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agenda ec o n o m y  fi n a n c e & ga m i n g  tel ec o m m u n i cati o n s  P o rts & m a r i n e s er v i c es  to u r i s m  en v i r o n m ent

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gibraltar How a peninsula of just 30,000 people is attracting the attention of investors from across the world Words: Daniel Wellbelove


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“This government prides itself in defining everything we do in a way that is designed to be business-friendly” Fabian Picardo

Above: Fabian Picardo, Gibraltar’s Chief Minister. Right: For a small territory, Gibraltar is courting big investments. Far right: The Rock, complete with port and airport runway

it’s been a sorry few years for economies across Europe, many of which are still struggling to overcome one of the most crippling financial crises in living memory. Bucking this trend, however, is Gibraltar, which continues to enjoy the impressive rates of growth that have seen it positioned near the top of the OECD’s tables for the past two decades. So how does a small peninsula of only 30,000 people become one of Europe’s most forward-thinking economies and a leading hub for new investment? In part, it’s the result of a stable legal system, based on British common law and the rules of equity. Add to that the unique lifestyle, which combines an Anglo-Saxon business environment with a sunny climate and Latin way of living. And, perhaps most importantly, the Rock is also home to business-friendly attitudes that pervade everything that is done here – and nobody is more important to setting this tone than the territory’s government. “This government prides itself on defining everything we do in a way that is designed to be business-friendly,” says Chief Minister Fabian Picardo. “We

want to be attractive to businessmen, so there is not a lot of red tape, and we comply with our obligations in a quick and easy way that supports 21stcentury entrepreneurs.” After 15 years in opposition, the Socialist Liberal Alliance was elected to power in late 2011. The coalition immediately announced a raft of political and economic reforms, while promising to open up parliament. They set out by embracing modern business practices and quickly recognised the importance of communications in today’s economy. Picardo is proud to point out that he is the first Chief Minister to have his own personal email account and hopes that this change in philosophy will help his government achieve its headline pledge: to increase


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the territory’s GDP to £1.65 billion by 2015, which implies an ambitious annual growth rate of 10.5%. Gibraltar boasts a supportive economic and fiscal regime – highlighted by a low corporate tax rate of 10%, no capital gains tax or VAT, and a commitment to integrating the territory with the global economy – all of which has seen a wave of overseas investment that is just as notable for its quality as its quantity. This economic progress has not only been a boon to the private sector; it is also vital to how the government approaches its social agenda. “When we designed our manifesto, we wanted to combine both the social responsibility of being in government with being a government that’s very

pro-business,” says Picardo. “Through businesses, we are able to ensure we have enough revenue to provide for those less well-off in our community.” With space at a premium – the entire peninsula measures just 6.8km2 – Gibraltar’s economy has primarily developed around a few key pillars: shipping, financial services, tourism and, most recently, online gaming, which has grown enormously since the mid-1990s, in line with improvements in the Rock’s communications and internet services. In order to maintain strong economic growth, the onus is on the private sector and government to work together to tap new markets and attract new investment for these industries. Taking advantage of the territory’s

desirable location at the crossroads of Africa and Europe, the government has made great strides towards increased openness, transparency and accountability – essential qualities when courting new business. Having joined the European Union in 1973, Gibraltar is fully compliant with all international directives, while the government is exploring a variety of fresh options with the emerging BRIC economies. “We think many economies could do what we do, but not many are doing it,” says Picardo. “Gibraltar provides entrepreneurs in Europe and further afield with a great place to base their European headquarters or with their first stepping stone into the European Economic Area.”


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Financial times

Regulation, reputation and access to the EU single market have made Gibraltar the location of choice for many of the world’s largest financial services and e-gaming companies

Albert Isola, Minister for Financial Services and Gaming

a long-term commitment to regulatory control and a steadfast dedication to promoting growth in the private sector are paying dividends in Gibraltar, as more and more businesses realise that the territory offers a first-class finance centre to rival any on the continent. Far from the sunshine tax haven that is often portrayed, Gibraltar’s economy is instead defined by its integrity, responsibility and a “low tax, not no tax” philosophy that is turning heads across the world. Lloyds TSB, SG Hambros, Credit Suisse, KPMG, PwC and Deloitte are just a few of the market-leading international companies that have already benefitted from the Rock’s supportive business environment. Now one of the most reputable hubs in Europe, Gibraltar is ideally placed to secure new business from London and beyond. “Gibraltar offers a package: reputation, regulation and access to the EU single market,” says James Tipping, director of the Gibraltar Finance Centre, which advises the government on all financial services policy matters. “Without those three things, we wouldn’t get anywhere.” In today’s global economy, corporate governance and regulatory continuity across borders have become vital. To this end, Gibraltar’s government has worked tirelessly to create a strong and reputable financial centre known throughout the world. Its first priority was to oversee the

territory’s transition to an onshore EU jurisdiction that is fully compliant with all international directives. This status gives all of the firms within its borders access to the single European market and a client base of over 500 million people. Since putting pen to its first tax information exchange agreement (TIEA) with the USA in 2009, 25 more have been signed with some of the world’s major economies, while Gibraltar has been added to the OECD white list – indicating that it conforms to all internationally agreed tax standards. Most recently, a pilot scheme was established for the automatic exchange of tax information with the UK, France, Germany, Spain and Italy; another bold move towards promoting Gibraltar as a world-leading centre for transparency and stability. This has created a controlled and well-regulated environment in which companies can enjoy the benefits of operating in a jurisdiction that has all the powers of a EU member in a town of just 30,000 people. Indeed, its size may be one of Gibraltar’s greatest strengths, offering efficiency and flexibility in business and the possibility of meeting top decision-makers even when considering only a modest investment. The territory also boasts a businessfriendly fiscal regime, with a corporation tax rate of 10%. Meanwhile, the maximum effective rate of tax for residents is only 25%, and tax is capped at £30,000 for high-networth individuals who relocate. In addition, Gibraltar is not subject to a VAT regime or the Common Customs Union. The workforce is professional, approachable and trained to UK standards. The diversity offered by a wide range of home-grown and international companies has created a robust and innovative economy, while the high quality of the infrastructure has been maintained even through a period of rapid growth. All of this has made Gibraltar a popular alternative destination for the insurance industry – which has grown from 15 companies in 2001 to over 100 today, including protected


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cell companies – and the investment funds sector. Ernst & Young has recently re-established a presence in the territory after a 14-year absence. “Gibraltar has become very attractive to us as a result of the clear decision to reposition itself within the reputable, well-regulated onshore financial space,” says Jose Julio Pisharello, managing partner of EY Gibraltar. “Plus, besides the competitive tax rate and knowledgeable workforce, being in the EU has worked tremendously in our favour. For example, being able to passport banking funds and insurance into the rest of the EU without the need for additional authorisation has been very important.” The financial services sector already accounts for a fifth of GDP and 14% of total employment, and these figures are likely to grow as the territory continues to court new firms with ventures such as the annual Gibraltar Day in the City of London, and as more companies recognise the unique possibilities offered by this world-leading finance centre. gaming Even as the financial services sector continues to expand, the Gibraltar government is betting big on another burgeoning industry to help continue its impressive record of economic growth. “Today, online gaming accounts for about 20% of Gibraltar’s GDP, a significant amount of direct revenue to the government and a good proportion of Gibraltar’s employment base,” says Nyreen Llamas, partner at Hassans International Law Firm. “Furthermore, the industry has introduced skills to the employment market in the areas of e-commerce, payment processing and technology which did not exist here before.” Just as in finance, regulation and reputation are proving vital to its success. “We are focused purely on strong regulation and working with the very best brands,” says Minister for Financial Services and Gaming Albert Isola. “For every one company that comes in, we probably reject close to 10 others.” Some 28 e-gaming firms now have premises in Gibraltar, where they benefit from an advantageous business and robust regulatory environment. In return, these licensees must conform to the highest standards: they must be proven blue-chip corporations, are obliged to submit detailed capital and profit reporting, and are subject to auditing by the Gibraltar Licensing Authority. Once again, transparency is paramount. Nevertheless, after 15 years of almost uninterrupted growth, the industry is now facing its biggest challenge to date, with the UK proposing a 15% point-of-consumption tax on online gambling that could come into effect from 2014. Isola, however, is unfazed: “We’ve got a sophisticated group of gaming companies and I have every confidence in them remaining at the forefront of this business.”

“We are focused purely on working with the very best brands” Albert Isola


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Europe’s port of call A diverse range of quality marine services and a formidable bunkering industry have made the port of Gibraltar one of the Mediterranean’s most important shipping centres for centuries, Gibraltar figured largely in the strategies of naval officers, with its location at the gateway to the Mediterranean marking it as an invaluable military stronghold. But even with the battles of old consigned to the history books, the port has lost none of its importance, having transformed itself into a maritime centre of great repute and considerable potential. Today, shipping still accounts for 25% of the territory’s GDP. Located at the crossroads of the Atlantic and Mediterranean shipping

routes, the Rock’s proximity to the Gibraltar Straits allows vessels to berth within an hour of leaving the shipping lanes. There are no tidal restrictions or locks to navigate, while its waters are deep and well sheltered. Together, this provides the ideal geographical conditions for a wide range of maritime services, with the port able to accommodate vessels of all types and sizes. In particular, Gibraltar has earned an impressive reputation for the provision of bunkering services – the process of supplying fuel to a ship at sea, either from land or, more commonly, ship-to-ship transfer. Six operators are licensed to work here, where they take advantage of some of the lowest fuel costs and port fees in the EU. “We moved 4.2 million tonnes of bunkers last year,” says Captain Roy Stanbrook, CEO of the Gibraltar Ports Authority (GPA). “And the projections for this year look very favourable compared to most northern European ports.” According to GPA data, 10,350 ships called in at Gibraltar in 2011, of which almost 6,200 took on bunkers, with the total volume of fuel supplied increasing more than fivefold in the last 20 years. As you’d expect in such an environmentally sensitive industry, there is a great emphasis on upholding the highest safety standards, while the port fully complies with all EU and international regulations. Its Bunkering Code of Practice was thoroughly revised in 2011; the GPA is an associate member of the UK’s

Oil Spill Response group; and it employs a dedicated Bunkering Superintendent to oversee all port operations. This commitment to eco-friendly practices is consistent throughout the port’s activities. “If you have a very high standard ship, the chances of a pollution incident dramatically fall,” says Stanbrook. “That’s why we recently joined the international Green Awards Scheme. If a ship owner maintains his ship and its operating systems to the scheme’s standards, we can reward them by reducing their port dues or offering some other incentive.” Aside from bunkering, Gibraltar’s status of being outside the European Customs Union has made it an important calling point for passing ships looking to take on provisions and a change of crew, while it also offers a world-class one-stop shop for services ranging from hull cleaning to ship repair. “They keep calling Gibraltar a bunkering port; I want to call it a maritime hub,” says Minister for

The port of Gibraltar caters for all manner of ships


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With operations in 16 countries, Peninsula Petroleum is one of the world’s largest bunkering firms

Tourism, Public Transport and Ports Neil Costa. “Ships come primarily for bunkering, but ancillary to this, there are all of these other services that Gibraltar does provide.” At the forefront of this crucial industry is Gibdock, which provides high-quality shipyard services in three dry docks originally constructed by the Royal Navy at the end of the 19th century. “Today, our focus is on enhancing operations and developing future business, as well as the repair and conversion work we undertake on around 120 ships per year,” says Gibdock's CEO Richard Beards. “Our location, quality of work and ability to deliver on schedule is attracting a growing number of high-end offshore vessel owners.” The company is also mindful of green issues, and has embarked on an innovative programme to install bubble barriers in its docks to prevent marine species from becoming trapped.

How does a company grow from zero to become one of Gibraltar’s greatest success stories?

“It’s a combination of many different things, but above all, hard work and having a different approach to the industry to what was there before,” says John Bassadone Jr., managing director of Peninsula Petroleum – the shining star of Gibraltar’s formidable bunkering industry and the largest privately owned company that the territory has ever produced. Today, Peninsula ranks as one of the top oil trading and bunkering suppliers in the world, with annual sales in excess of 7,000,000 tonnes of fuel, and a turnover of over 5 billion USD – not bad for a company that only secured its first independent contract as

recently as 1996. Now with a presence in 16 countries, it stands out as an example that many other Gibraltarian companies hope to emulate. So how did Peninsula do it? “Historically, the bunker oil industry was less dynamic and service-oriented, so we were quickly able to find our niche,” says Bassadone. This meant dedication to first-class customer care and personalised service, which continues to define the company’s operations to this day. “On top of that, we make sure we always hire people who fit the Peninsula profile: down-to-earth, well-rounded and here for a career, not their next step.” In a competitive market, the company continues to differentiate itself with the sheer diversity of services it offers. As an integrated marine service provider, it is able to support its clients in everything from ship agency to ship repair and maintenance through its

parent Gibunco Group – a claim that precious few companies can make. Bassadone remains as passionate about the industry as when he started, and foresees a bright future for Peninsula: “While keeping our conservative approach and our feet firmly on the ground, the further along we go, the more opportunities open up. There are some very interesting and exciting projects that we are working on which will hopefully take us to the next level.” Nevertheless, home is where the heart is, and even as operations continue to expand overseas, Gibraltar remains the flagship location for Peninsula. “It remains the barometer for what we want to do everywhere else,” says Bassadone of the port that the company helped become the biggest bunkering centre in the Mediterranean. “What we do here, we want to replicate all around the world.”


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Relax haven

Ocean Village Marina, one of three on the Rock

How the Rock aims to become the leading short-break destination for travellers from the UK and beyond “there are not many places where you can stand on top of a rock and see three countries and two continents,” says Nicky Guerrero, CEO of the Gibraltar Tourist Board. “And the Rock itself is stunning, while we offer a blend of history, heritage and culture in a very small space that is hard to beat.” This unique combination of striking natural and historical sites – in addition to its reputation for firstrate hospitality, excellent shopping and warm Mediterranean climate – attracts 11 million visitors per year by air, sea and land. This may sound a lot for a territory of only 30,000 people, but Gibraltar’s government is doing all it can to drive these numbers up. “When we were elected into office, the first thing we did was market more effectively,” says Neil Costa.

“We invited tourism partners to advertise alongside us, and we’ve seen immediate results, with Superbreak in the UK recently reporting a 300% increase in bookings to Gibraltar.” Gibraltar has long been an important stop on the cruise itinerary, not least because its VAT-free status makes it the only port in the area offering cruise liners a tax break. Even so, the government is

Gibraltar’s airport is getting busier

determined to increase the number of ships calling at the port from the 172 that docked last year, making investment in this area a central plank of its manifesto commitments. Recognising the importance of personal contact, Costa and his team hold regular meetings with the industry’s top executives, while also investigating the possibility of smaller vessels using the port for partial or full turnaround cruises. Similarly, Costa is keen to extend Gibraltar’s accessibility by air: “One of my main aims is to establish sustainable air links between Gibraltar and Spain, while also increasing the frequency of London flights.” Early signs are positive, with new routes announced over the summer, as well as a greater capacity from


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London. As it stands, Gibraltar is set for a record year for air traffic passengers. And there’s room for growth too, with the territory’s new £65 million terminal capable of processing 1 million visitors a year. The other key strategy that the government is keen to explore is the promotion of events tourism, especially during periods of low hotel occupancy. Gibraltar hosted its first-ever literary festival at the end of October, which – along with other initiatives such as its now-renowned chess festival and strongman competition – it hopes will boost visitor numbers, even outside the traditional holiday season. Of course, it’s one thing to entice new travellers to Gibraltar for the first time – the next challenge is to keep them coming back. Costa is determined to make Gibraltar Europe’s next destination of choice. “The hope is that when they have come for an event, they will want to come again for leisure,” he says. With this in mind, the government has invested significantly in its primary tourist attractions, not least those in the Upper Rock, where £1 million has been committed for the second successive year. In 1993, the area was awarded nature reserve

One of Gibraltar’s famous Barbary macaques

status, in recognition of the need to protect its outstanding beauty and the rare fauna and flora that inhabit it, including the semi-wild population of Barbary macaques for which Gibraltar is well-known. Given its rich military heritage, it’s not surprising that many of the territory’s cultural and historical sites also rank among its most popular tourist haunts; foremost among them is the network of caves that burrow deep inside the Rock. With some

Yearly events at a glance

dating from the Great Siege of the late 1700s, and others from World War II, they represent an unmissable engineering marvel. One company intrinsically linked to Gibraltar’s military past – and ideally positioned to take advantage of any increase in tourist numbers – is Saccone & Speed, which imports and distributes alcohol in the territory. “Next year, we are celebrating our 175-year anniversary,” says managing director Denis P. Lafferty. “The company’s success stemmed from its willingness to look outside Gibraltar, while we became known for our support of the navy and diplomatic core, which for years were our main customers.” Today, Saccone & Speed is still growing and has diversified into new sectors such as food distribution. “We have continued with a strong business ethic, profitable trading and being a part of the community,” says Lafferty.

 January: Tradewise Gibraltar Chess Festival  February: Young Artists Competitive Exhibition  March: Drama Festival  April: International Song Festival  May-June: Spring Festival  September: National Day, Strongman Champions League  October: International Jazz Festival, Literary Festival  December/January: New Year Celebrations


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The bedrock of the Rock Gibraltar’s emergence as a modern economic hub would not have been possible without huge investments in its telecoms industry while the growth in its financial services and e-gaming sectors continues to steal the headlines, the true backbone of the Gibraltar economy has to be its state-of-the-art telecommunications infrastructure, without which neither of these celebrated industries would survive. It goes without saying that e-gaming could not exist without the internet, but it is no less important in finance, where information has to be instantaneous and a split-second delay in data retrieval can make a big difference. As such, they are reliant on a service that is fast, competitive and consistent. There was a time when Gibraltar was dependent on a small number of international network routes. Given the consequent vulnerability to single points of failure, attracting these industries would have been difficult. This is no longer the case. “The fibre-optic platform put down in the 1990s was really the start of a network that was advanced for its time and fit for the purpose of the industries that were to come,” says Tim Bristow, CEO of Gibtelecom, the territory’s leading communications provider. The industry has gone from strength to strength ever since. “E-commerce,

Tim Bristow, CEO of Gibtelecom

and predominantly e-gaming, has made us up our game in terms of quality, reliability, resilience and speed of service,” says Bristow. “And these improvements have been of huge benefit to the local community and smaller businesses as well.” For a small territory, Gibraltar’s government and its telecom companies, particularly Gibtelecom, are not shy about making big investments. Most recently, Gibtelecom signed up as a foundershareholder in the consortium behind a 15,000km-long submarine

“E-commerce has made us up our game in terms of quality, reliability, resilience and speed of service” Tim Bristow

cable link, the Europe-India Gateway (EIG), expanding its frontiers into the international arena and allowing the company to grow its global business. The EIG cable system, which spans from London to Mumbai, runs across three continents and has 13 landing points, of which Gibraltar is one. This promises to be a boon for the territory’s economy, offering greater route diversity and the opportunity for Gibraltar’s businesses to tap into a next-generation fibre network. Moving ahead, the next challenge is upgrading Gibtelecom’s highspeed broadband network covering the Rock, even though the territory already enjoys higher fast broadband per capita than the vast majority of Europe. This requires extending its fibre-optic platform to get closer to homes and workplaces, and building street cabinets to shorten the copper wire length. Bristow is optimistic about the plans: “We hope to have virtually all of Gibraltar covered within a year or so.”


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The green agenda Protection of the territory’s native marine life has been a priority for this environmentally conscious government gibraltar hit the headlines during July, when its decision to sink 70 concrete blocks just off its coast resulted in widespread protests by Spanish fishermen and uproar in Madrid. A great furore followed, but at its heart was just one government’s avowed dedication to protecting its marine environment and promoting the regeneration of local fishery stocks that had been depleted by trawling, primarily by Spanish ships. Artificial reefs are not even uncommon in this area of the Mediterranean, with Spain placing 130 of its own since the 1980s. In 1991, Gibraltar signed its Nature Protection Act, with the conservation of the bay’s unique ecosystem high on its priorities. And with nearly 1,500 species of fauna and flora found within its first 30m of depth, according to a 2006 Spanish study – as well as the Rock’s significance as a breeding area for numerous dolphin species – it’s little wonder that both the Gibraltarian and Spanish governments continue to take steps to preserve it. The Southern Waters of Gibraltar was established as the area’s first Site of Community Importance in 2006, with subsequent legislation granting it Special Area of Conservation and Special Protected Area status. This recognition of the fragile environment beneath the waves is symbolic of the government’s pledge to put the environment at the centre of everything it does. One of its key promises during the election campaign was that every minister would be a minister for the environment, and, so far, it’s stuck to its word, prioritising green issues in public spending and encouraging

investment in green technology by slashing import duties on low-energy lighting and hybrid vehicles. The plans do not stop there, with the introduction of pilot schemes for

“It touches my heart when young dynamic governments give the environment priority” Al Gore

renewable technologies and an eco-park to assist with waste disposal expected soon. The government also hopes to reduce polluting power generation from its three diesel plants, and has recently awarded a £4 million contract for a temporary power station to ease existing capacity. The government lists the creation of a sustainable environmental management strategy and increasing public awareness of green issues among its key objectives. In October 2012 it hosted an international climate conference, Thinking Green, which attracted such prestigious speakers as former US vice-president Al Gore. “How impressed I am with what Mr Picardo and his government are doing for the environment,” said Gore. “It touches my heart when young dynamic governments give the environment priority. Gibraltar is an example for the rest of the world.”


The Agenda  

Gibraltar Finance advertising supplement in Easyjet in-flight magazine covering economy, Finance & Gaming, Telecommunications, Ports & Marin...

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