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They called it “the partnership that consolidated Lighthouse Group as Malta’s leading marketing company.” A veteran of the local market Lighthouse has stretched its reach to foreign shores and partnered with Ashley Worldgroup. If you were mesmerised by the opening ceremony of the Athens Olympics, if you were spellbound by the Greek pavilion at the Shanghai World Expo, if you were enticed to holiday in Greece by the multinational campaigns of the last few years, if you were influenced by the Hyundai campaign in the South African World Cup, then you have already met Ashley Worldgroup. Welcome to Lighthouse and Ashley. Let’s talk.

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Contents 8 Our man in London

His Excellency Joseph Zammit Tabona, Malta’s High Commissioner to the United Kingdom and Northern Ireland, is a strong voice in promoting Malta’s financial services sector.

12 Money makes the world go round

The Chairman of the Malta Financial Services Authority Prof. Joe Bannister tells Vanessa Macdonald that the sector is moving steadily ahead.

16 A financial stronghold

Despite the financial meltdown, Malta’s performance over the past two years is a powerful testament to the stability of its financial services industry, says Kenneth Farrugia.

19 Setting up operations in Malta: the tax aspect

The financial services industry has become one of the main pillars of the Maltese economy and its importance to the longterm growth prospects of the country cannot be overstated.

22 A mind game

Vanessa Macdonald analyses some of the key perceptions that emerge from the Ernst & Young report.

26 Taking stock

2009 was a record year with 12 corporate bonds and one equity admitted to the Malta Stock Exchange’s recognised lists, besides 11 new issues of Government Stocks, amounting to €800 million in all. In addition there were 61 issues of Treasury Bills amounting to a nominal value of over €1.6 billion. Malta Stock Exchange chief executive officer designate Eileen Muscat speaks to Money about these high levels of activity.

29 The psychology of investment

Alex Mangion believes it is important to understand the behaviour of investors, with the help of a few psychological insights.

33 Building blocks of success Simon Tortell explains to Money what supported Malta’s growth as a financial services centre - and what will help it grow even further.

35 The versatile portfolio manager

Mark Hollingsworth says that by investing cheaply, effectively and wisely, you can diversify your portfolio.

37 Malta’s opportunity in Real Estate Investment Trusts

Malta should take advantage of growing opportunities in REITs, says Reuben M. Buttigieg.

41 Insurance management in Malta

Malta is set to become one of Europe’s leading captive insurance domiciles, says John Tortell.

43 Trusts and estate planning Dedicating some time to figure out and finalise your most important estate planning goals is one of the best ways to ensure that your wishes will be respected, says Andrew Chetcuti Ganado.

45 Planning an enjoyable retirement

Your retirement can be a rewarding experience, as long as you plan it carefully, says Stuart Fairbairn.

46 A cunning plan

Photographer and prospective architect Kris Micallef makes room for architect Chris Briffa.

60 Blowing hot and cold

Island Caterers suggest unusual combinations to add a dash of style.

62 Rome is where the heart is

When in Rome, do as Mona Farrugia does.

66 Injury time

Don Ross shows you how to use the Power Plate to recover from injury.

Money / Issue 03 - 3

Money / Issue 03 - 5

Welcome Grumbling may be a national pastime, a social trait that is inherent to any small nation, and a small island nation at that. But the one thing that truly distinguishes us is our perseverance; a quality which makes us particularly savvy and tough at doing business and which pushed Malta to successfully shift to a knowledge-based economy.

Editor Anthony P. Bernard Email:

It is also this characteristic that has helped Malta establish itself as a strong financial services centre. While other economies stumbled and fell, our finances weathered the storm of the financial meltdown and its aftermath. Not only did we survive, but we also continued to register growth. The financial services sector, in particular, enjoyed a growth of 22 % over the previous year in 2009.

Design Jon Calleja Email:

Other sectors experienced similar growth. According to a survey by the Malta Insurance Management Association, the assets held under management by insurance companies doubled between 2008 and 2010, from €555 to €1,099 million. Despite this success, Malta is certainly not resting on its laurels and is pushing hard to achieve Government’s vision to make Malta a centre of excellence by 2015. Other opportunities beckon. The potential coming into force of the Aircraft Registry Act will add momentum to the aviation sector. Malta’s strong yet flexible legislation also facilitates the establishment of, for instance, Real Estate Investment Trusts and Islamic Real Estate Investment Trusts. And by the time Malta assumes EU presidency in 2017, we will have a state of the art Corporate Village which is expected to be a thriving central business district. In this issue of Money, we focus on the people behind Malta’s financial services sector. We interview His Excellency Joseph Zammit Tabona, Malta’s High Commissioner to the United Kingdom and Northern Ireland, Professor Joe Bannister, Chairman of the Malta Financial Services Authority, and Mr Kenneth Farrugia, Chairman of FinanceMalta. Our financial and legal experts also lock their crosshairs on the financial sector, focusing on taxation, legal and insurance issues. Money has made a name for itself for combining business expertise with luxury, lifestyle, travel and fashion. In this issue, we maintain and strengthen our reputation by giving you a stylish fashion shoot, a fresh travelogue to the Eternal City, and a peek at this autumn’s hottest and most fashionable colours. Read on and enjoy this issue of Money – it’s our investment in you.

Consulting Editor Stanley Borg Email:

Front cover credit Lino Arrigo Azzopardi Printing Progress Press Distribution Mailbox Direct Marketing Group Hand delivered to businesses in Malta and selected Vodafone corporate clients and all their retail outlets. All 5 Star Hotels including their business centers, executive lounges and rooms (were allowed). Maltese Embassies abroad (UK, Rome, Brussels, Moscow and Libya). Some government institutions and ministries. For information regarding promotion and advertising contact Jamie Maher Tel: 00 356 2131 4719, 2134 2155 Email:

Money is published by BE Communications Ltd, 37, Amery Street, Sliema SLM 1702 All rights reserved. Reproduction in whole or in part is strictly prohibited without written permission. Opinions expressed in Money are not necessary those of the editor or publisher. All reasonable care is taken to ensure truth and accuracy, but the editor and publishers cannot be held responsible for errors or omissions in articles, advertising, photographs or illustrations. Unsolicited manuscripts are welcome but cannot be returned without a stamped, self-addressed envelope. The editor is not responsible for material submitted for consideration.

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Our man H in London His Excellency Joseph Zammit Tabona, Malta’s High Commissioner to the United Kingdom and Northern Ireland, is a strong voice in promoting Malta’s financial services sector.

is Excellency Joseph Zammit Tabona, Malta’s High Commissioner to the United Kingdom and Northern Ireland, has a varied experience in the financial services sector. He qualified as a Chartered Accountant in 1971 and a year later became partner of the local branch of Turquand Youngs & Co. He was a partner of PricewaterhouseCoopers until his retirement from active practice in 2000. Mr Zammit Tabona is also a Fellow of the Institute of Chartered Accountants in England and Wales, a Fellow of the Malta Institute of Accountants, a Fellow Member of the Institute of Taxation, and also has a warrant to practice as a Certified Public Accountant.

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During his distinguished career, Mr Zammit Tabona acted as Chairman of the Malta Accountancy Board, Chairman of the Malta Stock Exchange, Chairman of FinanceMalta and Chairman of Viset Malta plc. Mr Zammit Tabona became Executive Director of the Malta Enterprise Board in January 2002. In August 2003, he was appointed Chairman of the Malta Development Corporation, the Malta External Trade Corporation, the Institute for the Promotion of Small Enterprise and eventually the Malta Enterprise Corporation. Mr Zammit Tabona also served as President of the Malta Federation of Industry, a Member of the Board of Directors of Bank of

Bookings are shifting from tour operators to individual online bookings. Valletta Limited plc., and Director of HSBC Life Assurance (Malta) Ltd. between 2001 and 2005. During the same period, he also served on the Board of the Malta Council for Arts, Science and Technology.

much as competition with the UK. We need to continually look at how we can do business together and how we can move forward together. The underlying strength of our financial sectors would tend to augur success.”

Certainly, a fine and illustrious CV. Yet how does HE marry this rich experience with his position as High Commissioner of Malta in London in order to promote Malta as both a holiday and business destination?

The role of Malta’s representatives abroad is not only to strengthen and promote Malta’s image, but also to report back on opportunities. Do institutions and agencies, like the Malta Financial and Services Authority, take into account this feedback when changing direction and policy?

“The relationship between Malta and the UK is a strong one. It is built on peopleto-people links but also on business-tobusiness links. These links have to be renewed constantly and extended – that is part of my mission. As High Commissioner I aim to increase the financial interaction between our two countries. I aim to extend our solid economic relationship into the future – the positions that I have held in the past tend to facilitate this work.” Until recently, the UK was considered to be the top financial services centre in the world. Following the economic downturn, is that still the case? “There is no doubt that the global financial crisis and accompanying recession has taken its toll on the UK as it has on all the other major economies. However, the fundamentals of the UK financial services sector remain good and in my opinion the UK will retain its prominence in this field. I would say that for Malta this will provide opportunities of partnership and collaboration as

“One of Malta’s major advantages vis-à-vis other financial centres around the world is that its small size allows it to practise as well as preach flexibility. It is relatively easy to achieve coordination and response amongst all the interested parties. Personally, I work very closely with MFSA and other similar Maltese agencies to exchange information on a continuing basis so that our policy not only reflects recent trends but is also innovative and seeks to set an example. Together, our authorities retain a nimble posture in the market. This approach has secured very positive results for some time now,” confirms HE. In the past years, Malta’s financial services sector has gone from strength to strength. Yet is the average Briton aware of Malta’s strengths in this sector? “The people-to-people contacts between our two countries are very widespread indeed. The financial services sector is no exception in this

regard. However, I believe that Malta’s financial services proposal has been a rather well kept secret so far and we need to do more to highlight the opportunities available for British investors. At the High Commission we are constantly doing this and making sure that those interested in investing in Malta get their own assessment by visiting our islands. Following several visits so far, we are planning more familiarisation events later on in the year.” “Also, much of my day-to-day work is concentrated on the generation of new leads and I am always seeking opportunities for mutuallyadvantageous exchanges. I have been tasked in this direction from my first day in this post. I am always keen to explain the advantages of Malta’s financial services, and I am increasingly finding an eager audience in this regard.” One of the main hurdles to investment is red tape, which the Government is keen to eliminate. Has the reduction in bureaucracy had a positive effect in attracting foreign direct investment? And does Malta need to do more in its drive to reduce bureaucracy? “By all means, the reduction of bureaucracy in Malta has brought concrete and positive benefits for the business community. Investors clearly like the emphasis on one-stop solutions and the attention to detail that is required in today’s highly competitive international environment. However,

Money / Issue 03 - 9

this is no static matter and the threat of more red tape is always there lurking in the background. This is why we retain a constant watch, so we can ensure that business needs are not unnecessarily shackled by any new regulatory requirements. We intend to remain vigilant and to engage the bureaucrats only where this is absolutely needed.” Malta is also constantly seeking new opportunities, such as the potential coming into force of the Aircraft Registry Act. Would the UK be a potential high profile investor in areas such as private aircraft management, financing and leasing operations? “Yes, of course. We have already had significant success in attracting aviation-related services to our country such as SR Technics and easyJet plc. The new Aircraft Registry Act will add to the momentum. The UK itself has a vibrant aviation sector that is always looking for new opportunities to retain its own competitive edge. Malta can help in this regard. We have a developed

infrastructure and dedicated and flexible educational and training institutions that can help us muster success.” “At the Farnborough Airshow earlier this year I met a few operators that have a distinct interest in what Malta has to offer in the aviation sector. These companies will be visiting Malta to finetune their assessments. They seem keen on taking concrete action and we are very excited about this. Later on in October, Transport Malta will be hosting an event in London to specifically promote not only the expanding Maltese aviation flag but also Malta’s merchant shipping and superyacht sector. Malta’s Maritime Register is the world’s seventh largest and second largest in the EU. Our flag has a long and successful record and retains its allure in the maritime domain, particularly here in London in the world’s maritime hub.” Apart from a strong yet flexible legislation and a perseverant and skilled workforce, Malta also has a number of advantages – such as the mild climate, a

sound ICT infrastructure and proficiency in the English language – which play an important role in attracting foreign investment. “Without a shadow of doubt, these factors are of crucial importance. I would say that all of these issues would rank even higher than other key issues like taxation. Malta knows this and increasingly other players are becoming aware of what our country has to offer across the board.”

The big cat returns Gasan Enterprises Ltd. officially launched the all-new Jaguar XJ in Malta with an exclusive reception at the private residence of the British High Commissioner in Malta at San Pawl tat-Tarġa. Her Excellency Louise Stanton, the High Commissioner, welcomed the guests and spoke of the long British tradition in motoring excellence that Jaguar represented. Gasan Enterprises Ltd. Managing Director David Gasan said the all-new top-ofthe-range Jaguar XJ was launched in a year when Jaguar is celebrating its 75th anniversary and Gasan Enterprises the 15th anniversary as Jaguar’s representatives in Malta. Mr Gasan briefly dwelt on the many iconic models that are part of Jaguar’s history, from the SS100 in the 1930s through the E-Type in the 1960s and the first XJ in the late 1960s. More recently, the XK range and the XF were well received, both in Malta and internationally. Gasan Enterprises became local concessionaires of Jaguar in 1995 soon after the Ford Motor Company acquired the marque. “We have over these years built an excellent relationship with Jaguar and our sales performance even in this premium segment in Malta meant we have led the market for many a year since,” he said. With 40 years of automotive pedigree and refinement, the XJ is now in its eighth generation. “This is an XJ like no other previous model, with a level of luxury, refinement and sophistication that sets it quite apart,” Mr Gasan said. “One can personalise this model both in terms of the exterior and the interior to a degree that has not been surpassed in any Jaguar before.” 10 - Money / Issue 03

Money makes the world go round The Chairman of the Malta Financial Services Authority Prof. Joe Bannister tells Vanessa Macdonald that the sector is moving steadily ahead.


his year, there has been a fundamental change in the organisational chart of the MFSA. This was necessary to make the Authority more integrated and increase the emphasis on the supervision as required by the new regulatory and supervisory structures coming into force in Europe next year. The MFSA oversees an economic sector which has thrived and grown into a veritable empire over the past decade. And what makes it all the more amazing is that it has continued to do so even when other jurisdictions have seen business slowing down.

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Analysis of the financial crisis brought along various reports which recommended stronger supervision and the Board of the Authority decided two years ago to “embrace the change”, as Prof. Bannister says. “We have regular audits of our regulatory structures and how they are functioning. We grew by addition to become single regulators, gradually taking over regulation of the stock exchange, banking and insurance besides creating other units to deal with issues such as pensions. Over time it became evident that these same units were not only doing regulatory work but also doing authorisation and supervision all at the same time. Consequently the Board of Governors, following external advice, decided to remove authorisation and regulatory development from each unit and to essentially create a single authorisation unit, a single regulatory development unit and supervision units for insurance and pensions, for securities and markets and for banking,” he explains. “As the dust from the change started to settle, an internal audit of the regulatory and supervisory functions in order to assess our adherence to international core principles was initiated last March by teams of international experts, with the final visit in August. The reports should start coming in by the end of September – this time the Board decided to increase transparency and publish the report, probably by the end of the year.” But while the internal reorganisation and the audit are relevant to existing and new business, the MFSA is also conscious that it has to work with new business. It does this by offering an extraordinary service which has been praised over and over by practitioners, as well as keeping on its toes. The accessibility of the regulator is always cited as one of the most important competitive advantages. Other jurisdictions are only now beginning to appreciate that many of the problems in the recent meltdown could have been avoided had they had more contact with the industry. The Authority also ensures as much transparency as possible.

But it is innovation that really sets the jurisdiction apart. MFSA leaves it up to the practitioners to create products and services but it ensures that the legislation gives scope for innovation. For example, the Special Funds Act was set up in anticipation of the government’s state pension reform, but while the government waits for the right time to make the changes, the world is moving on. European Directives have been updated and foreign pension schemes are being set up here. So the MFSA has revised the Special Funds Act which will now be called the Occupational Pensions Act. This can be used for private pensions – albeit without the fiscal benefits that the government would offer once it completed its reform. It is also creating the Incorporated Cell Company, which will be used by insurance companies and Collective Investment Schemes, and upgrading the 10th schedule of the Companies Act on limited partnerships so that it can be used by funds as well. It is also ensuring that contractual funds – which belong to individuals and not to company SICAVs – can be eligible for double taxation treaties. Even established legislation like the Companies Act and the Trusts and Trustees Act are being tweaked and refined. The only area which has not yet taken off is Islamic Finance. The MFSA issued its guidelines for funds after months of consultation with a Sharia expert. Prof. Bannister has ruled out Islamic banking for the moment, as there is simply not the demand for it in Malta – and Maltese and European legislation needs a lot of adjustment to comply with the Sharia Code. However, the MFSA is ready to accept applications for Sharia compliant funds. “The regulators know how to handle these applications, but it is entirely up to practitioners to bring the funds here now. Many have already been travelling to Muslim countries to promote the jurisdiction,” Prof. Bannister says. “It should be just a matter of time.”

Money / Issue 03 - 13

In the meantime, the Authority is boosting its current network of 25 memoranda of understanding with other jurisdictions, bilateral agreements that complement international ones. Prof. Bannister explains that the flow of business is easier if the regulators know each other – and that bilateral agreements create one-to-one flows. “The recently-signed MOU with China will help Maltese companies sell funds there for example, but MOUs do more than just that. The agreement with Germany resulted in three regulators going there for two weeks of training. An MOU with South Africa created a flurry of interest in fund administration and the MFSA is now looking at Latin America and the Far East.”

“Sometimes due diligence does take a bit of time, and because of data protection it is not always possible to get the information. Unfortunately when companies complain about delays, we cannot tell them that there are side issues. So I always advise people to rely on the Authority to do what it needs to do and let the regulatory process take its course.” “We are seeing a quantum leap because companies know that we pull out all the stops when we can and move very fast when we are able to. Practitioners do not always appreciate this as they want everything tomorrow,” he said.

This global reach is a major component in the MFSA’s next strategic plan. Of course, other jurisdictions not only look at Malta with respect but also with an element of envy, especially those which are seeing their own throughput dry up as they become less competitive and as their regulatory structures stiffen with age.

The growth brings with it challenges such as the need to ensure that there are enough human resources. The MFSA’s Education Consultative Committee has done a lot in this sphere and is currently following up a skills analysis report it carried out a few years ago by inviting practitioners and licensees to list their requirements.

There was a time when Prof. Bannister had to write regularly in international media to head off attempts to undermine Malta’s success. Today he sees this as a sign that Malta is on the right track. Still, he refuses to be overcome by rhetoric.

The fact that students at MCAST and the University get a stipend helps to attract youths. This unfortunately was creating a shortage of ACII qualified people for the insurance industry. However, the Authority intervened and funded eight students.

“You hear people say that in the financial sector we could become the Switzerland of the Mediterranean or the Bahrain of the Mediterranean or the Cayman of the Mediterranean but we want to be Malta and are not emulating anybody,” he says. “We do not look at what Luxembourg is doing. We are limited by our size and are not after quantity. So we want to keep the formula that we have, competitive with strong due diligence procedures.”

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The Malta Institute of Accountants has also been invited to join the committee to give its input, while the Malta College of Arts, Science and Technology has already got three courses with the MFSA, and the Authority is offering to fund another one to re-train people.

Prof. Bannister thinks that there are now more or less enough people working their way through the education system who intend to choose financial services as their career. But he thinks the key to filling the gaps is to retrain some of the underemployed people, such as women who are no longer in the workforce and who could easily change career. Overall, Prof. Bannister oozes a quiet confidence, forecasting that the MFSA workforce of 165 will grow to 175-180 by early next year at the rate it is expanding. The MFSA has delivered on its promise to make Malta a reputable financial services centre, which would add value to an economy that is becoming more and more services oriented. “On the surface it appears that there is no value-added in financial services and that the government is only getting tax. But any money flowing through a system – there are €8 billion in domiciled investment funds alone – leaves considerable non-interest income. Banks gain from it, as do insurance companies, accountants and law firms and an increasing number of employees are required to service this business. This is quite a difference from the value-added people are accustomed to in manufacturing.”

A financial stronghold Despite the financial meltdown, Malta’s performance over the past two years is a powerful testament to the stability of its financial services industry, says Kenneth Farrugia.

Kenneth Farrugia is Chairman of FinanceMalta, a public-private initiative set up to promote Malta as an international financial centre.

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alta is rapidly gaining international recognition as a brand denoting excellence in financial services. This is evidenced by the increasing number of reputable international financial services operators who have identified the strengths that Malta has to offer and have consequently set up their operations in Malta. The developments taking place in Malta’s financial services industry significantly contrasts with what has happened internationally as the world emerges from the grip of recession that took hold after the chaos of the financial crisis, where many countries around the world are taking stock, evaluating the damage their economies suffered and calculating the cost of a future recovery. Several will have to pay a hefty price. Deficit and debt burdens have soared across Europe, requiring tough budgetary decisions in the near future. In fact, despite the challenging market environment, which has in turn brought about both a transformation in the landscape of global financial markets and an upheaval that affected financial systems in most advanced economies, Malta’s own financial system escaped relatively unscathed. This was primarily driven by the robust and stringent regulatory framework as well as Malta’s adherence to sound banking principles. Consequently, these developments have not only been instrumental in attracting foreign financial institutions to Malta but have also protected Malta from the onslaught of the financial crisis.

In effect, Malta’s performance over the past two years is a powerful testament to the stability and confidence of its financial service industry. Indeed, the financial services industry in Malta grew by 22 % in 2009, employment in the sector rose to close to 7,000 and the island’s banks, investment managers and practitioners are handling billions of euro in turnover every year. This success confirms that Malta is on the right path to achieving its ambitions for this sector. It is a timely moment, therefore, to remember that in 2009 Malta was one of the top five performing EU economies in terms of GDP. The international crisis has had a limited impact on the Maltese economy. Malta was one of only two countries in the European Union that managed to reduce its deficit in 2009, confirming its commitment to fiscal consolidation. The financial systems and banking sector remained solid and, in their resilience, brought Malta international acclaim and raised its international profile. Indeed, the latest Moody’s Investors Service Report attested Malta’s high degree of resilience, stating that Malta’s A1 government ratings reflect the country’s “high economic resiliency and its very high financial robustness”. Undoubtedly, the driver of these strengths is led by the presence of a well-trained and motivated workforce. In itself, this reflects the importance of Malta’s education system which has been continuously strengthened and broadened to ensure that the growth of the industry’s various sectors is constantly supported by the availability of skilled and knowledgeable human resources.

The industry’s growth is also being driven by other equally important factors. These include the presence of a comprehensive legal and regulatory framework, as well as a competitive fiscal regime backed up by over 50 double taxation agreements. To these, I would also add a sophisticated ICT infrastructure, English as an official language, an enviable climate, and Malta’s unique strategic location as an EU country with strong Mediterranean links. Moreover, the presence of a single efficient regulator, the Malta Financial Services Authority, which has built a reputation for being a meticulous yet accessible supervisory body, ensures that operators are fully compliant with EU regulations. This is pivotal to Malta’s positioning as a reputable effective, stable and skilled jurisdiction.

also supported by a number of laudable international rankings issued by various international organisations. Just to mention a few, the European Commission’s latest Internal Market Scoreboard published in January 2009 emphasised how Malta has been quick to embrace the opportunities offered by the EU single market. It ranked Malta in joint first position out of all EU countries for the implementation of internal market directives, demonstrating both Malta’s efficiency in transposing European rules into domestic law and that its economy is one of the most integrated in the Union.

standards. This is a major achievement for Malta which has long fought for this recognition and which immediately placed it on the white list. In addition to these commendable achievements, Malta’s set-up is in accordance with European Code of Conduct rules and European Union directives and is also in line with OECD parameters as stated in the latest G20 meeting. All these initiatives are instilling confidence in international investors who are rapidly acknowledging that doing business in Malta means doing business at the highest benchmarks and standards possible. These high standards – in regulation, professional services, human resources, infrastructure, IT services and competitiveness – are what will ensure Malta is able to fulfill its potential as an international financial services centre.

Both the Government and the financial services industry services operators are building on these assets and competitive advantages and are led by the strong vision and belief that the financial sector can continue increasing its economic contribution, creating further wealth and employment opportunities. Malta’s thrust to position itself as an international financial services centre of repute, is not only evidenced by the compelling growth statistics – particularly those achieved by the funds, insurance and banking sectors – but

Moreover, according to The Global Competitiveness Report 2009-2010 issued by the World Economic Forum, Malta ranked 52nd among 133 economies in the global competitiveness table. In this report, Malta was also ranked as having the 13th soundest banking sector and again 13th in the financial sophistication category. Of interest was the CapGemini report prepared for the European Commission in 2009 which measured European eGovernment Services. Again, here Malta ranked first. Malta also ranked as one of the top five EU performers in terms of foreign direct investment inflows as a proportion of gross domestic product and was among 40 countries that were praised by the OECD for “substantially implementing” internationally agreed tax

Vodafone collaborates with the Royal Malta Yacht Club

Vodafone Malta has signed a collaboration agreement with the Royal Malta Yacht Club in Ta’ Xbiex with the aim of supporting the Club in its remit to organise races and to provide fitness, recreation and marine facilities to members. The agreement was signed by Georges Bonello DuPuis as Commodore of the RMYC and by Business Marketing Manager Daniel Grech on behalf of Vodafone Malta Ltd.

Within the context of the above and the internationalisation of Malta’s financial services industry, FinanceMalta’s main aim is to further strengthen Malta’s financial services brand through a comprehensive number of initiatives across various media. These initiatives include the organisation of conferences which to date have been organised in London, Frankfurt, Bahrain and China, the participation in third party conferences, organisation of webcasts, podcast, information supplements and various other similar initiatives.

“As a country with a rich maritime history, Malta has developed numerous facilities for sailing enthusiasts and established itself as an attractive yachting centre,” said Mr Bonello DuPuis. “On behalf of RMYC I would like to thank Vodafone for the welcome support that will help the Club hone in on beneficial opportunities for its members.” The RMYC is a private yacht club that runs a wide variety of action-packed racing throughout the year as well as a comprehensive social calendar. Malta’s climate provides near perfect sailing conditions throughout the year, ensuring the Club is kept busy with initiatives all year round. The Club is a favourite port of call for reciprocal members from all over the world. RMYC is the founding member of the Malta Sailing Federation and is deeply committed to maintaining and strengthening the yachting tradition in Malta. Vodafone Malta will be extending advantageous offers on its high-end services and products to RMYC, who will in turn pass on the benefits to its large member base. The collaboration between the leading operator and the Club is an initiative that fosters successful business relationships among different stakeholders in Maltese industry.

Money / Issue 03 - 17



Setting up operations in Malta the tax aspect The financial services industry has become one of the main pillars of the Maltese economy and its importance to the longterm growth prospects of the country cannot be overstated. Article by Neville Gatt, Steve Gingell and Mirko Rapa, all of PricewaterhouseCoopers, Malta

alta’s approach in this sector is one that has evolved and matured since the first companies carrying on international business activities set up operations in Malta in the late eighties. Since then, Malta has shifted its attention to attracting high quality financial services industry players to set up operations in Malta.

In this respect, Malta has sought to attract businesses that set up a physical presence in Malta which is commensurate with the level of operations carried out from Malta and which are able to put in place proper and adequate systems of supervision and control in line with Maltese and EU legal requirements.

In order to build a highly respectable financial services centre, Malta had to ensure that it has a robust regulatory framework so as to ensure that it only allows serious businesses to use Malta as a base for establishing their operations. This also enables Malta’s fellow European Union (EU) member states to have full confidence and trust in Maltese enterprises offering financial services in their jurisdictions since they are assured that the Maltese regulator is carrying out its duties in much the same manner and adhering to the same standards as their own regulators.

The corollary to establishing an operation with an appropriate amount of substance in Malta is that such enterprises are subject to the Maltese tax system on the profits that they earn. In this regard, Malta has adapted and developed its tax regime so as not to discourage enterprises from operating from Malta within the constraints and parameters allowed in terms of EU law and Malta’s international obligations.

The Maltese tax system

Company taxation In terms of the Maltese Income Tax Act, any person (including body corporates) who is both domiciled and ordinarily resident in

Malta is subject to tax on a worldwide basis. Companies incorporated under Maltese law are automatically both resident and domiciled in Malta. Foreign companies are considered as resident in Malta only if their control and management are exercised in Malta. Such companies are subject to tax only in respect of Maltasource income (including capital gains) and on income arising outside Malta (excluding capital gains) that is received in Malta. Companies are subject to tax on their business profits at the normal corporate rate of 35%. Profits are arrived at after deducting allowable expenses. The general rule is that tax deductions are allowed only with respect to expenses incurred wholly and exclusively in the production of the income but the law contains special rules on various items of deductions. Taxation of dividends Malta operates a full imputation system of taxation of dividends.

Money / Issue 03 - 19

Consequently, when a company distributes dividends out of profits on which it has paid tax, no further tax is due by the shareholder and a credit for the tax paid by the distributing company is available to the shareholders. Furthermore, tax refunds are available in respect of distributable profits allocated to the Foreign Income Account (FIA) and Maltese Taxed Account (MTA). Income allocated to the FIA consists of an exhaustive list of distributable profits resulting from taxable income arising or closely connected with income arising outside Malta. On the other hand, the MTA consists of taxed profits which have not been allocated to any other tax accounts. Subject to certain conditions, tax refunds are available to shareholders in respect of profits that have been distributed by a company, which profits have been taxed in Malta. The refund is typically of 6/7th of the Malta tax, i.e. the Malta tax paid grossed up with any amount of foreign tax actually suffered on foreign source profits. Other refunds are the 5/7th refund where the profits derive from passive interest and royalties and the 2/3rd refund where the distributable profits are allocated to the FIA and the company claims double taxation relief in respect of such income. Tax refunds are payable to shareholders within a few weeks from

20 - Money / Issue 03

payment of the corporate tax by the distributing company. The result of the abovementioned full imputation and tax refunds systems is an attractive tax burden on most distributed profits. Participation exemption A company is also entitled to claim a participation exemption in respect of profits derived from a “participating holding” or its disposal subject to satisfying certain conditions and to satisfying certain anti-avoidance rules. A “participating holding” typically exists among others where the company has a holding of at least 10% of the equity shares of a company or has a holding of equity shares involving an investment having a value of at least €1.164m at the date of purchase and is held by the shareholder for an uninterrupted period of 183 days. The application of the participation exemption ensures a zero tax burden on dividends received from qualifying participations and on gains made on their disposal. Other attractive tax features Apart from a low effective tax burden, Malta’s tax system offers a number of other attractive features which enhance the level of flexibility of the Maltese tax system: a network of more than 50 doubletax treaties concluded both with developed and

developing countries; as an EU member state, access to parent-subsidiary, interest and royalties and mergers directives; no withholding taxes on dividends, interest, royalties and capital gains on most share transfers paid to non-residents, irrespective of the existence (or otherwise) of a double tax treaty, subject to satisfaction of certain straight-forward conditions; • availability of unilateral (including underlying) tax relief •no thincapitalisation rules •no controlled foreign company regime. No capital duty on share issues and exemption from duty on transfers of shares for companies having the majority of their business interests outside Malta.

Conclusion The attractiveness of Malta as a financial services centre is based mainly on critical commercial features such as the availability of skilled human resources, a competitive cost-base, an accessible regulator having EU-level regulatory standards etc. However, given the highlymobile and competitive nature of the financial services sector, having an efficient tax regime is also important in order not to discourage blue-chip international investors from setting up business activities in Malta. This is achieved through a mix of general measures such as those referred to above which provide an attractive tax burden and material flexibility for investors.

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A mind game Vanessa Macdonald analyses some of the key perceptions that emerge from the Ernst & Young report.


that Malta’s attractiveness as a location would improve in the next 3 years.

The 6th edition, released earlier this summer, had few surprises: two-thirds of respondents said that the investment criteria had deteriorated because of the cost of energy and the reliability of the supply (60%), while the cost of human resources had also risen (23%).

The level of English of Maltese employees remained one of the most attractive investment criteria for foreign investors, mentioned by 90%of respondents. However, 86% also believed that employees’ productivity and the adoption of the euro contributed to its attractiveness. 86 per cent of respondents said productivity levels were very attractive or attractive, while 69% said labour costs were very attractive or attractive.

hen it comes to investment decisions, perceptions play a hefty role, which is why the Ernst and Young Attractiveness Survey is anticipated with a mixture of relish and hesitation.

However, when it came to where Malta had improved, there was more of a mix of factors. The domestic market had improved (21%), as had the availability of human resources (17%), cultural entertainment (16%), government assistance and support (15%), air transport cost (15%) and leisure activities (15%). The responses on the availability of human resources varied by sector: two-thirds of the banking, high-tech manufacturing, and other financial services said it had improved, while almost half in the gaming and pharmaceutical sectors had seen no change. A deterioration was noted by the other half of the companies involved in pharmaceuticals, and almost half of ICT firms. Overall, 40% of foreign-owned companies surveyed by Ernst & Young said their perceptions of Malta as an investment location improved over the past year, compared to 23% who believe it has deteriorated. And it gets better when looking ahead. Half said

22 - Money / Issue 03

At the other end of the scale, companies were far less convinced about energy, with rising costs and blackouts on their mind, with 71% stating that energy supply was an unattractive factor and 80% stating that energy cost was. Energy cost and supply were also the only 2 criteria where the majority executives perceived significant changes over the past year, and none saw a positive change; 67% saw cost worsen and 60% saw supply deteriorate. 72% said that they had installed energy-efficient devices, and most of the rest said that they had not done so either because of lack of funds or because they operated in rented premises. 20% said they invested in renewable energy devices, and 80% adopted internal procedures to make employees aware of energy consumption.

Survey participants were asked to name the most important criteria (up to five) for their company to expand, develop or retain its investment in Malta

Base: All 90 respondents. Total percentage superior to 100% since more than one criterion could be selected.

Money / Issue 03 - 23

Suggestions to Government to improve Malta’s competitiveness

Base: All 90 respondents. Total percentage superior to 100% since more than one suggestion could be mentioned.

The survey found that companies were also negative about the judicial system, with only 25% describing it as very attractive or attractive and 18% rating it as not attractive – although only 2% listed improving the Court system when asked to suggest ways to improve Malta’s competitiveness. Only 24% found environment laws and regulations attractive, and a dire 4% were complimentary about the planning regulations. Nevertheless, the most important investment criterion was the corporate tax rate, mentioned by 46% of respondents. 64% described it as attractive, while just 17% deemed it not to be. Second was the availability of local human resources, mentioned by 42% and deemed attractive by 54%. Bureaucracy was a prime concern when respondents were asked about what government could do to improve the country’s competitiveness, and was mentioned by 67% of them. Specific issues mentioned include the government agencies’ response time

24 - Money / Issue 03

to queries, a perceived adversarial approach towards foreign companies, and summer working hours. The survey also indicates that companies are more optimistic over what will happen in the next 3 years; 50% believe things will improve, and just 10% expect things to worsen. This is not that bad considering that 82 per cent of the companies had been affected by the international recession. Most experienced a decrease in business activity, while a third witnessed a decrease in investment income. Only a third of respondents regarded the international economic environment as being in a position to support their company’s growth by September 2010. Nonetheless, 74% still said that they were considering expanding in the future, the same levels as those who did expand in the last three years (76%). Ernst & Young’s 2010 Malta Attractiveness Survey was based on the views of top executives from 90 foreignowned companies, which between them employ over 14,000 people.

Taking stock 2009 was a record year with 12 corporate bonds and one equity admitted to the Malta Stock Exchange’s recognised lists, besides 11 new issues of Government Stocks, amounting to €800 million in all. In addition there were 61 issues of Treasury Bills amounting to a nominal value of over €1.6 billion. Malta Stock Exchange chief executive officer designate Eileen Muscat speaks to Money about these high levels of activity.

Whereas until a few years ago, there were only a handful of corporate bonds, lately there has been a flurry of activity. Are private investors doing their homework before they take the plunge? It is now 18 years since the first equity listing and 16 years since the first corporate bond listing on the local market. Since those first tentative steps all market players, be they the issuers, regulators, intermediaries, and not least, the investors, have gained in confidence and experience. This development can be seen from both trading and investment patterns over the years as private investors are becoming more knowledgeable, sophisticated and responsive to the changing financial scenario. While the overwhelming response to corporate issues at the primary market may indicate that private investors will invest in anything as long as they get a good return, this is not the case. It is true that a high coupon rate and the repute of the issuer have a significant bearing on whether an investor will participate in an issue or not – this is inevitable. After all, we all want to get the best return on our investments, particularly when investments are being bought to hold to maturity. But an analysis of corporate issues does indicate significant differences in, for example, the number of investors participating in an issue, the average size of

26 - Money / Issue 03

an investment or the spread of investments held by investors. It is clear that investors are becoming more discerning and are learning to ask the right questions. We still have a way to go and all have a part to play – regulators, market, intermediaries, issuers, educators – in developing and honing the skills of investors. Knowledgeable investors are confident investors, and confident investors participate actively in the market.

Although there was so much activity, when you analyse the listings, there were only three new issuers, one through the issue of an equity and a corporate bond while the other two issued corporate bonds. In 2010, there have been no new equity issues. Do you think that interest is waning? During the first seven months of the year there have been 12 new corporate bond issues as well as four roll-over issues, with a total issue value of around €280 million. Two of the issuers came to the market for the first time. Two equity issues, one of which will be by a first-time issuer, are scheduled for the fourth quarter of the year. Interest can therefore hardly be said to be waning. Indications for the first half of 2011 are very positive, both in respect of equities and corporate bonds. There are also very

positive indications that during 2011 we should see new types of instruments being admitted to our market.

In spite of all the activity on the main list, there was only one company added to the Alternative Companies List. What is the reason for this, especially given the fact that credit is so much tighter? Coming to the market for the first time is not an easy process, particularly for new or small companies that have to build up the governance, management and operational structures that are required, whether seeking admission to the Official List or the ACL. Indeed, as the only significant difference between one listing regime and the other is a requirement of a three-year operating track record for admission to the Official List, many companies find it more opportune to build up the required infrastructure, at the same time building up the required track record, and opting to go straight for listing on the Official List, enjoying from the outset the benefits attributed to admission on the Official List. Currently, consideration is being given to proposed changes in the ACL regime to make this a fast-track, simple and costeffective listing process particularly aimed at new companies and start-up projects.

Knowledgeable investors are confident investors, and confident investors participate actively in the market. In 2009, the MSE saw a slight decrease in the number of transactions, to 13,518 from 13,626 in 2008. Why was there so little fluctuation? And are you seeing more private investor transactions, compared to institutional investors? Comparative 2008 and 2009 trading figures show a significant decrease in trading in equities, both with regards to turnover value, as well as the number of trades effected, echoing the decrease in equity trading in most markets as a result of the financial crisis. Conversely, however, during 2009 trading shifted towards the corporate bond and Treasury Bill markets, which more than compensated for the loss in equity trading and the slight decrease in trading in Government Stocks. 2009 also saw an increase in private investor transactions in the equity, corporate bond and Government stock markets, as can be seen from the increase in holdings in these securities registered between the end of 2008 and the end of 2009. At the same time, institutional investors were more active in the Treasury Bill market throughout 2009. For the first seven months of the current year, market figures show an upsurge in trading activity across the equity, corporate bond and Government stock market, with the total turnover figure already exceeding €314 million, a year-toyear increase of almost 35 per cent.

The total trading turnover in 2009 amounted to €553 million, an increase of 13.3 per cent. Is this significant, given the financial crisis? The local financial sector, including the capital market, has not been immune to the global financial crisis. However, the financial sector has proven to be very robust and has emerged largely unscathed from the fall-out of the financial turmoil. The capital market itself, being primarily a domestic market, has been insulated from the fluctuations of more global markets. Significantly, however, confidence in the local market as a whole remained high. So while equity trading took a significant hit during the first six months of the year, investors exiting the equity market did

not place their investment elsewhere, but rather moved such investment to another sector of the market, primarily the corporate bond market. The primary market was also very active during 2009, I believe primarily as a result of increasing awareness of the capital market as an effective alternative means to raise capital. Of course, the active primary market, particularly the corporate bond market, had a knock-on effect on the secondary market, with a resultant increase in trading. Given the limitations of our market, the 2009 primary and secondary market figures are not insignificant. These figures denote investor confidence which ultimately is what drives and expands a market.

The MSE Index peaked at over 6500 in February 2005, plunging to 2600 in April 2009. It now stands at 3507. While some of the volatility comes from the overall financial scenario, there are many industry watchers who feel that the share prices do not reflect the fundamentals of the companies and that a market maker is needed. What is your opinion on this issue? A share price is whatever an investor is prepared to pay. So while the financial fundamentals of a company have a bearing on what that price may be, there are other factors which determine a share price – an investor’s own interpretation of company fundamentals, liquidity on the market, the economic sector in which it operates, other possibly more attractive securities available to invest in, or an actual need to sell to change investment into cash. All these factors may come into play. The presence of market makers – providing liquidity to the market and operating within stipulated parameters – would go some way to smoothen out some inconsistencies that may arise from time to time in share prices. However, the presence of market makers does not, on its own, remove the effect of any other contributing factor to the share price, particularly in a highly retail market. Current discussions regarding the introduction of market makers to our market are at an advanced stage.

The movement in share prices this year has been particularly detached from the companies’ results, with companies that announced huge profits seeing double digit drops, and others that saw huge drops seeing double digit increases. What is going on? Throughout 2009, when the financial turmoil was at its height, the performance of national economies had a considerable impact on share prices, irrespective of the performance of the individual companies. The local market was not immune to this. Companies from some sectors suffered from perhaps perceived instability and unsustainability of certain economic sectors while still posting multi-million euro profits, albeit at lower values than the previous years. Conversely, less profitable companies operating in different economic sectors may have gained from a more positive perception of the sector. Looking at financial results and comparing figures is not enough – this can be misleading. It is what lies behind and what has resulted in such figures that is important.

The MSE made a profit of €1.19 million in 2009, which sounds like quite a plum. What’s happening with privatisation? Privatisation is primarily the shareholder’s (Government’s) call and not management’s call. Privatisation is one of a number of potential routes towards internationalising the Exchange’s business and creating a more vibrant exchange. Regardless of privatisation, both internationalisation and business creation remain objectives in themselves. What is clear it that the Exchange has an important role to play in Government’s vision for the financial services sector which envisages this sector contributing up to 25 per cent of our GDP by the year 2015. In order to contribute towards this vision, the Exchange will continue in its efforts to improve efficiencies and generate new business thereby delivering increased value to its shareholder, the Government, and the economy as a whole.

Money / Issue 03 - 27


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Alex Mangion is the Managing Director of MPM Capital Investments Ltd, 81, B. Bontadini Street, B’Kara. MPM Capital Investments Ltd is licensed to conduct Investment Services Business by the Malta Financial Services Authority. You may contact Mr Mangion on or 2149 3250.

The psychology of investment Alex Mangion believes it is important to understand the behaviour of investors, with the help of a few psychological insights


wo years have passed since we witnessed the unexpected. An institution which was considered too big to fail eventually failed. The fall of Lehman Brothers on September 15, 2008 led to unprecedented events that have seen millions of jobs lost, negative investment returns and above all lack of trust and confidence. Numerous stimulus packages and government guarantee schemes were structured just to achieve one target: regenerate trust and confidence in the markets. Who would invest in an asset if s/he cannot trust the counterparty? Investing is not just the economic activity most people think it is. It is a web of human behaviour and emotions that direct the rises and falls of the markets and investors. Though hardly ever thought of as such, the stock market is a hub of human behaviour and thought patterns. At the other end of the transactions is another human being, a human being with emotions, someone who is experiencing feelings that could range from optimism to over-confidence, greed or fear. A human being whose personality and mood affects the stock market. And that is what creates the psychology of investments. This is more commonly known as “behavioural finance”. When investing, the pendulum swings between two basic groups of emotions: optimism and greed, and fear and caution. When fear is created within the stock market, investors start selling shares to avoid losing their savings. It takes selfdiscipline on the part of the investor or stockbroker to look beyond the initial feeling of fear in order to judge it rationally. A falling market can fall even further due to fear. Another psychological trend in the markets that affects emotions is the herd mentality. Stock market bubbles and crashes are great examples of the herd mentality. A herd mentality in general tends to begin and end with extremes of emotions: frenzied buying to cause a bubble and then selling in a panic to trigger a crash. In this scenario, one will encounter otherwise sensible people who act against their better judgement; individuals don’t want to be left out and rush with the crowd into and out of the market.

Kahneman and Tversky (1979) introduced a new class of utility evaluation where investors weigh losses more heavily than gains. This is called the “prospect theory”. Psychological studies have repeatedly demonstrated that the pain of losing money from investments is nearly three times greater than the joy of earning money. Investors often have more trouble selling than buying. If a stock is heading up, investors wait, hoping to increase their gains. If it is heading down, investors wait too, hoping to recoup their losses. Of the two, the latter is the bigger problem. This suggests investors do not prefer to “cut their losses”. On the other hand, the concept of positive feedback trading refers to a trading strategy in which investors buy after prices rise and sell after prices fall. This type of trading can result from herding or high expectations. Investors tend to become more optimistic when the market goes up and more pessimistic when the market goes down. Hence, prices fall too much on bad news and rise too much on good news. Investors may avoid selling stocks that have gone down in order to avoid the regret of having made a bad investment and the embarrassment of reporting the loss. They may also find it easier to follow the crowd and buy a popular stock: if it subsequently goes down, it can be rationalised as something everyone else owned. The possible fear of regret is a factor driving some investors’ behaviour. This factor is most likely to dominate where investors are not confident about their information or ability to process it. Investors may use financial consultants as scapegoats thereby reducing their responsibility for poor investment decisions. Market discipline is indispensable to succeed in stock markets. Investment time horizons should be set and followed. Unfortunately, in a rising market, investors have long time horizons; they are not only thinking of the future, they are willing to plan for the future. They look at their investment returns over three, five and even 10-year periods. Conversely, in a declining market, investors shorten their time horizons dramatically.

Money / Issue 03 - 29

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30 - Money / Issue 03

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Money / Issue 03 - 31

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Simon is the Senior Partner at Simon Tortell and Associates. He was at the forefront of the development of the financial services industry in Malta, having advised on the incorporation and regulatory compliance of both Professional Investor Funds and UCITS in Malta.

Simon Tortell explains to Money what supported Malta’s growth as a financial services centre - and what will help it grow even further.

Despite the economic downturn, Malta has continued to strengthen its position as a financial services centre. To what would you owe this success and growth? Malta’s stable financial system and well regulated financial services regulatory environment has mitigated the effect of the global financial crisis on local banks, insurance companies and investment services providers. In fact, international players in the financial services industry are now looking at Malta as an ideal location within the euro zone to relocate their activities. Malta’s success factors in the financial services industry are: • An approachable and dynamic financial services regulator: the Malta Financial Services Authority (MFSA); • The competitive and transparent fiscal regime coupled with a comprehensive double taxation treaty network; • The euro being Malta’s official currency; • The strong and EU compliant legislative framework; and • The availability of trained multi-lingual personnel.

How important is a strong legislation in financial services? A strong and transparent legislative framework is certainly one of the key elements contributing to the success of a financial services jurisdiction. Despite being a civil law jurisdiction, the corpus of Maltese laws comprises English Law elements. The most notable example is the Companies Act. The Maltese financial services legislation is versatile and able to relate to other legislative frameworks. The local financial services regime also complies with EU directives and regulations, and therefore financial services firms licensed in Malta may benefit from the passporting regime, which allows them to offer cross-border services across the European Union. The Maltese regime also provides for a transparent and streamlined approach which allows companies incorporated overseas to relocate to Malta.

How does your firm keep up with the increasingly complex and changing environment of financial services? Keeping abreast with developments in the financial services industry, both locally and overseas, is certainly one of our main areas of focus. A dedicated team of professionals within our firm monitors these developments, produces regular legislative updates for our clients and contributes in specialised financial services publications. Our firm is also actively involved in training programmes, conferences and financial services associations overseas. In fact, Simon Tortell & Associates is a member of the International Swaps and Derivatives Association (ISDA), the International Bar Association and the Alternative Investment Management Association (AIMA).

One of your primary areas of expertise and success are PIFs. PIFs are highly flexible and lightly regulated, but is this quality achieved at the expense of safety?

• Protection of family assets against third party claims and spendthrift heirs; • Appointment of trustee enables the efficient administration of the deceased’s assets; and • Devolution of deceased’s assets to beneficiaries is simpler, faster and less complex when compared to succession requirements.

With regards to taxation, what are the elements that constitute effective corporate tax planning? In March 2007, Malta promulgated amendments to its tax legislation pursuant to an agreement reached with EU authorities in respect of the adoption of a nondiscriminatory tax system. The cornerstone of Maltese tax legislation is the principle of imputation which allows that upon the receipt of a dividend, shareholders are credited in full with the underlying tax paid by the company. Other key features of the Maltese tax system are:

Malta’s success in the licencing and re-domiciliation of Professional Investor Funds (PIFs) has played a key role in the development of the entire local financial services industry. In fact, during the past years we have also seen a number of internationally-renowned hedge fund managers and administrators establishing a presence in Malta. As a firm we have been actively involved in the incorporation and licensing of PIFs in Malta as well as the development of innovative PIF structures and investment techniques. Despite the fact that the Maltese PIF regime is more flexible and less tightly regulated than that applicable to retail investment funds, the MFSA has achieved a balance between flexibility, adequate regulation and adherence to international obligations in so far as the PIF regime is concerned.

• Participation exemptions;

What are the advantages that trust and estate planning have over a will?

• Continue to invest in financial services training, continuous professional development programmes and infrastructure;

The use of a trust as an instrument to dispose of assets after an individual’s death as an alternative to a will has gained significant momentum during the recent years. The main advantages of a trust over a will are:

• An exemption from tax on income derived by collective investment schemes; • Extensive network of double taxation treaties; and • Possibility of Advance Revenue Rulings on international transactions.

What must Malta do in order to keep its position as a top financial services centre? • Promotion of Malta as a financial services hub internationally; • React swiftly to developments in the financial services industry, through legislative instruments, MFSA rules and regulatory policies; • Retain competitive edge in so far as costs and speed of execution are concerned;

• Expand tax treaty network; and • Enter into further memoranda of understanding with overseas regulators and financial services bodies.

Money / Issue 03 - 33

Mark Hollingsworth is Managing Director of Hollingsworth International Financial Services, which is authorised by the Malta Financial Services Authority to provide investment services, licence IS/32457.

The versatile portfolio manager Mark Hollingsworth says that by investing cheaply, effectively and wisely, you can diversify your portfolio.


Equity Indices


Gold Bullion ETF

IShares Brazil

FTSE100 Autocall 11%

Short Silver ETF

IShares Eastern Europe

Blue Chip Income Note 8.1%

Leveraged Crude Oil ETF

IShares Australia

3 Year Phoenix Note 18%

Grains ETF Global Nuclear Energy ETF


myth often observed by investors is that in order to spread your risk into more sophisticated investments and alternative strategies, you require substantial capital. The reality is that you can gain exposure to hedge funds, managed futures and structured notes at very low entry levels as long as you have a portfolio manager who is able to pool investors’ capital. Historically, a typical investment portfolio would consist of overseas and local equities (typically bank shares), bonds (including emerging markets) and possibly equity or bond funds from an overseas company registering their funds in Malta. While the choice in the local market is improving, liquidity issues remain a concern and investors are not diversifying enough away from the local marketplace. Given the choice, most investors would prefer to invest in global opportunities, if the risks and prospects are properly explained. Having your capital protected is very popular,

especially to new investors. Some of the local banks offer such products en masse and clients can participate in this plain vanilla approach. But what if investors want to invest in gold or oil or the Brazilian stockmarket as opposed to the traditional standard FTSE or Eurostoxx offerings? Can their advisor do this while protecting their capital? Typically the response is negative as minimum levels for such structures are often in the region of €1 million. If on the other hand, your advisor or portfolio manager can gain access to international banks then the door is opened to a world of choice. Whereas the minimum trade may be €1 million, the manager can pool individual trades, often from as little as €10,000, and then place one aggregate trade of €1 million. The same principle applies to many hedge funds or alternative investments. Often perceived as being only for the rich and famous, investors can now trade from low levels if their manager has a good relationship with the fund managers. Having a

If your advisor or portfolio manager can gain access to international banks then the door is opened to a world of choice. sizeable asset base allows the manager to bring in new investors who piggy-back onto the fund without having to commit large amounts. If you do elect to invest internationally, a mistake often made by investors is to only consider investment funds from recognised banks and financial institutions. There are however much cheaper, easily accessible ways of investing into almost any global stockmarket, commodity or currency in the world. Exchange Traded Funds and IShares are used by many portfolio managers to allow them to trade intra-day without surrender penalties or lock-in periods like many investment funds. Imagine therefore the hypothetical portfolio above. This portfolio contains a truly global exposure to commodities, equities and income notes, the latter being in the form of structured income notes that pay a fixed income with inbuilt capital protection. To the average investor, the use of ETFs and IShares will be unheard of but they are a fabulous way of investing cheaply and effectively into almost any market you choose. You avoid the initial fees that you would incur with fund managers and they also carry a much lower annual management fee. A portfolio manager’s job is not only about performance but controlling costs also. If they can give investors a truly international portfolio that includes alternative investments, capital protection and the use of low cost trading tools, then the investors are really getting a portfolio that may be perceived to require a very high capital investment. In reality, managers could offer their services and give a diversified approach for investments in the region of €50,000 upwards – therefore appealing to a lot wider clientele and not just the super rich.

Money / Issue 03 - 35

Malta’s opportunity in Real Estate Investment Trusts Malta should take advantage of growing opportunities in REITs, says Reuben M. Buttigieg.


Reuben M. Buttigieg is Managing Director of Erremme Business Advisors and is currently Council Member, Honorary Treasurer and Memberships Committee Chairman of the Malta Institute of Management. He is also director of MIM Training and Development Ltd.

eal Estate Investment Trusts are collective investment schemes that derive their primary income from investment in real estate. They are very popular in Far East countries, such as Japan, Singapore and Hong Kong. REITs are structured to pool funds from investors and invest in income-producing property or property development. In Malta, the CIS structure that can be used to establish REITs is the unit trust. One characteristic that is typical of REITs is its strong dividend yield policy. REITs must distribute a minimum of 90% of income generated to unit holders. Depending on the objectives of the REIT, it can be established as a closed-ended fund listed on a stock exchange, amongst other structures. Various countries are seeing growing opportunities in REITs, such as Germany, and its introduction of G-REITs. Islamic finance, which is experiencing a phenomenal growth, has not let this opportunity go by. Islamic REITs, I-REITS, are similar to conventional REITs in structure but have certain characteristics unique to them, the main difference being that I-REITS would be

Sharia compliant. The first issue of Guidelines of I-REITs, by the Securities Commission of Malaysia, defined these CISs as investment vehicles “that propose to invest at least 50% of their total assets in real estate, whether through direct ownership or through a single purpose company whose principal assets comprise real estate.” The methodology of I-REITs starts with it being set up as a unit trust. This requires establishment in the form of a written instrument. A call is issued for prospective investors who buy a unit of the I-REIT, therefore becoming unit holders. The pool of funds is then used to purchase real estate. The property may be used to generate income by means of rent, or alternatively, by acquiring land, developing it, marking it up and selling it off. Due to the level of expertise required, it is the norm for trustees to be legal persons with sufficient resources to take on this responsibility. The trustee, who operates in Malta, is obliged by Malta’s Civil Code to act in the best interest of the unit holders (as beneficiaries), and the Trust and Trustees Act imposes obligations of, among others, duties of maintaining proper records and providing information as requested by the beneficiaries.

Money / Issue 03 - 37

The trustee may be granted the power of delegating certain duties, in managing the I-REIT’s assets, to a property management firm. This firm will be in charge of various duties such as those of determining rent amounts, budgeting, preparing monthly accounts, maintaining the property and advising on the purchase and sale of property.

Malta has different legislative instruments that facilitate the establishment of both Real Estate Investment Trusts and Islamic Real Estate Investment Trusts. In case of I-REITS, a portion of the pool of funds may be invested in fixed income instruments such as asset-backed securities (Islamic bonds) and non-real estate-related assets, cash and deposits which are Sharia-compliant, as well as liquid assets (in securities which are nonproperty related).

The Trust and Trustees Act is an ideal instrument which gives REITS and I-REITs the possibility of operating within a regulated regime within the European Union, giving the necessary flexibility in its operations. This is particularly so in the case of I-REITS and the appointment of a Sharia Board, which is required by all Islamic financial and commercial institutions to ensure adherence to Sharia law in their operation. This Board is composed of Sharia scholars and may assist the trustee in the compilation of the I-REIT annual report. I-REITs are not allowed to invest in non-halal activities. Trustees will need to ensure that their investment decisions are Sharia compliant. Should the case arise where investment is to be made in haram activities, the Sharia Board has the right and duty to veto the investment. In order to do this, Sharia Boards may be appointed as protectors. Also, the I-REIT is not permitted to own property where the tenants operate nonhalal activities – that which is unlawful by Sharia. Prior to commencement of business, this condition will be stipulated in the trust instrument. From a tax perspective, the REIT is subject to CIS income tax regulation. Income tax law differentiates between two types of CISs, those which are prescribed funds and those which are non-prescribed funds (being more fiscally advantageous). The main instances where this transaction is liable for tax are two. When fungibles are

settled on trust by the settlors and when tax is liable to be paid by unit holders on income received. However, in the case of REITS that have most of the assets outside Malta, the Malta Tax Regime is an interesting one to explore. This is even more so if the unit holders are non-Maltese residents. The wide Double Taxation Treaty network that Malta has with various countries may further mitigate tax implications, if any. The benefits investors could reap from both REITs and I-REITs are worth looking at. By investing in these investment schemes, investors can receive a stable yet mixed portfolio of assets under professional management bound by fiduciary obligations towards them. They may offer enhanced liquidity for added security and high dividend distributions for stable returns. Also, investors’ interests may be protected against fluctuations in the market by means of inflation hedging. Malta has different legislative instruments that facilitate the establishment of both REITs and I-REITS. The advantages of the Maltese system vary according to the target investors and/or target assets. Given the increased popularity of REITs, and in the light of Malta’s business friendly environment, the use of this instrument (REITs) is bound to increase more and more in Malta. In fact, it appears that various international institutions are exploring the opportunities offered by Malta in this context.

MIM Business Resources and Information Network (BRAIN) The events that hit the planet over the years and the global recession, have revolutionised our workplace. Entities can no longer remain passive, the need to form part of an association or membership that can offer up-to-date development is now essential. The Malta Institute of Management has reviewed the Corporate Membership Scheme offering two options namely – Standard and Premium Packages. The Premium Package offers access to the BRAIN Portal that provides members with access to various management e-journals, terms, definitions, on-line training and education videos. Contact MIM at or at 21453097

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John Tortell is the Director of USA Risk Group (Malta) Ltd., and was the first Chairman of the Malta Insurance Managers Association.

Insurance management in Malta Malta is set to become one of Europe’s leading captive insurance domiciles, says John Tortell.

Malta has developed innovative alternative risk solutions that enable corporations to maintain affordable and flexible insurance coverage, improve cash flow, and control expenses.


hen Malta joined the European Union in May 2004, it had already taken steps to implement a regulatory framework that operated to EU standards and could accommodate pure captive insurance companies. It now looks set to become one of Europe’s leading captive insurance domiciles. With a captive insurance vehicle, companies stabilise coverage for specific exposures while participating in the underwriting profit and investment income. In addition, captives control the processing of claims, have flexibility with policy provisions, and gain special cash flow advantages. With expert implementation and management, a captive or risk retention group gives companies an excellent tool to help manage risk and control costs. Pure captives are classified as Affiliated Insurance Companies and are granted some important exemptions from some of the provisions of the Insurance Business Act which regulates all Maltese insurers. For instance, they are granted exemption from contributing to the Protection and Compensation Fund and from paying duty on contracts of insurance relating to risks outside Malta. Malta can offer both pure captives and captives writing third party business a wealth of benefits. The first is the ability to write policies directly into the EU and European Economic Area – full EU membership enables Maltese captives to dispense with the

need for fronting companies into the EU/European Economic Area.

secretarial services; cash management services; and regulatory compliance.

Another benefit is an effective and responsive regulation – this is to EU standards and is both flexible and responsive, for which the most successful established captive domiciles are favoured. Protected Cell Companies legislation enables a PCC to be formed in Malta whereby each cell’s assets and liabilities are legally separated. Also, an insurance company insuring risks outside Malta can receive tax refunds which reduce the effective tax rate in addition to Malta having double taxation treaties with 60 countries. There is also migration from other jurisdictions – the Continuation of Insurance Companies Regulations 2003 enables captives to be easily relocated from other jurisdictions which have similar legislation.

The training process has also developed locally. Students can study insurance specifically both at the University of Malta where specialisation is obtained in financial services and the Malta Insurance Training Centre where insurance-specific courses are offered in collaboration with the Chartered Insurance Institute of London. These all help in the process of attracting more youngsters into the financial services field where they are likely to obtain good placements after graduating.

Moreover, Malta is an established financial centre – insurance, legal and accounting expertise is all available within Malta’s highly trained professional workforce.

Malta has developed innovative alternative risk solutions that enable corporations to maintain affordable and flexible insurance coverage, improve cash flow, and control expenses. In these days of cost cutting measures, it is one of the most important features to any development of new international markets. These are done in the form of non-traditional solutions to create a custom designed product.

Malta will be worth considering as the location for a captive where the ability to issue policies directly into the EU/ EEA may provide significant savings on fronting and collateral costs. Among the services that local managers provide will be: preparation of feasibility studies; incorporation and licensing of captives; underwriting captive risks; reinsurance placement; accounting, administration and management of captive; corporate

As a jurisdiction we have now earned the reputation that ensures clients will always be dealing with teams of professionals that provide the full range of services for consultancy, project management and ongoing management services for captive insurance companies. This includes the legal, auditing and regulatory field with all sectors working hand in hand to create an effective insurance domicile.

Money / Issue 03 - 41

It takes Excelsior’s bespoke hospitality to get your deal done and dusted.


e extend our Grand philosophy of luxury, comfort and service to each and every guest, especially our business guests. Because when your mission-critical deal is done here at the Excelsior, our 5-star hospitality can turn your new deal into a full-blown corporate event. Our eventing skills and state-of-the-art technology are crafted to fit both your corporate culture and your budget. We bring purpose-built, corporate and banqueting

facilities to your conference table, too, should you need it. There’s room for 1,000 seated delegates in 4,026 square metres of space with 14 different venue formats for you to choose from. For the comfort of your delegates, the Excelsior has 430 deluxe and Executive bedrooms with picturesque views across the waters of Marsamxett Harbour. Call the Excelsior sales team now on (+356) 2125 0520 or email quoting M01, to see what kind of 5-star bespoke deal we can do for you.

A Member of

Trusts and estate planning Dedicating some time to figure out and finalise your most important estate planning goals is one of the best ways to ensure that your wishes will be respected, says Andrew Chetcuti Ganado.


rafting a plan that provides for everyone you love once you come to pass away is no easy task as it requires amongst other matters sorting out how your wealth is going to be distributed, succession tax paid for, how your minor children will be provided for, or who will run and manage your business. You might even wish to plan out in advance the execution of decisions pertaining to your healthcare requirements should you be unable to handle this yourself. You have no way of making sure that what you want to happen will actually happen unless you plan for it. Moreover, if you do not wish to rely on your spouse and children to work it out, you should consider resorting to a solution that addresses this need directly – an estate plan. Estate planning helps you transfer your accumulated wealth from one generation to another as well as to charities or other persons. If you carefully plan your estate, you will also be able to choose who will look after your minor children or even yourself should the need arise. If, on the other hand, you are still considering the option of drawing up a will or testament, it is worthwhile knowing that a trust is an ideal medium for estate planning and will allow you more flexibility and confidentiality than a will. Still, you may

also consider opting for a testamentary trust that comes into effect upon your demise. There are a number of benefits in setting up a trust. A trust is an extremely useful instrument because it gives you access to tailor-made solutions that address your needs and concerns directly – you will benefit from the peace of mind of knowing that your wealth is being managed and protected by professionals, with the added benefit of deciding how and when your family will inherit your assets. This will simplify your estate administration besides avoiding the lengthy and costly succession procedures for your family upon your demise. Presently you are probably in a position to manage your own estate – however, it is worthwhile considering making a plan that addresses the eventuality of your not being able to handle your affairs at a later stage in life. A trust can assist you should such an event happen. The trustee, guided by the terms of the Trust Deed and your Letters of Wishes, will manage your estate on your behalf in an impartial and objective manner – ensuring that your financial needs are met, thereby avoiding any abuse or mismanagement of your own estate by inexperienced family members or third parties.

Andrew Chetcuti Ganado is Head Trustee Services Unit at Bank of Valletta.

When acquiring or holding immovable property in trust, keep in mind that immovable property which is settled or acquired in trust does not form part of your estate any longer. Therefore, it will be subject to any succession tax upon your demise. Consequently your heirs will not be confronted with the decision of having to sell the property should there not be sufficient funds to pay the relative taxes. Once you have transferred your immovable property into trust for your own benefit during your lifetime, the property can still be used and enjoyed, rented out (rental income will be distributed back to you), used as security against any facility, or sold. When sold, the proceeds may either be held in trust for your benefit or distributed back to you or to any other appointed beneficiaries under the trust. There is also the aspect of business succession planning. After having worked hard to establish your own business, it would be a pity to see it fall by the wayside should something happen to you. This can be avoided if you prepare a business succession plan. Depending on your business needs, a trustee can help you plan for the future should you no longer want or are unable to run your business any more. What are the assets that can be transferred into trust? You can transfer your portfolio of investments and securities (both those held in Malta and overseas), bank accounts, works of art, paintings, jewellery and antiques as well as all kinds of immovable property. Should you transfer your portfolio of investments into trust, you will still be able to avail yourself of discretionary portfolio management and investment advisory services with BOV’s Wealth Management Division. When you choose Bank of Valletta as your trustee, you will enjoy peace of mind knowing that the trust is under the ownership, management and control of a reputable bank offering a dedicated professional service by a fully fledged Trustee Services Unit. We will work closely with you to develop customised solutions, while ensuring that your needs are fully understood, continually evaluated and met – including the maximisation of your wealth. For more information about Trustee Services call on Tel: 2275 1565 or send an e-mail at Bank of Valletta p.l.c. (BOV) is licensed by the Malta Financial Services Authority as a credit and financial institution and to conduct investment services business. BOV is licensed by the MFSA to carry out trustee services under the Trusts & Trustee Act (Chapter 331 of the Laws of Malta).

Money / Issue 03 - 43

Stuart Fairbairn is a pensions consultant at Middlesea Valletta Life.

Planning an enjoyable retirement Your retirement can be a rewarding experience, as long as you plan it carefully, says Stuart Fairbairn.


lanning for a successful and enjoyable retirement is a complicated, yet achievable goal.

A retirement plan may provide opportunities that may affect you and your future. When planning for retirement, one of the most challenging questions is “How much do I need to save?” Although there’s no one-size-fits-all answer, there are numerous considerations. Learn what to think about and how to incorporate your personal goals into your individual retirement savings plan. It’s much easier to save when you know what you’re saving for. When it comes to how much to save for retirement, there are several key questions and considerations you should evaluate as you contemplate retirement, either with or without the assistance of an independent financial planner. The first question you need to consider is, what do you envisage for your retirement? Does your ideal retirement life look a lot like the one you have now? Or would you hope to step it up a bit? Alternatively, you may crave the idea of an earlier retirement even at the expense of a lower standard of living. There’s no right or wrong answer, but your anticipated retirement lifestyle is a critical component in answering the “How much?” question. Your current income is a useful starting point for calculating your retirement planning needs. Odds are

that the more you make today, the more you’ll need in retirement because your expectations are that your lifestyle will increase each year. When will you retire? The younger you are when you retire, the longer you can expect to live during retirement. This means you’ll need more in savings. If you wait longer until retirement, not only will you be retired for a shorter amount of time, but you will also work more years, meaning you can save more. How much have you saved already and how old are you now? The younger you are and the more you have saved, the less you’ll need to save in the future in order to achieve the same retirement standard of living as someone older or with less money saved up until this point. The early bird gets more than just the worm. As you can see, there isn’t a concrete answer to the “How much should I save?” question of retirement. However, there is a rule of thumb. After you’ve determined what you think you’ll need to live on during retirement, multiply it by 25. For example, if you think you’ll need €30,000 a year, the rule of thumb says that you’ll need 25 times that amount, or €750,000 in order to retire comfortably. If you expect to receive €15,000 in Social Security benefits each year you’d only need half of the €30,000 each year from your savings. Since you’ll only need about €15,000 each year, you’d need about €375,000 saved by your retirement date.

Still, a rule of thumb is not a rule of law. More importantly, everyone’s retirement goals are personal and no one gets into trouble because they saved too much too soon. How can you start saving towards your retirement? The MSV Retirement Plan can help make your retirement more rewarding. It is designed with you in mind. You have complete independence and control to tailor the plan to suit your personal circumstances. This can help you build up the money you will need in retirement in order to live the life you want. The MSV Retirement Plan can be started for only €40 per month. You can save as much as you want as long as it is affordable now and in the foreseeable future. You can also choose for how long you are willing to save and where to invest your money. The MSV Retirement Plan has been designed specifically to help you make the most of your retirement. For more information call on Tel: 2122 6411 or contact your intermediary. Middlesea Valletta Life Assurance Co Ltd (C-15722) is authorised by the Malta Financial Services Authority to carry on Long Term Business under the Insurance Business Act, 1998. Investment returns can go down as well as up and past performance is not necessarily a guide to the future.

Money / Issue 03 - 45

A cunning plan Photographer and prospective architect Kris Micallef makes room for architect Chris Briffa. Photos by Kris Micallef

What is your best moment of the day?

Where do you work on your projects?

I’m quite a night bird; I function best in the evenings and at night.

On my sketchbook, at my desk, at home, on a table in a restaurant and sometimes at the big table in my office. I am often in the company of my collaborators and clients, builders and tradesmen, or friends. I would like to work more during the day, ideally in front of the sea, with the music on.

What do you have on your bedside table? “The sword and the scimitar” by David Ball. So far it takes place mostly in 1550s Birgu, which is my hometown, and it is like re-living the spaces I know so well under a different light in a different epoch.

Which clothes do you like wearing? I like simple clothes, sometimes with a small unusual detail; mostly black in winter and white in summer. I like hats, but I don’t wear them yet, and I like unusual shoes. I like designer clothes but more to discuss them with designers and fashionistas than to wear them.

Do you discuss your work with other designers? Not as much as I would like to. I mean I am constantly discussing ideas with my collaborators at the studio, with many consultants and also with friends but I feel it is a pity that there is no local platform for architects and designers to discuss their work. Maybe it’s time to set up a ‘salon d’architecture’; it might do this country a lot of good.

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What kind of music do you listen to? At the moment I am listening to contemporary gypsy music, but last week I was playing a lot of 1970s funk. Classical piano music is a constant favourite, though.

Could you describe your style as a good friend might? I think that our work is clean and different, simply because it does not try to repeat itself and is very specific to the site and people who will inhabit it. In this sense it has no style, it can only live and be expressed once, like some special childhood memory which can never be re-lived.

Why are you so concerned about difference? There is never the same location or time, nor the same client nor the same budget for a project. Yet

there is typically a repetition of the same in most of the built environment that surrounds us, and nobody likes this. This is a need that we fill with our work. Most of us need change, as we all live in a progressively smaller world where everything looks and feels the same. We need to look at the world with different eyes.

Are there any architectural works from the past that have influenced you particularly? I am very inspired by medieval towns and their intricate spaces…also many of the buildings in Valletta are truly beautiful….the architecture in cities like Rome, Tunis and Barcelona is also very inspiring.

…any particular examples? Mdina and Birgu, the Grandmaster’s Palace in Valletta, the Pantheon in Rome, the Medina in Tunis and the amphitheatre at El Jem, the 1929 Barcelona Pavillion for example…. we could be here for a while.

And contemporary architects still working today? Peter Zumthor, Herzog & de Meuron, Jean Nouvel, Shigeru Ban… So many of them, I could never make one list.

Have you designed anything overseas? We built an office and a loft apartment in Antwerp some years back, and also a very interesting detached house in Aalter (Belgium), but this is yet to be built. We also designed some buildings in Bahrain, and a small school in London but we weren’t too present during construction so I don’t really consider them my own. I am not too concerned about building abroad at the moment, we are still a very young practice and Malta is a good playground. It would be interesting in the future, but it would also mean that I would need to travel a lot to follow the projects.

Spotlight on Chris Briffa Born in 1974, Chris Briffa grew up in Birgu and graduated from the University of Malta. He furthered his studies at Virginia Tech (USA) and was awarded his Architecture degree in 1999. Between 1996 and 2002 Briffa worked at Architecture Project (Valletta). During this time, he set up EASA98 ‘Living on the Edge’ – an international architectural workshop on Fort Manoel. In 2000 he moved to Valletta. In 2004 he founded Chris Briffa Architects in Valletta, and in 2006 he completed a specialisation course focusing on boutique hotel design at the Politecnico di Milano. He has been a design tutor at the University of Malta since 2007. Chris Briffa Architects were responsible for a number of projects in Valletta, including 2 22, Shu, and the recent arty public convenience in Strait Street. Public convenience. Photo by Norbert Attard

Money / Issue 03 - 47

Proposal for a residential extension 2010

Were there many unbuilt projects? Oh yes, probably there are more unbuilt than built. They are important for our progress, and they are probably the best ones, the most pure and uncompromised.

Are you still designing furniture and products? Lately I didn’t spend much time on this but it’s a recurring theme in my sketchbook. I am looking forward to re-visiting a Maltese artifact that I have been planning to do for a very long time. Valletta is full of beautiful artifacts.

What is it you have about Valletta? There is a strong desire to analyse, understand and preserve the past but this should not prevent us from expressing something, from inventing. In this sense ‘utopia’ is a part of our work as architects. Valletta is very beautiful but a very challenging scenario to work in, on both physical and psychosomatic grounds.

Anything exciting on the drawing board? Luxury guesthouse proposal 2010

Yes, much. Right now we are finalising a proposal for a 40room boutique hotel housed in a very old building in Valletta - very exciting – but nonetheless very complex. We are also working on a public garden, an underground enoteca & jazz club, a homely tapas bar and a luxury 6-roomed guesthouse in a haunted house.

How do you manage to maintain such a high level of design control on your projects? We probably manage because we have a small set-up and we only work on a few projects at a time. We have worked on mostly small to medium size projects, typically easier to handle, and which give us good experience with complex architectural detailing.

Why is detail so important to you?

Bahrain Boutique Hotel 2008

Detail is at the basis of all design, of all beautiful things really, especially if you want your design to look clean and work soundly. I am the son of a carpenter and a wood carver; he is very finicky in his work. I think I inherited this obsession a little; I cannot live with compromise and learning how to properly detail the joining of materials is a life-long lesson.

Do you enjoy teaching design? It gives me great satisfaction and energy, there is a lot of talent locally. It is very challenging to push students to their own blossoming but it’s a very tough job and a studio atmosphere would make it much more efficient.

What if you were to be given an open cheque for an open project? I would first choose a site on an arid Maltese landscape and most probably I would design a space for contemplation or a chapel, not sure. Maybe I would just make the Maltese landscape the greenest place on earth or build a mobile low-energy living pod for the homeless. This is a very difficult question.

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What about the future? These are uncertain times on various levels – environmental, economic and political - but we need to be optimistic, not be afraid and keep very focused on the present. Architects should be very concerned about the future. We need to understand better current technology and ecology, and combine this knowledge with our skills to visualise a better tomorrow.



COMPUTER SOLUTIONS LTD 141, Old Bakery Street, Valletta,VLT1457, Malta Tel: (+356) 2552 2000 | Fax: (+356) 2552 2001 | Email:

50 - Money / Issue 03

Market trends Photography: Kris Micallef, W: Fashion Stylist: LukeEngerer / Model: Cosmo

Massimo Dutti hat - €24.90 Esprit polo neck - €39.95 Massimo Dutti cardigan - €69.90 Massimo Dutti jacket - €160.00 Massimo Dutti trousers - €49.90 Massimo Dutti scarf - €39.90 Money / Issue 03 - 51 Ecco shoes - €114.90

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Opposite Red Herring Shirt @ Debenhams - €32.00 Piazza Italia Cardigan - €18.99 Piazza Italia Jeans - €17.99 Massimo Dutti shoes - €94.90 Massimo Dutti jacket - €160.00 Massimo Dutti trousers - €79.90 Massimo Dutti shirt - €49.90 Massiom Dutti scarf - €39.90 Massimo Dutti belt - €39.90 Money / Issue 03 - 53 Ecco shoes - €104.90

Esprit jacket - €169.95 Esprit trousers - €79.95 Esprit shirt - €39.95 Red Herring @ Debenhams cardigan - €39.00 Debenhams shoes - €59.00 Opposite Massimo Dutti hat - €24.90 Red Herring @ Debenhams t-shirt - €34.00 Esprit cardigan - €69.95 Esprit trousers - €79.95 Esprit jacket - €139.95 Debenhams shoes - €59.00

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Money / Issue 03 - 55

Esprit t-shirt - €19.95 Piazza Italia cardigan - €18.99 Jeff Banks jeans @ Debenhams - €39.00 56 - Money / Issue 03 Massimo Dutti shoes - €94.90

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Autumn Hues

Money welcomes an autumn in muted colours and earthy tones – Mother Nature will be pleased Photography: Tonio Lombardi / Stylist: Kira Drury

06 01



08 09





05 12

01 Ecco socks, €9.90 / 02 Carpisa filofax, €45.19 / 03 French Connection shades, €77.00 / 04 Carpisa passport holder, €33.66 / 05 Debenhams watch, €33.00 / 06 Ecco camel loafers, €59.90 / 07 New Look brown suede shoes, €49.00 / 08 New Look floral shirt, €19.00 09 Debenhams checked shirt, €36.00 / 10 Esprit grey top, €25.95 / 11 Piazza Italia ties, €8.99 each / 12 French Connection shower gels, €8.08 each / 13 Piazza Italia trousers, €17.99

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01 07 11 02





09 05 06


01 Piazza Italia cardigan, €12.99 / 02 Peacocks multi ball necklace, €13.00 / 03 Piazza Italia cardigan, €12.99 / 04 Accessorize leaf necklace, €13.90 / 05 Piazza Italia cardigan, €12.99 / 06 Accessorize floral necklace, €24.90 / 07 Debenhams heels, €35.00 / 08 Ecco cream handbag, €75.92 / 09 Accessorize clutch bag, €39.00 / 10 Peacocks lip-gloss, €2.00 / 11 things* hair-bands, €6.75 each / 12 Esprit polka dot dress, €59.95

Money / Issue 03 - 59

Blowing hot and cold Island Caterers suggest unusual combinations to add a dash of style. Photos by Christian Sant Fournier

Prawn carpacccio salad with ginger dressing You need: 2 kg gamberi rossi 1 cucumber 2 pink gapefruit 200g mixed fancy lettuce

1 piece fresh ginger root 1 garlic clove 1 red onion 200ml olive oil

Method: Peel the gamberi rossi and wrap into a cling film cylinder securing well from both sides. Freeze for at least 24 hours until prawns are well set. Prepare the grapefruit in segments and keep aside in a bowl. Peel the cucumber with a peeler and slice thinly on a mandolin until you get fine strips of cucumber circa 1 inch wide. Trim and rinse well the lettuce leaves, drain well and keep cool in a fridge. For the dressing, peel the red onion, fresh ginger and the garlic and chop roughly. Blend well together with the olive oil and add a touch of salt to taste. Pour in a squeeze bottle and refrigerate.

Baked chocolate fondant with white chocolate ice-cream Chocolate fondant

serves 4 160g dark chocolate 160g unsalted butter 175g eggs 125g icing sugar 20g cocoa powder 85g flour

White chocolate ice-cream 5 egg yolks 95g sugar 375ml milk 310g white chocolate 375g cream

Method: For the pudding melt the chocolate and butter over bain-marie. Mix the flour & the cocoa powder and pass through a sieve, then set aside. Whisk by hand the egg yolks and sugar and then fold into the chocolate mixture. Gradually add the dry ingredients and mix them together. Finally whisk the egg whites until stiff snow and fold gently into the chocolate mixture. Brush four ramekins with melted butter and fill 3/4 full with the chocolate mixture. Bake for 8-9 minutes in a pre-heated oven at 175oc. For the ice-cream whisk the egg yolks and sugar, boil cream and milk. Once boiled add the white chocolate and whisk in the egg mixture well. Pass through a strainer and leave to cool down. Pour the mixture in an ice-cream machine and churn.

60 - Money / Issue 03 Contact Details -

Corn fed chicken with wild mushroom orzotto 200g chicken breast 80g barley 50g dried wild mushrooms 1 lt vegetable stock 100g fresh coriander 100ml olive oil

80g salted butter 220 g natural yoghurt 2 each baby carrots 2 each baby zucchini 1 piece baby pok-choi

Method: Pan fry the chicken breast skin side down till golden brown, slow cook for about one hour. Soak the dried mushrooms in tepid water and chop. Sweat the mushrooms in a little olive oil and a teaspoon of butter, add the barley and sweat. Start adding the vegetable stock little by little until the barley is al dente, set aside and season to taste. Hang the yoghurt overnight in a muslin cloth, place a bowl underneath so that excess water will fall into it. Take the yoghurt and add the chopped fresh coriander to it , if you wish one can add a few drops of freshly squeezed lemon juice. Boil the baby vegetables and glaze in a bit of olive oil and butter, season to taste. For presentation spoon a large spoon of the barley in the centre of the plate, place the chicken breast on top and the vegetables on its side. garnish with a quenelle of the coriander raita.

Potato gnocchi with rabbit confit, tomato fondue and parma ham You need: 150g potato gnocchi 100g rabbit leg 200ml olive oil 1 bayleaf 1 garlic clove

black peppercorns 1kg tomatoes 100g salted butter 80g parma ham 1lt vegetable stock

Method: Simmer gently the rabbit leg in the olive oil together with the bayleaf, peppercorns and the garlic for 1 hour 15 minutes. Remove from the heat and let the rabbit leg cool in the oil overnight. Take the leg out of the oil and shred the rabbit meat into fine strips. Blanch and peel the tomatoes, quarter and deseed, roughly chop and sweat them in the butter for about 45 minutes. Chop the parma ham into thin strips. Boil the potato gnocchi in plenty of boiling salted water for about 10 minutes, until they rise to the surface. While the gnocchi are cooking sweat the rabbit meat in a little olive oil , add 2 tablespoons of tomato fondue and add 100 ml vegetable stock , reduce by one third add the gnocchi and the parma ham and correct the seasoning and consistency. Serve in a large pasta dish and grate fresh parmesan cheese on top.

Money / Issue 03 - 61

Rome T is where the heart is When in Rome, do as Mona Farrugia does. Photos of Rome by Davinia Hamilton at

62 - Money / Issue 03

here comes a point in every parent’s life when going abroad with the fruit of your loins starts to become a huge embarrassment, not for the parent but for the offspring. At 10, children still find it exciting that they are being whizzed off on holiday and are old enough to enjoy it. At 13, they are eyeing the boys/girls (tick as appropriate) and hiding it from mum and dad, while the latter have a good giggle at how naive their girls/boys (tick again) are to not realise that they know what is going on. At 15, most children would rather stay at home than accompany the old folks to some forsaken – for which read ‘no other 15-year-old for miles – village in Tuscany. Beyond that, something happens that brings the young ’uns running back to

mummy and daddy. It’s that defining moment in every teen’s life when they realise that their parents are, in fact, walking, talking, Visa-waving banks. Going away alone and sleeping in some horrendous hostel is fine if you are doing it with friends, but when mum and dad are there, the possibility of a luxurious hotel room in an area where street people do not come attached to the front door, scrumptious food is the norm, and a spot of shopping with someone else paying a distinct possibility, nay bonding necessity, starts to look very attractive. It is here that most parents cave in and start visiting London, over and over, with their kids, as there, they can make everybody happy in a very generic way. This continues until they realise how

History walks with you, hiding or shouting out from every façade, paving stone, and wall.

foolish the idea is, how boring the destination has become, and obviously, how ridiculous it is to spend your entire day, every day, going in and out of high street shops. The perfect solution to assuage all guilt, polish the family with a little culture and enjoy the whole package with nobody noticing what is going on, is Rome. The eternal city has it all. History walks with you, hiding or shouting out from every façade, paving stone, and wall, so much so that the idea of actually going to a museum that is called one is anathema.

You simply do not need to. When Keith Zammit, a Director at The European School of English, suggested Rome to his two lovely undertwenty ladies, they balked a the idea. “It’s a friggin’ openair museum,” they moaned, as they tried to convince him to change destination and preferably return to the great open-air shop called London. Keith came up with the idea of roaming in Rome and planned the trip according to a Da Vinci Code itinerary. In other words, he injected a huge dollop of fun into

what they thought would be the epitome of stultifying boredom. Suddenly the Sistine Chapel, the Caravaggio gallery and the Coliseum stirred to life. The three adventurers stood on the steps of the Piazza di Spagna and watched the glitterati and the brides. They ate at marvellous restaurants on the Trastevere in the evenings. They found delight in champagne ice cream from Giolitti. They even fitted in an afternoon of shopping. By the time they returned, both girls had decided they wanted to return (probably

sans dad, due to all the Italian boys) and one of them wanted to move there. For ever. If you have any similar plans, you need to find a hotel which will make everybody happy. Somewhere adult enough, but not too overwhelmingly so. That place could very well be the stunning Hotel Barocco, historical, boutique and chic enough, to form a part of the Da Vinci trip without it being in-yourface or full of 80-year-old American tourists sporting socks-and-sandals combos.

Money / Issue 03 - 63

The real veal Saltimbocca alla Romana My favourite restaurant in Rome is Checchino dal 1887 in the Testaccio quarter, home of the quinto quarto: offal. Checchino is always packed with diners, mostly Romans and a healthy dose of in-the-know tourists. This is their recipe for the Saltimbocca alla Romana. You need: • 8 slices of veal • 80g of finely sliced Parma ham •F  resh sage leaves, one or two for each slice of veal • Flour for dusting • 50g salted butter •1  60ml dry white wine (the flavour is important here so do not use cheap wine) Salt and freshly ground pepper Method: Pound the veal escalopes by placing them on a flat surface and flattening them with a rolling pin or a mallet. You need them thin but not sievelike. Place half a slice of Parma ham and a sage leaf in the middle of each escalope, fold and hold together with a toothpick or two. Dredge in flour and shake off any excess. Melt the butter in a frying pan over high heat and add the veal. Cook quickly on both sides, add the wine and allow it to evaporate. Reduce the heat, cover the pan, and simmer for a few minutes. Remove the toothpicks and serve.

64 - Money / Issue 03

Overlooking Bernini’s Triton Fountain, the Barocco is a 41-room property located in an old aristocratic building in the heart of Baroque Rome. Wonderfully, it comes with a service/room ratio of 1:2. That means that for every two rooms, there is at least one person allocated to make sure that every whim is catered for. I first visited, and fell in love with, the Hotel Barocco, in 1999. My previous accommodation experiences in the city had been either those of school visits or of staying with friends in ridiculously posh areas where everyone hired a car (and a driver) to chauffeur them to the nearest salumeria. Even then, in a city where you are lucky if there is a distance between the mattress and the wall in your hotel room, it was obvious that the Barocco management had left nothing to chance. It was chintzy, but in the best way possible, and the space in even the basic rooms was much more than adequate. The furniture was walnut, polished until it gleamed. It still is. I went back a few years later because, having stayed at other Roman hotels, and even cute 3-bedroom B&Bs, nothing came remotely close to the quiet grandeur of the tiny Barocco. Its location is literally minutes away from the Piazza di Spagna yet far enough to not attract the noise and street bustle of that area. At the end of 2009, the hotel closed for three months to have a complete overhaul, opening once again in 2010 to offer guests superior standards of comfort and style. In a city packed with hotels, it is amazing how the Barocco manages to fill up its allocation of 41 so quickly. It needs booking and sometimes well in advance: these kinds of historical accommodation properties are like honey for the beelike Americans who cannot believe they can actually stay in what is effectively a palazzo in the city. There is great attention to detail everywhere you look, absolute cleanliness, unique rooms (the décor changes from one to the next) as well as a winning combination of historical ambience and 21st-century technology. Few people manage to go to Rome and not fall in love with it. We take it so for granted because it is just a one-hour hop away from us. Yet it never disappoints. Even if you’re just a teen. Mona Farrugia edits the food, travel and review website

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Injury time They tried to make you go to rehab, and we say go, go, go. Don Ross shows you how to use the Power Plate to recover from injury.


t the Dr Fitness Power Plate studio, the Power Plate uses the whole body vibration, or WBV, to contract muscles 30 to 50 times per second, unlike the old-fashioned belt exercisers that just shifted skin around. The Power Plate not only improves muscle strength and muscle tone, but also increases flexibility and motion while stimulating the production of collagen, creating tighter, more beautiful skin. The Power Plate can also help sports performance by increasing explosive strength, agility and muscular endurance.


Pulled calf muscle rehab massage Position: Lie down face up with upper body in front of the plate, calves leaning on the plate


Lower back strain rehab Position: Sit facing away from the plate, legs straight, clamp mat between upper body and plate, pull mat around back and shoulders

Posture: Relaxed, toes pointed upward

Posture: Back and neck straight

Tension: No tension

Variation: Legs slightly bent, push body against plate intensively

Variations: Turn legs and feet slightly outwards

Tension: No tension

The Dr Fitness Power Plate special anti active-ageing package provides a simple solution to preventing agerelated muscle loss, bone density loss, as well as wrinkles on your skin. Using the Power Plate, you can perform acceleration training exercises – these contribute to a more youthful feeling by fuelling an increase in the secretion of serotonin, the feel good neurotransmitter. The Dr Fitness Power Plate is also ideal for rehabilitation exercises following injury. The following exercises were developed to tackle lower backache and pains, ankle and knee recover, hamstring pulls, and more. Make sure that you perform these exercises after the swelling has gone down. All exercise will be tailormade for your particular injury with approval of your doctor. What’s your excuse now? Contact Dr Fitness on E:, T: 2702 0376 or M: 7981 2235.

66 - Money / Issue 03



Shoulder and neck relaxer

Hamstring pulls and strains

Position: Kneel-down in front of the plate, put hands on plate with arms straight

Position: Put aerobic step in front of the plate, relax and support upper body with step

Posture: Back and neck straight, divide weight over hands and hang back

Posture: Back straight

Tension: No tension Variations: Bend arms, place lower arms on plate

Tension: No tension Variation: You can move forward to include hip area

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