nutritional supplements and vitamins in the USA and Canadian markets. He also owns half of the factory, conveniently y located in Florida, which produces the cannabis extract. When Benediktas earned his first million at the age of 23 years, he was an unknown entity. Fast forward to 2018: he’s a business celebrity in Lithuania in addition to being wellknown author. His book “Bitonomy. Introduction to the First Million via the Internet” is a best seller in Lithuania. Simply put, Bitonomy stands for the freedom that the internet gives you. It’s the autonomy, and the ability to be a master of your own time, and your own ideas. That’s partly how he came up with the idea to write a book. Even when he was still in school, he knew that

working for someone else’s company was not what he wanted to do in his life. The second part of his idea came when he was 16 and had just started his activities on the internet. As he remembers, there was simply too much information. So he decided to write a book that would also serve as a map in the business world, which can often be deceptive. As he put it: “I realised that someone should write a book about how it all actually works in the virtual world.” Now all the profits from his book are used to support the Fund and its

activities. Last year, the BGF became a part of a nationwide project “Computers for Children”, a year before that it supported the “We Read Vilnius” event. BGF is also currently sponsoring 11 young talents from Lithuania. Benediktas has a lot of plans for BGF in the near future. One of them is to create an art of technology. As he put it: “It will be new and fresh. We are so used to thinking that technology has a clear function, while art somehow does not. So, we want to implement an idea of convergence between art and technology.”

Benediktas believes that his fund will continue to have a positive impact and deliver great results. However, in order to go forward, it all comes down to having a stable income. That’s why maintaining a successful business is also one of the most important intentions for Benediktas. As he said, “Truthfully, I felt the need to establish a fund from quite early. I’ve never experienced much happiness while simply buying things. I’m always looking for greater meanings, my business is based on bigger goals as well — not just for me, but for Lithuania and for the rest of the world.”

Benediktas says that he faced and had to overcome many challenges while building his online business. However, the most important thing is to learn from them. “Perhaps about 80 percent of everything I’ve done was unsuccessful. But an ability to learn from painful mistakes actually allowed me to build those 20 percent that were successful.” Now he is sure that the internet creates and offers thousands of opportunities to everyone. And if you know how to learn from your mistakes and continue to motivate yourself: success is inevitable. Whatever you do, just don’t stop trying. europeanbusinessmagazine.com 89


Disrupting The Financial Sector at its Best


intech - The term defines technologies that are applied in financial services or used to help companies manage the financial aspects of their businesses. As more and more startups enter the space and traditional banks try to adopt new technologies, everyone in the industry has ‘Fintech’ on their mind. Fintech is not new either. The term has been here since circa 2008. The banking sector has traditionally been an industry that didn’t face too many disruptive innovations and changes. However, as the wave of digitalization and computerization hit its shores, it changed the way that transactions are processed and delivered, and suddenly banking solutions and processes became more complicated but streamlined — with the new, improved Fintech. Before you enter the world of ‘Fintech’, let’s explain what it is. When you want to make an online purchase, and use PayPal, Apple Pay or just your credit card, to do that, all the parties involved in this action — you (the consumer), the e-commerce retailer

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and the banks behind the money exchange — are using Fintech. Technologies have changed the financial sector and its services, as what was once handled one way (think human hands), is now digitalized, and we have Fintech startups to thank this for. Fintech, is the principal reason why almost every kind of financial activity — whether its wealth management, banking or payments — turned the overall approach of the industry upside down. Given that these changes and opportunities attract attention and massive investments, Fintech’s case has been no exception. Last year was a fantastic year for the financial technology industry: it received more than $17.4 billion in investment, and as much as a third of all consumers worldwide are using two or more Fintech services. Interestingly, although Fintech is often associated with startups, the world’s top banks — such as HSBC and Credit Suisse — have been developing their own Fintech ideas to make operations more streamlined .There is a vast number of Fintech

startups in the US, making it a huge market.Factors such as highly trained tech and software engineers and an abundance of resources with a very heavy tech-centric culture has been the main contributing factors. However, there are some different predictions on Fintech’s future. Experts say that 2021 will bring a new leader in this field — China. What is more, various Fintech companies have made considerable investments in the traditional banking system area, and China has moved 96 percent of its e-commerce sales without the services of a bank: a line-up which includes giants like Alipay and an online banking platform called 91 Financial Information Service. As well as the financial technology industry booming, , areas like online and mobile payments, big data, alternative finance and financial management have come a long way due to innovative technological solutions in their field. Fintech has had a major impact on these disruptive innovations, such as Artificial Intelligence, Robotics, Biometric applications, Blockchain, Peer-to-Peer lending, and many more. 2019 will be an exciting year when it comes to Fintech’s innovations. Disruptions like Digital Wallet and Cryptocurrency Wallet with different options are about to hit the market — and some of them already did. The most popular Digital Wallets right now are Android Pay and Apple Pay. A

Digital Wallet is an electronic device that enables consumers to make an electronic transaction: it can include online purchases using a desktop or smartphone at any physical store. Normally there is a link between a consumer’s bank account and a digital wallet, which can also contain things like a driver’s license, a health card, loyalty cards, ID documents, etc. A Cryptocurrency Wallet is a type of digital wallet where private keys are stored for cryptocurrencies — think bitcoin. It can be used to receive or pay cryptocurrency transactions. Right now, the most popular Cryptocurrency Wallets in the market are Bitcoin Core, Electrum and Jaxx. We’ve talked about Artificial Intelligence and machine learning quite a lot in our articles, but it reaches entirely new heights when it comes to Fintech. AI and machine learning for automation, predictive analysis, addressing queries, and many other key actions, are liked by a huge number of Fintech players. AI is also responsible for securing financial services and transactions, removing potential security risks out of the process. According to PWC’s Global Fintech Report 2017, nearly 30 percent of financial institutions invested in AI. Analysts say that the number of

financial institutions that invested in this sphere indirectly is even higher. As changes in the banking industry quickly approach, it’s also important to note that mobile technologies have had a massive impact on consumers behavior. The so-called transformational shift is the most important one, as consumers are using mobile banking more increasingly every day. In short, this means that people have developed new habits when it comes to their finances. Nine out of ten individuals are banking from home — logging into their bank accounts while sitting at their desk or in the living room. 31 percent of millennials are using mobile banking services when socializing. Essentially mobile apps now provide independence and opportunities to monitor personal finances conveniently and at speed and growing exponentially. Analysts say that compared to desktop use, mobile use has been on the rise with the main activities being in e-commerce and social media spaces. The resulting effect is increased comfort and convenience when it comes to mobile payments. Which is why various Fintech companies and startups are working on integrating payment channels with as many

mobile-friendly features as possible, starting with mobile wallets and ending with QR codes. which is why the mobile banking and payments are estimated to reach 92 billion USD mark by 2019. Given that bank transactions frequently raise questions that cause security concern, but many raise the question ‘what about the safety?’. Which is where the Fintech industry like to think it has it covered: Blockchain technology has become a great alternative for safeguarding transactions and related data. Security benefits play an important role in the Fintech industry, that’s why there are so many investments in adopting this technology. Again HSBC as well as Barclays — both are planning to adopt blockchain technology for this immediately. Due to consumers and their changing behavior: when it comes to their finances, they know what they want and where they want it. Financial companies and startups are very aware of this, and that’s why “convenience” has become such an important word in Fintech — companies are inspired to deliver the best disruptive innovations that meet the evolving consumer’s expectations in financial services, and it’s a game that’s worth playing.

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European Startups


he European Startup scene is bustling and thriving. Aside from London, Berlin, and Stockholm, other tech hubs are emerging such as Paris, Munich, Zurich, and Copenhagen. With the surge in tech talent on the continent, tech behemoths such as Google, Facebook, and Amazon are all expanding their European tech hubs. A study by the Boston Consulting Group shows that the Benelux, Baltic, and Nordic countries of the EU are digital frontrunners and rank well in IT infrastructure, internet access, and government activity in Internet-related activities. These countries generate 8% of their GDP from internet commerce. This trend is forecasted to generate 1.6 million to 2.3 million jobs from 2015 to 2020. In total, the continent has around 57 tech unicorns. Manish Madhvani, the managing partner at GP Bullhound, said, “It has often been said that European tech entrepreneurs are focused only on exits, they are too quick to sell, and they are therefore incapable of building serious technology and companies of genuine scale. We believe otherwise. Our research into Europe’s billion-dollar technology companies has shown that there is an army of ambitious entrepreneurs building businesses of serious scale across the continent.” According to data from PitchBook’s Q3 European VC Investment report, Spotify is top regarding valuation, having an astounding $8.84 billion valuation.

United Kingdom UK is home to at least a third of Europe’s tech entrepreneurs and research from GP Bullhound shows that the European tech unicorns are on the rise and may soon have its first $50 billion tech behemoth. The UK has 22 startups with a valuation of $1bn or more, and four of these 22 startups are considered to be unicorns: Deliveroo, the 92 europeanbusinessmagazine.com

food-delivery startup; Improbable, a virtual-world developer; Mimecast, a cloud-based email company; and boohoo.com, a fashion retailer. British startups have been a favourite of Silicon Valley investors. For 2017, a whopping $1.13 billion is expected to be invested in UK startups. Brexit is not seen to be a threat to the rapidly growing startup scene. Sherry Coutu who co-founded Silicon Valley Comes to the UK, said, “With some of the best global talent and a strong culture of entrepreneurship, the UK and Silicon Valley are two of the world’s leading places to start and scale a technology business. While London has grown to become Europe’s largest tech hub, we still have a way to go to emulate the success of Silicon Valley, and there is a lot we can learn from each other. It is no surprise to see that British tech firms continue to attract more venture capital investment from the Bay area than any other European country.” The only risk to a hard Brexit is regarding skilled labour. London’s tech startups rely heavily on software and IT developers and engineers from Eastern Europe. Statistics show that in London, more than 20% of London startup employees are from other countries.

Germany Earlier this year, Delivery Hero went public on the Frankfurt stock exchange with a valuation of over $5 billion. This made Delivery Hero the second largest IPO that was backed by venture capitalists. This could spur more investments in European tech firms. Germany has around seven unicorns, and six of them continue to experience rapid growth. In the mid-2000s, there were less than 30 tech startups. Now there around 2500 startups in Berlin. Other large startups to hail from Berlin include Foodpanda, Soundcloud, Wooga, ResearchGate, and HelloFresh.

France Paris is a bright spot for startups. With Macron at the helm, he has promised to turn France into a “startup nation” by lowering corporate and capital gains taxes. This could spur further venture capital flows into the country. Paris has recently opened Station F, which is a startup campus and home to incubator programs such as those of Facebook and Microsoft. Recently, Partech Ventures and Idinvest Partners, which are major venture capitalists in France, have increased their venture funds and are closing major fundraising deals in the country. Benoist Grossman, the

managing partner of Idinvest Partners, said, “The European entrepreneur ecosystem today is just magic. We are seeing quality people, serial entrepreneurs, younger and younger, all over Europe.” Partech Ventures, on the other hand, has raised 1 billion euros the past year and a half which gives them lots of financial power to back more startups across Europe.

Stockholm Stockholm is also excelling in the startup scene. With its small domestic market, its startups are outward

looking and seeking to expand globally immediately. JF Gauthier, CEO of Startup Genome, commenting on the Stockholm startup scene, said, “Clearly they have special skills at scaling startups, and we have to say they do so at an amazing rate considering the small size of its ecosystem. Lean and mean they are. Its startups reported challenges with getting access to talent with startup experience, but that is an issue that can come with fast ecosystem growth.” Stockholm excels regarding global connectedness, funding quality, and exit values. It has produced successful startups such as Spotify and King

(the developer of the addictive app, Candy Crush).

Eastern Europe Eastern European tech hubs are on the rise, such as Warsaw, Krakow, Prague, Budapest, Bratislava, Tallinn, Riga, and Vilnius. In a span of five years, early-stage investment in Eastern Europe has catapulted from $10 million to $283 million. There are around 30,000 startups in Eastern Europe and growth is expected as more accelerators, coworking areas, and VC companies enter the region. The region gave birth to three global unicorns: Skype, Avast, and Transferwise. europeanbusinessmagazine.com 93

Deep Technology Deep tech refers to the kind of artificial intelligence innovation that Google’s DeepMind creates. According to London venture capital firm Atomico, Europe’s tech sector particularly in artificial intelligence is making significant progress. In 2015, $13.6 billion was invested in the sector compared to $2.8 billion in 2011. Deep tech accounted for $1.3 billion of the total venture investments in 2015 compared to $289 million in 2011. Research from venture capitalist, Asgard, shows that among European nations, the UK has the strongest AI ecosystem and that London is the number one place for this niche. There are around 121 AI startups in the UK.

Weaknesses of European Startups A knock-on of Europe’s tech sector includes its inability to create a tech giant that rivals the giants of Silicon Valley like Google and apple. While significant funds are flowing into European startups, these startups are not getting enough later-stage capital which will allow them to scale and grow faster. US firms get 14 more times later-stage capital compared to their European counterparts.

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Another weakness is the lack of a true European single digital market, unlike US or China. This makes it challenging for tech startups as they have to consider 28 different consumer markets and regulatory platforms. Karen Boers, CEO of European Startup Network, said, “I see two main reasons why European start-ups do not scale to their full potential. First of all, the fear of

failure which is very much part of our European DNA and secondly, the fragmented markets. Start-ups need to conquer 28 different business environments before they can be fully pan-European.” Regulation in the areas of data ownership, access and usability, and e-commerce also looks to be a significant barrier to growth for European tech startups.

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uropean cities are in transition, and with an ever-growing influx of sensitive data businesses are looking for alternatives to the public cloud to secure private information. Consequently, the data centre market is central to the commercial success of these capitals and towns, playing a fundamental role in helping companies innovate, develop and grow. Patricia Cullen reports. With the global tech industry booming, digital jobs are fast becoming the solid foundation for the world economy. Silicon Valley was once at the heart of everything tech, but investments in Europe are at an all-time high, and the status of the tech scene on this side of the Atlantic is the greatest it has ever been. Understandably then, America’s tech giants - Facebook, Apple, Microsoft, Google and Amazon are focusing their attention on Europe for acquisitions and talent, and it is becoming increasingly evident that the Old Continent is home to some of the world’s newest tech cities. There is also a growing call from the major cloud and content platforms for highly-connected data centres. So, what key cities are meeting this demand?

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With over 800,000 people, Amsterdam has historically enjoyed a celebrated reputation as a key centre for commerce and culture. With approximately two million sf of data centre floor space anticipated to be added to Amsterdam’s hosting portfolio, practically doubling the area’s current size, the city is fast becoming the digital gateway to Europe. Its efforts have not gone unnoticed and have earned the location numerous accolades, including a million-dollar Capital of Innovation award from the European Commission in 2016 and a place in the top 10 of the most advanced global cities in the IESE Cities in Motion Indexx from the University of Navarra. Stockholm - another location to watch - has always been at the forefront of data and technological innovation, and its start-up ecosystem is one of the best in the world. This progressive city has been home to several ‘unicorn’ companies such as Spotify, Skype and Ericsson, attracting $1.4 billion of venture capital investment since 2013, and entering into the New Year, it is still a technological hotspot. The Swedish capital has

produced the second highest number of unicorns and the most start-ups per capita after Silicon Valley, and the Stockholm Data Parks initiative highlights the city’s ground-breaking and unique appeal. Hoping that data centres can soon create a net-positive environmental impact, harvesting their heat for Swedish homes, this city and its data centres are real game changers. Hoping to be entirely fossil fuel free by 2040, Stockholm, and its pioneering data centres, can play a key role in positive, environmental change. The Startup Ecosystem Ranking October 2017, which features 125 countries and 950 cities, laid Germany at fifth place, just behind the US, UK, Canada, and Israel. Frankfurt, nicknamed ‘Mainhattan’ thanks to its striking skyscraper skyline and location on the River Main, is one of the world’s leading financial centres. Home to major financial institutions such as the European Central Bank, the Bundesbank and the German Stock Exchange, and with more than 70,000 people employed in its financial sector, Frankfurt requires perfect connectivity and security to combat

digital transformations and cyber threats. The EU’s principal financial centre is an ideal location to attract fintechs, and it has fast become a centre for young, innovative and reactive businesses. Frankfurt has had its share of breakthrough successes, such as BuyVIP, which was acquired by Amazon, and Fintech 360T, Germany’s largest start-up exit, which was acquired by Deutsche Boerse in 2015 for $796m. Effective businesses need effective providers and effective interconnection hubs that align with their approach, delivering the best performance for the business. Closer to home, London has always been dominant in the data market, but when you take into account all that capacity being occupied by the hyperscalers, Dublin will soon get its time in the data spotlight. The Irish capital is set to overtake London as the biggest European data centre market in terms of occupied capacity in 2019. Digital technologies assist in the development, design and delivery of transportation systems, infrastructure and architecture to help create the healthy, sustainable, resilient and prosperous cities mentioned above,

and companies turn to the cloud to strengthen their influence in the digital age. Data centres are the 21st century’s most important infrastructure, and are the beating heart of both corporate and everyday living, connecting business people and communities. InterXion Holding N.V. ( https://www. interxion.com/) provides carrier and cloud-neutral colocation data center services throughout Europe, allowing its users to connect to a range of telecommunications carriers, Internet service providers and other consumers. The company currently operates more than 50 data centres in 11 countries, and by harnessing the power of this connectivity, businesses can exploit profitable opportunities, creating value for themselves and their customers. The Internet of Things (IoT) is shifting how we live - from the emergence of smart cities to connected cars and much of what is driving progress within the IOT’s is data, and lots of it. Connecting over 20 billion devices this year, a number that is anticipated to be more like 70 billion by 2020, the IOT’s is ensuring IT infrastructure is capable of handling the

24/7 demand for applications such as video, social media, enterprise business and financial systems. Likewise, virtual reality (VR) is a concept that has skyrocketed in recent years, and according to Cisco’s report ‘The Zettabyte Era: Trends and Analysis’, VR traffic is expected to increase 20 times over by 2021. AI, VR and the IoT’s are driving the future, influencing and changing all areas of our lives, and the traditional data centre is no different. The rise of pioneering data centres and the implementation of 5G, alongside so many other developments is telling. The next few years are going to be very exciting for business and trade. There has been a fundamental shift in how people interact with work, technology and each other, and current models run the risk of becoming obsolete. Businesses need to acknowledge this and consolidate their digital technical strategy into a unifying hub. This new hub-based approach to technology and data centres can help truly harness the power of digital and allow your business to extend its footprint, enter new markets and burst into 2019 with increased expertise and gusto.

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