business agenda issue 01

businessagendaTHe Official business publicaTiOn Of THe MalTa business bureau

ISSUE 01 I NOV – DEC 2009

THIS ISSUE

LaTE paymEnTS dIrEcTIvE

Not a moment too soon

page 30

EU affaIrSMeet Richard Cachia Caruana, Malta's Permanent Representative to the European Union.

page 20

caSE STUdyAir Malta CEO Joe Cappello discusses the airline's competitiveness and plans for the future.

page 36

InTErvIEwAlbert Mizzi, one of Malta's most successful entrepreneurs and his insatiable appetite for more business.

page 28

rEacHInG OUTMBB President George Micallef discusses how the Business Agenda will reach out to enterprise.

page 4

Business Outlook:

See page 6 for the full story. See page 13 for the full story.

The launch of the much-awaited Services Directive is just around the corner and is set to take the Euro-pean Single Market in services to a whole new level.

The main aim of the ambitious Directive is to release the untapped growth potential of the European services markets, which will be tackled by the removal of legal and administrative barriers to trade within the services industry. The Directive is welcomed by both busi-nesses and consumers alike as it will make it easier for services to be provided and made use of across

European borders. The Directive, which is due to be implemented in December, will require Member States to simplify the procedures that service providers need to deal with when offering a service in another Member State other than the one they are registered in.

Member States will be required to remove "unjustified and dispro-portionate" burdens and to facili-tate the establishment of business and the cross border provision of services.

Leading business players in the services, tourism, manufactur-ing and ICT industries agree that the economy in 2010 should get better, though they still expect a very challenging year. Joseph F.X. Zahra, an economist and business leader, believes that the economy has “structural problems that need to be tackled before it is too late”. He believes that 2010 should not bring a worsening in the economic scenario. Malta’s outlook is depen-dent on the performance of its main trading markets, which are showing signs of recovery. Hotelier Winston J Zahra says the tourism industry is bracing itself for a challenging

first quarter of 2010. “Hopefully, the international economic scenario will improve and business will return to more sustainable levels mid-way through 2010.”

William Wait, deputy CEO of Toly Ltd, believes that competitiveness of the manufacturing industry is a key issue that should be tackled in 2010. According to ICT expert Keith Fearne, the ICT industry is already showing “signs of recovery” and expresses the opinion that 2010 should be considerably better than this year.

‘CHALLENGING BUT BETTER’

See page 8 for the full story.

The President of the United Nations World Tourism Organisa-tion (UNWTO) of Affiliate Members, Eulogio Bordas, has advised Malta to invest in its branding if it wants to ensure that it retains its attrac-tiveness as a tourist destination. His advice was given during an inter-view with the Business Agenda, during which the newly-appointed UNWTO president discussed a number of issues relating to the European tourism industry.

This piece of advice may indeed prove valuable in the long-term as Malta, like many other European

destinations, has experienced a drop in tourist arrivals in 2009. As a result, revenue in the hospital-ity industry has also fallen, caus-ing concern within the hospitality industry.

Despite the challenges faced by the global tourism industry in 2009, Mr Bordas points out that there is a general feeling within the indus-try that 2010 will bring slight growth in demand and many experts “trust that in the summer of 2011 or 2012, the pre-crisis figures will be recu-perated.”

UN TOURISM BODY: MALTA SHOULD INVEST IN ITS BRAND

EU Services DirectiveCOMES INTO FORCE ON DECEMBER 28

NEWSPAPER POST

2 BUSINESS AGENDA | Nov – DEc 2009

3BUSINESS AGENDA | Nov – DEc 2009

I would like to welcome everyone to this first issue of our new quar-terly publication. This project has been in the pipeline for a number of months now and it is indeed a mat-ter of great satisfaction to finally see it finalised, printed and ‘alive’. Dur-ing the past years, the MBB has had a number of publications such as the monthly European newsletter, subsequently re-launched as the ‘MBB News Ticker’. With the ben-efit of hindsight, we became aware that these publications were too focused on news developments at EU level funding opportunities and coverage of recent events, rather than breaking down topics of dis-cussion into more enticing pieces of opinion-driven features.

The last couple of months have seen a complete regeneration of the MBB both in terms of its ser-vice tangibility to members and also in its structure. This restruc-turing has given us the opportunity to take a more pro-active approach, and although it must be said that we still have quite a journey ahead of us, hard work and cooperation will bring us to meet our mem-bers’ aspirations. This publication derives its name precisely from these elements; ‘Business Agenda’ signifies that there is an agenda owned and scripted for Maltese business which is duly responsive to entrepreneurs’ needs. Our objec-tive and commitment is to commu-

nicate this agenda, to ensure that it is heard at the appropriate institu-tional echelons, both at a national level and at a European level. This publication will thus be circulated amongst various businesses in Malta, but also to a number of inter-est groups and EU policy-makers in Brussels.

From a skim-through of the articles included in this first issue, there are a number of topical issues which we have tackled and over which the MBB has taken a policy-lead nationally conse-quently bringing home the busi-ness perspective within the respec-tive policy-debates surrounding these issues.

Late payments in business, and in public purchasing by authorities from private suppliers, has been a national dilemma for several years. As expected, the international economic downturn hurt Maltese businesses. This was especially felt in terms of disruption to cash flow, with late payments creating an extra burden leading to their survival. The MBB pursued this issue with the relevant authorities through the ‘Settling Late Pay-ments on Time’ Report and a Busi-ness breakfast bringing together the stakeholders to discuss possi-ble solutions. Results are becoming already apparent through propos-als announced within Budget 2009.

These measures are certainly a step in the right direction whereby €61 million will be allocated for the pur-chase of medicines and the credit period for the payment of medicine suppliers will be reduced to 120 days. The Maltese pharmaceutical import and retail business is the sector worst hit by late payments in terms of volume of outstanding payments owed by debtors. None-theless, it is important to note that other sectors such as construction and ICT are equally badly plagued by late payments.

The Services Directive is also expected to have a major impact on Maltese service providers, with new business opportunities to open up for local economic operators inter-ested to make the best out of the enlarged EU internal market. To this end, the article in this issue aims to encompass the major implications of the Directive’s transposition, pro-cess with comments also obtained from the UK Services Directive implementation team. The MBB is committed to prepare Maltese busi-ness to have a head start through information, and also by means of a paper including Practical Guid-ance Notes – work currently being compiled and drafted by the MBB executive team. The Services Direc-tive is to be transposed by the end of December, and this would see a number of amendments to local licensing regulations affecting

the services sectors including the travel and tourism, a cross-sec-tion of regulated professions such as engineering and accountancy services besides the more wide-ranging general trading licenses regulations

The goal of this newspaper is to give Maltese business a cred-ible platform to express opinions, put forward arguments and show-case success stories always within the context of EU membership and evolving EU-related matters. For this issue, it is our firm conviction of the timely relevance and perti-nence to provide a snapshot into the Maltese business community’s outlook for the incoming new year, with comments obtained from opin-ion leaders in the tourism, ICT and manufacturing industries. These opinions are framed in a com-parative perspective adjacent to the expertise of leading economist Joseph F X Zahra who gives us his own verdict on what to expect in economic terms from the incom-ing 2010. Find out for yourselves what prospects and challenges our businesses are forecasting for 2010!

In this issue we also carry an interview with Malta’s Permanent Representative to the EU Ambas-sador Richard Cachia-Caruana, in order to obtain a more personal insight into the strategic goals

and daily challenges encountered in representing Malta’s interests within the EU decision-making process. We trust our readers will find the interview interesting as the Ambassador Cachia-Caruana is one of the most prominent and experienced figures in Malta-EU relations, with his office one of the most important channels of rep-resentation of Maltese interests within the EU institutions, influenc-ing their policy outcomes.

I would like to take this oppor-tunity to thank everyone who par-took in this project, and stress that it is only thanks to their collabora-tion that this production became possible. I would like to convey my team's commitment to bring home in every forthcoming edition of the ‘Business Agenda’ engaging fea-tures tackling issues of close rel-evance to the Maltese business landscape from an EU angle. In the meantime, we sincerely hope that you find this first issue of Business Agenda interesting enough to make you earnestly await receipt of the second issue in early 2010.

Finally, on behalf of the MBB Board and the executive team, let me take this opportunity to wish you and your families, all the best for the upcoming fes-tive season and a prosperous new year.

publisherContent House LtdMallia Buildings3, Level 2Triq in-NegozjuMriehel QRM3000

Tel: 00356 2132 0712/3Email: [email protected]

malta Business BureauCasa LeonePjazza Robert SamutFloriana

Tel: 00356 2125 1719 (Malta Office)

Tel: 00322 502 6091 (Brussels Office)Email: [email protected]@mbb.org.mtwww.mbb.org.mt

Editor: Joe TantiDeputy Editor: claire azzopardi Eitorial Team: yves cordina, Omar cutajar, mariella Scicluna, amanda Sciortino

Business Agenda is the quarterly publication of the Malta Business Bureau. It is distributed to all members of the Malta Chamber of Commerce, Enterprise & Industry and all the members of the Malta Hotels & Restaurants Association. Business Agenda is also distributed to other leading business by Mailbox Distribution Services, part of Mailboc Group. Business Agenda is also distributed by the Malta Business Bureau to leading European and Business institutions in Brussels.

A MORE PROACTIVEMALTA BUSINESS BUREAU

ediTOrial

By Joe Tanti


By George Micallef

Over recent months, the Malta Business Bureau has gone through a restructuring process which included the appointment of a new CEO, new executive staff, a new office and a renewed strategy. The MBB has also been working on a series of new initiatives with the aim of strengthening its services pack-age for the members of the Malta Chamber and the Malta Hotels and Restaurants Association, whilst also raising its profile on the local and EU-level.

This new publication aims to heighten the MBB’s presence amongst members whilst provid-ing interesting, valuable and timely information, imbued with an EU perspective yet relevant for the local business scenario. Business Agenda is intended to be a strategic element of the MBB’s evolving mis-sion function. The MBB’s initial role towards its parent organisations was to provide support and advice on EU-related matters, however, this role is gradually evolving to a more pro-active approach, seek-ing to provide direct assistance to Maltese enterprises interested in understanding better the regula-tory challenges emanating from pipeline EU legislation, as well as harnessing the business opportuni-ties provided by the enlarged inter-nal market.

I am sure that most of you acknowledge the enhanced com-munication efforts of the MBB in recent months. We trust that you will also soon be able to benefit from the revamped portal which is to be launched within the coming weeks and which will be replacing the current MBB website. The new MBB portal is a parallel exercise to the launch of this quarterly paper aimed to provide more-value added service while also seeking to bet-

ter connect Maltese business to the European Union. I am sure many of you have occasionally come across several publications dealing with business issues and/or EU matters. With the launch of the Business Agenda we are attempting to break the mould on how such issues are conventionally communicated to entrepreneurs, political decision-makers, policy-makers, public opinion leaders and social partners’ organisations alike.

Business Agenda is targeted at business owners, managers and executives within private organisa-tions that want to have a greater voice in EU-related affairs. But not just… Business Agenda is meant to appeal to a wide cross-section of national and EU policy-makers.

Debate is the key word here and our paper will provide a platform for exchange of views and serve as a meeting point for both conver-gent and divergent perspectives on unfolding EU issues.

Valid and relevant information on EU developments will nonethe-less remain the firm anchorage of our novel communication. Busi-ness Agenda will seek to engage with the local business community, communicating their concerns and opinions on different aspects of EU business-related topics. In this way, we hope to bring home more tangi-bility and associative interest for its readership.

This publication will be issued quarterly and the majority of copies will be distributed among members of the Malta Chamber and MHRA. Business Agenda will also be dis-seminated in Brussels, to vari-ous counterparts and institutional contacts which have been estab-lished through our Brussels office, thus offering the Maltese busi-ness scene a heightened European

Union platform. A cover article will be the flagship feature within the Business Agenda. Our team will do its best to ensure these features will cover topical issues, relevant at the time of publication tackling EU issues. The items will be thoroughly reviewed from divergent perspec-tive thus seeking to generate genu-ine debate. Other sections will delve into a variety of issues, always with an EU slant, carrying feedback from opinion leaders on different legisla-tion and regulatory developments that are of particular interest to the Maltese business community.

The other sections of the paper are aimed to be more informal to engage the reader on a more per-sonal level. In these features, we are aiming to have a mix of high-profile personalities from both the local private sector and from abroad. It is our specific intent to highlight the successes of entre-preneurs who started cross-border trade or even commercial ventures ‘abroad’ within the internal market.

Finally, each issue will include a business news section. This section would be dedicated to an update of MBB-related local and foreign business news, serving as a guide to the latest developments that would interest or affect the busi-ness community. It will also aim to include key reports and develop-ments which will help businesses to keep abreast on influencing fac-tors occurring within the EU deci-sion-making process.

The MBB is on a momentum of change, adaptation and growth. It is increasingly positioning itself as the key player on all EU-related matters of interest, concern or of opportunity for Maltese business. A new year is round the corner, and with it new initiatives to be unveiled by the MBB. 2010 is the closure of the first decade of the 21st century

– exciting times when innovation, R&D, the integration and deepening of markets, the climate challenge and the future of ICT industries are the everyday headline news. On all these issues, the MBB will be at the forefront of the local debate from an EU perspective.

I augur that this first edition of the Business Agenda will pro-vide you with interesting insights into the ongoing EU developments affecting us all. On behalf of my

fellow colleagues of the MBB’s board, I thank the CEO - Joe Tanti, our permanent delegate in Brus-sels - Omar Cutajar and all the MBB’s team for their efforts and dedication!

BUSINESS AGENDAREACHING OUT TO ENTERPRISE

Mr Micallef is the President of the Malta Business Bureau. He was also recently elected as the new President of the Malta Hotels and Restaurants Association.


By Omar Cutajar

Now that the implementation deadline of the Services Directive – set for the December 28, 2009 – is fast approaching, many will recall the intense debate on the contents of the original Commission propos-als which aimed at liberalising the EU internal market for services.

The Services Directive addresses a fundamental tenet of the very founding treaties of the Euro-pean Community, whereby it was pledged that restrictions on free-dom to provide services within the community would be prohibited. In practice, the freedom to provide services in another Member State other than the country of where the business service provider is regis-tered is only being attained with the current transposition process of the Services Directive – a full 60 years after the principle was incorporated into the founding treaties!

ScoPe of tHe SeRviceS DiRective – wHAt iS it All ABout?

The Services Directive is the legal instrument transforming the prin-ciple of the freedom to provide ser-vices across the EU internal market into reality. The Directive requires all Member States’ administrations to lift a series of legal and administra-tive barriers currently curtailing the potential ease of business estab-lishment and the provision of ser-vices from a service provider which is established within another EU Member State.

In a nutshell, the correct imple-mentation of the Services Direc-tive will facilitate procedures for the establishment of businesses in the services sector as well as the cross-border provision of services across the internal market.

The simplifications being ush-ered in by the Services Directive in relation to both business establish-ment and cross-border provision of services apply across a wide vari-ety of economic service activities. In principle, the Directive applies

to all services that have not been explicitly excluded from its envis-aged scope. Going beyond this legal viewpoint and taking a more prag-matic perspective, the scope of the Services Directive reaches out to all distributive trades, the activities of most regulated professions, tour-ism accommodation and leisure services, business consultancy services as well as more specific sectors such as construction ser-vices, training, IT services and real estate services.

However, there are a number of exceptions as well, which include electronic communications, audio-visual services, transport, gambling activities and financial services. Politically-sensitive sectors, such as state-provided social services, healthcare services and private security services are also outside the scope of the Services Directive.

tHe ‘Point of Single contAct’ – will it finAlly Be tHe one-StoP SHoP foR BuSineSS?

All this heralds a broad, yet focused, effort for simpler proce-dures and less paperwork for SMEs to deal with. This will enhance the overall economic performance of the services sector, as long as the implementation process is done well and with the necessary invest-ments in both human and finan-cial resources, particularly in rela-tion to the creation of the ‘Point of Single Contact’.

An important element of the Services Directive is the obligatory inception of what are known as the ‘Points of Single Contact (PSCs)’ within each Member State’s public administration. The PSC will serve as a single contact point between

businesses and the various reg-ulatory and licensing authori-ties within each Member State's administration.

The PSCs will provide an online portal for completing the required application and licences, facilitat-ing considerably the process linked to business set-up and the related compliance procedures with the relevant regulations. Mutual rec-ognition between the respective PSCs will further ease the com-pliance procedures for service providers interested in operating cross-border.

The Commission's intention to set up a ‘PSC webgate’, which would operate as a central entry point by providing web-links to all national PSC portals, will ease the way for local operators interested in providing services across the internal market. The interoperabil-

ity of the PSCs should ensure the required trustworthiness and reli-ability for businesses to steer away from the maze of business informa-tion portals, often providing patchy – if not sometimes conflicting – information on business licensing documentation requirements and procedures.

In Malta, the setting up of the PSC is progressively advancing in line with the obligation contained within the Services Directive. A govern-ment tender for the procurement of the e-forms platform that would provide for the direct submission of license applications and their sub-sequent electronic authorisation has been launched some months ago. Given the timeframes required for the adjudication of the tender, it is not expected that the PSC will become operational before the ini-tial months of 2010 though, in the meantime, the eGov portal will be

EU SERVICES DIRECTIVE

To enter into force on December 28The malta Business Bureau recently organised a seminar to discuss the Service directive.

from left: George micallef (mBB president), Joe Tanti (mBB cEO), phyllis farrugia (ministry of finance, Economy & Investment).


providing all the necessary down-loadable application forms linked to the various business authorisation schemes.

tHe ‘Point of Single contAct’ – A HelPing AiD foR inteRnAtionAlizAtion of MAlteSe BuSineSS

The establishment of the PSCs within the other EU Member States is a welcome development in the context of the internationalisation efforts of Maltese business. Local businesses need the know-how, the capital and the human capacity to increasingly venture into cross-border operations within the Euro-pean Single Market.

The PSCs will facilitate access to licensing information. In this regard, the setting up of the points of single contact within our major trading partners on the continent are an interesting development complementing the substantial internationalisation support schemes put in place over the recent years by the Maltese government.

For instance, in the United King-dom, a single UK-wide point of sin-gle contact will be centrally deliv-ered through BusinessLink.gov. The UK Services Directive Imple-mentation Team within the Depart-ment for Business, Innovation and Skills is working to make the UK Point of Single Contact available to business as from December. None-theless, like in Malta, the whole set-up is not expected to be fully opera-tional electronically before the end of March 2010.

According to Ms Jane Swift from the UK implementation team, “once launched, the UK point of single contact will be reviewed for further improvements in due course, as a result also of the Commission’s pilot on interoperability of PSCs”. A review of the PSC services offered online is indeed useful in due time also in Malta in order to ensure that it is responsive to the needs of both

local and other EU-originating ser-vice providers and service users.

unleASHing tHe PotentiAl foR cRoSS-BoRDeR tRADe in SeRviceS

The operational launch of the PSC is part and parcel of the trans-position process of the Services Directive. Given the wide-ranging scope of the Services Directive, the Maltese government sensibly opted for the adoption of a “horizontal act” as framework legislation for all services covered by the Directive. The national implementing legis-lation entitled the Services (Inter-nal Market) Bill was introduced for first reading in Parliament towards the end of September and following two other separate debates on the

item, it was unanimously approved after a second reading during the parliamentary session held on the November 10.

The Services (Internal Market) Bill introduces a series of amend-ments into sector specific legisla-tion affecting a wide array of busi-ness-related regulatory acts such as for instance the Commercial Code, the Trading Licences Act and the Malta Travel and Tourism Ser-vices Act. The amendments to these broad regulating acts are comple-mented by significant modifications to the laws regulating organized professions like the Accountancy Profession Act and the Engineering Profession Act.

The legislative changes ushered in by the Services (Internal Market) Bill have two main aims. On the

one hand, they seek to adapt the requirements applicable to estab-lishment of business and, on the other hand, they seek to introduce changes in requirements applica-ble to the cross-border provision of services by service providers estab-lished in another EU Member State.

The legislative changes ushered in by the implementation of the Ser-vices Directive not only represent a real step forward for the internal market, but also an opportunity to enhance the net positive contri-bution that the services business sector contributes to Malta’s GDP growth.

Maltese businesses are confi-dent that a positive outcome can be achieved for local economic opera-tors despite the structural chal-lenges encountered when seeking

to consolidate themselves on the Maltese services market, whilst they try to position their operations for proactive pursuing of cross-border opportunities abroad, on the internal market.

Adaptation requires time, effort and capacity to react to new mar-ket developments. As Ms Swift remarked, “the Services Directive is a far reaching instrument and we expect it to take a little time to bed down across Europe”.

For Maltese business there is definite need to adapt, but with the right public-policy support frame-works, there is no reason why local enterprise should not har-ness the business opportunities created by the transposition of the Services Directive.


In an interview with the Business Agenda, Joseph F. X. Zahra, a lead-ing economist and businessman, claimed that the country’s eco-nomic structural problems “need to be tackled before it is too late.” However, despite these structural problems, Mr Zahra believes that 2010 should not bring a worsening in the economic scenario.

“Malta’s economic perfor-mance during 2010 will be directly dependent on the performance of our main markets. We are seeing improvements in economic perfor-mance in Germany and France, and other countries in Europe are all expecting a pick-up of activity. The United States of, is now register-ing positive growth, while the Asian economies are already out of the recession,” he said.

While these developments cer-tainly bode well for the local econ-omy, one main concern that has been voiced by the local business is the high rate of inflation that was experienced throughout 2009. In the last 12 months, Malta recorded one of the highest rates of inflation in the euro area and also among the EU 27 – the concern in the forefront of people’s minds is whether this worrying trend is likely to continue throughout 2010.

Mr Zahra feels that the high inflation rate is being caused by structural problems and said that one major factor that had a nega-tive impact on the rate of infla-tion was directly linked to the high energy prices, which in turn have a knock-on effect on the Cost of Liv-ing Adjustment (COLA).

“The COLA mechanism is anti-quated and obsolete in its exist-ing format and therefore it should be high on the country’s agenda to have it reformed. We will only see prices lowering if we strengthen the market mechanism in the way wages and salaries are deter-

mined. We are already out-pricing ourselves because our cost of labor is being artificially pushed up. It is a vicious circle that needs to be tackled seriously and immediately,” he states.

According to Mr Zahra, there is also room for improvement within the private sector. One area that he would like to see businesses focus on throughout the coming year is making better use of the opportuni-ties offered by the European Single Market. He expresses his opinion on the matter in no uncertain terms saying that “the Maltese business community is not making full use of the opportunities deriving from the European Union."

"We have not yet shed our intro-vert Maltese business mentality – we have one of the largest global markets out there and yet we are still hesitating to address it. Mal-tese businesses took advantage by importing more products, but we have not taken the opportunity of going the other way… exporting products and services to Europe, investing abroad. Few businesses did this and they have been suc-cessful. We must communicate more these success stories and

promote these businesses to act as role models for others to follow,” he states.

While it may be true that the local business community should make better use of the easier access to the massive European Single Mar-ket, all businesses and govern-ment across Europe have some other concerns to keep them busy throughout the next year. Competi-tiveness is causing some furrows of concern to wrinkle the brows of many decision-makers and busi-ness leaders.

Mr Zahra explains that long last-ing competitiveness can only be achieved by providing higher value to those investors who decide to offer their services globally while being based in Malta. “Our econ-omy needs to be transformed into a value-added economy. Our peo-ple remain central to this point. This can only be attained if we go on investing in both vocational and academic education,” he said.

“Improving our competitiveness also implies much less government bureaucracy. Existing processes and procedures for the retrieving of the EU funds are rigid, impractical

and pedantic, thus risking that the country will not take full advantage of the millions of funds available from the European Union. Malta as a country needs to open up a national debate on the essence of our economic competitive edge,” he concludes.

Despite the obvious challenges that need to be faced if any serious progress is to be made, government has predicted a minimal, albeit pos-

itive, GDP growth of 0.2 per cent for 2010. There are many issues that demand to be addressed – struc-tural challenges, issues of competi-tiveness and making better use of the Single Market are all important, but the multitude of challenges beg the question of which is the greater priority? For those operating in the business community the answer is clear – the economy is king and 2010 is the time to put it back on its throne.

ECONOMYSUFFERING DUE TO STRUCTURAL PROBLEMS

“Recovery dependent on the performance of our main markets.”

“The COLA mechanism is antiquated and obsolete.”

Joseph f. X. Zahra


The hospitality industry is a key economic pillar for the local econ-omy, but 2009 has been a rela-tively difficult year. Winston Zahra Jr. Chief Executive Officer of Island Hotels Holdings plc, said that the hotel industry in particular has responded to price pressures by considerably reducing hotel rates across the board. “In my opinion rates have in fact been driven to a level that is too low and if rates are not driven up to more sustainable levels in the medium term then the product will suffer in the longer term as hoteliers will not have suf-ficient funds for re-investment. Mr Zahra explains that one way of tack-ling these challenges would be by fostering closer collaboration that would allow the industry to promote the islands collectively.

“The last quarter of 2009 and the first quarter of 2010 are going to be challenging. Advance book-ings across most market seg-ments are very weak and it is going to be difficult to generate the type of numbers for the industry to have a reasonable winter season,” he adds.

“Winter has always been tough even in the best of years but with the help of the conference and incentive market over the past years the results for the winter season have gradually improved. This year many corporations are shying away from spending money on these types of events and there-fore many hotels are missing the important revenues from this seg-ment. Concurrently, there seems to be a pickup in enquiries from April 2010 onwards. Hopefully, the inter-national economic situation will improve and business will return to more sustainable levels mid way through 2010,” he concludes.

Keith Fearne, Managing Director of IT Solutions, explains that the ICT industry has been hit by the reces-sion like most other sectors. How-ever, he says "the signs of recovery are already there. By the first quarter of 2010, most of the large ICT com-panies in Europe are expected to be showing growth".

In addition, the EU has identified this sector as one in which it wants to take a lead, and a lot of invest-ment is going into research and development within the industry.

Mr Fearne says that he expects the next 12 months to be consid-erably better. “Maltese businesses

are expected to start budgeting for capital investments again, and quite some ERDF funds should be avail-able in the market for companies to invest in upgrading their ICT set-ups. As the international situation improves, it will then become more realistic for the local industry to once again focus on winning busi-ness outside of Malta.”

William Wait, Deputy CEO at TOLY Ltd, speaks to Business Agenda about his expectations for 2010. Even though the manufac-turing industry has been through a tough time recently, Mr Wait still feels that it is a vital part of the economy. “Manufacturing employs over 23,000 people directly and is a key contributor to the island’s economic prosperity. One needs to also keep in mind the other eco-nomic activities which are directly generated through this industry but sometimes are not taken into con-sideration when high level policy decisions are being discussed or actually taken.”

According to Mr Wait, there are a number of key issues that he would like to see addressed throughout 2010. First and foremost, the com-petitiveness of the manufacturing industry is a concern. “This area is suffering as the costs of doing busi-ness in Malta are increasing on a daily basis. The cost of electricity is an example that we have been hammering on for months. I am not against having to pay the correct price for electricity but the 'correct' price needs to be established after all the inefficiencies inherent to a monopoly are eliminated.”

While Mr Wait acknowledges the fact that government has sup-ported manufacturing firms, he highlights the fact that this assis-tance is not sustainable in the long term. “We need to have struc-tures in place to ensure that the long term competitive advan-tages are in place without the need for long term intervention by government.”

Yet another area that Mr Wait believes deserves more attention is internationalisation. Mr Wait points out that the Maltese Economy is “too small and too open to sup-port any significant manufacturing activity unless the players in the industry look outside the perime-ters of this tiny island and look for markets outside Malta.

It is up the stakeholders in the Manufacturing Industry to wake up and take these opportunities and also to take advantage of Malta 's EU membership and the EU sup-port that one can get for this busi-ness. For this to happen there needs to be a change in mentality. Joint Ventures, Strategic Alliances and Clustering Concepts should not remain a dirty word but should be embraced.”

2010OUTLOOK

Industry next year:Competitiveness needs to be addressed

Information &Communication Technologies:Signs of recovery are there

Tourism:First quarter will be “very challenging”

“The last quarter of 2009 and first quarter of 2010 are going to be challenging.”

“The next 12 months should be considerably better.”

winston Zahra Jr.

william wait

Keith fearne“The costs of doing business in Malta are increasing.”


Q. Do you tHink tHAt 2010 will BRing, At leASt tHe BeginningS of tHe MucH AnticiPAteD econoMic RecoveRy?

A. The sentiment of European companies regarding their individ-ual outlook and that of the broader economy, have clearly improved since the summer months. Order books are improving, trade is pick-ing up again and the inventory cycle in industry has turned around.

The European Union is now tech-nically out of recession, although many Member States are still struggling with negative growth in the third quarter of this year. But overall, the picture is better than anticipated few months ago and we have to be grateful to European policy makers for having steered an effective response to stabi-lise the situation in a short period of time.

However, we need to be prudent though. Prospects are still highly uncertain and the recovery is on fragile grounds. As we highlighted in our autumn Economic Outlook the economy is stabilising under state and central banks’ support, and this cannot last forever.

The crisis will have lasting con-sequences and we need to confront this reality head on. Just a few num-bers to highlight the challenges: by the end of next year, total invest-ment in the EU (both public and

private) will have declined by 13 per cent from its level in 2008, unem-ployment will have increased above 10 per cent, and public indebted-ness will reach around 80 per cent of EU GDP.

The main concern of policy mak-ers should be that private spend-ing takes over as soon as possible so that governments and central banks can start withdrawing their exceptional measures. Some pre-conditions are needed for this to occur.

Q. wHAt ARe tHe MAin iSSueS tHAt neeD to Be ADDReSSeD By nAtionAl goveRnMentS, euRoPeAn inStitutionS AnD tHe BuSi-neSS coMMunity tHRougH-out 2010 to enSuRe tHAt SoliD founDAtionS ARe Set foR long-teRM RecoveRy?

A. The number one priority for us is still to restore access to afford-able financing. Until the finan-cial sector is fully functional and stand on its own feet, we will have a credit-less recovery, which means below trend growth and abnormal numbers of corporate bankruptcies.

Financial market conditions have improved in recent months but bank lending flows to companies continue to be negative and lend-ing standards are still very tight, in particular for SMEs. What we need to see is bank restructuring efforts

and financial market reforms which take due consideration of the financing needs of the economy and help restore credit supplies.

But keeping financing condi-tions at affordable levels for the private sector also means to cap the financing needs of the state. The exponential increase in pub-lic indebtedness in many Member States is bound to put significant upward pressure on long-term interest rates, with the effect of crowding out private investment in the recovery.

Restoring confidence in public finances requires clear commit-ments on “when” and “how” to stop deficits. On timing, we tend to agree that consolidation should start no later than 2011 if the recovery proves to be self-sustained. But the nature of consolidation measures is equally - if not more - impor-tant. Higher taxation, particularly on labour and capital, will impose lasting damage on growth and job prospects. The priority must be to reduce public spending and rebuild tax basis through growth-enhanc-ing reforms. This implies new thinking about the effectiveness of public administration, social sys-tems and tax structures.

Adaptability will be the key word for the recovery. Current measures to preserve jobs, such as short-time arrangements, were use-ful but are temporary and should remain so. The urgency now is to

prevent long-term unemployment, increase mobility, skills and labour participation. This can only be done through reforms. It is key to imple-ment the principle of flexicurity agreed at EU level, which com-bines the flexibility employers need to meet changing situations with security for workers by supporting them ‘between jobs and providing skills training. Flexicurity is not a fair weather policy’ - it shows its full potential especially in times of crisis.

But at a time when major relo-cations of investments are taking place at the global level, Europe’s competitiveness is of great-est importance for our economic future. More than ever, we need to focus on the attractiveness of the EU internal market for doing busi-ness and to support entrepreneur-ship and innovation.

In its recent publication entitled “Putting Europe Back on Track”, BUSINESSEUROPE spelled out its vision for a new growth strategy for the EU after 2010. We definitely call for a more effective pooling of Community and national policies in the future, looking at areas where EU’s value added is well identified. We also ask for a more consistent framework to identify reform pri-orities and to develop a real bench-marking culture among Member States. This is an essential condi-tion to increase the political impact of such a coordination exercise.

Let me conclude with some words on the international agenda. A year ago in Washington, G20 lead-ers concurred that global current account imbalances were a major underlying factor to the crisis and called again in Pittsburgh this year to reinforce cooperation to prevent unsustainable macroeconomic out-comes in the future.

In our view, current exchange rate developments, and in particu-lar that of the Chinese Renminbi, are inconsistent with these objec-tives. Since the G20 summit in Lon-don in early April, the euro appreci-ated by almost 12 per cent against both the Dollar and the Renminbi, with the latter being de facto pegged to the Dollar. We think it is important and timely that European leaders remind their counterparts of a joint commitment towards an orderly rebalancing of the global economy.

This means that US authorities must make real their pledge for a strong dollar policy and that Chi-nese authorities appreciate the Renminbi and introduce more flex-ibility in their exchange rate system. We count on the support of Juncker (Eurogroup President), Trichet (ECB President) and Almunia (Commis-sioner for Economic and Financial Affairs) to convey that message during their visit to Beijing in com-ing weeks.

ECONOMIC OUTLOOKBETTER THAN ANTICIPATEDIn a question and answer session with the MBB's permanent delegate in Brussels, OMAR CUTAJAR, Director for Economic Affairs within BUSINESS EUROPE, MARC STOCKER, claims that the economic outlook is better than anticipated and that gratitude is owed to European policy makers for this improvement.


UNWTO Affiliate Members Presi-dent, Eulogio Bordas, has advised Malta to invest in its branding if it wants to ensure that it retains its attractiveness as a tourist destina-tion. His advice was given during an interview with the Business Agenda, where the newly-appointed UNWTO president discussed a number of issues relating to the European tourism industry.

This piece of advice may indeed prove valuable in the long-term as Malta, like many other Euro-pen destinations, has experi-enced a drop in tourist arrivals in 2009. As a result, revenue in the hospitality industry has also fallen, causing concern withn the hospitality industry.

Although the fourth quarter of 2009 and the first quarter of 2010 are expected to be challenging for the tourism and hospitality industry in most European countries, includ-ing Malta, Mr Bordas highlighted

the fact that there are “very sig-nificant differences even between source markets and destinations.” He pointed out that some countries, such as Holland, have not unduly suffered the crisis. Nevertheless, Mr Bordas also says that other countries, such as England, have suffered intensively, stating that “as a consequence, those destinations that specialise in British tourism have been greatly affected.”

Despite the challenges face by the industry in 2009, Mr Bordas points out that there is a general feeling within the industry that 2010 will bring slight growth in demand and many experts “trust that in the summer of 2011 or 2012 ,the pre-crisis figures will be recuperated.”

While all European destina-tions are certainly looking forward to the recovery, it is certain that it will come out without significant effort. As an island depending

almost entirely on airline connec-tivity, Malta is not in a position to benefit from cross-border tourism and domestic tourism, unlike many other European destinations.

Mr Bordas acknowledges this challenge but also points out ways in which they can be overcome. He believes that the island must make an effort to offer more value than its competitors. “I suggest that Malta considers three strategies. The first one involves the creation of value by developing an extraor-dinary system of experiences. The second one is to eliminate the trivi-alisation of the destination and to provide it with an elegant authen-ticity and extremely high levels of cleanliness. The third strategy has to do with the creation of a power-ful brand, which is something that nowadays Malta doesn´t have,” he says.

In this regard, Malta can seek to benefit from its membership

of the UNWTO. In fact the Malta Hotels and Restaurants Association has this year become an Affiliate Member of the UNWTO, a develop-ment which was welcomed by all stakeholders.

Mr Bordas explains that Affili-ate Members represent the private sector’s voice inside the WTO. “Our objective is to influence tourism policies to create better conditions for the prosperous and sustainable development of the tourism indus-try on a global level. We are working on the identification of best prac-tices for managing congestion, such as air traffic congestion, airports congestion, historical cities’ centres congestion and even beaches con-gestion. Once identified, these best

practices will be offered to the gov-ernments together with our recom-mendation to implement them,” he concludes.

MALTA NEEDS

TO INVESTIN A MOREPOWERFUL BRAND

Eulogio Bordas (president, UnwTO affiliate members)

the Malta Hotels and Restaurants Association (MHRA) has become an Affiliate Member of the unwto. Affiliate Members seek to develop sustainable tourism, share global knowledge and experience, innovate and expand the activities of the private sector, with the aim of contributing to the fulfillment of the un Millennium Development goals.


The President of the Hotels, Restaurants and Cafes in Europe (HOTREC) organisation, Kent Nys-tröm, has expressed his concern that business trends in the hospi-tality industry across Europe are still very worrying. Speaking dur-ing the organisation’s 60th General Assembly, Mr Nyström renewed his call for a shift in EU policies to has-ten the recovery saying that “now is the time for the EU to anchor pro-business policies, better regulation and burden reductions in the heart of its daily activities”

HOTREC supports the Member States which already make use of the possibility offered to apply reduced VAT rates to hospitality services and strongly encourages other Member States to follow the same path to help hospitality busi-nesses survive the economic crisis. The Organisation has also called for the new European Commis-sion to withdraw the burdensome and inappropriate proposal impos-ing food labelling requirements to restaurants put forward by its predecessor.

A number of other issues were raised during the General Assem-bly, including the huge challenges being faced by the hospitality industry due to the economic and financial crisis. Most participants of the General assembly reported “calamitous business trends” in their respective countries, and most consider that the recovery is not in sight yet, and expect 2010 to be on the same level as 2009.

For example, restaurants in Ire-land witnessed a decrease of 30 per cent of their revenues over the last months. Hotel occupancy rates in Latvia and Lithuania fell by 20 per cent to 40 per cent and in France, 9000 jobs were lost in the first half of 2009.

Statistics also show that hotel occupancy rates in Malta dropped by 14 per cent during the first eight months of 2009. However, a few countries seem to experience the very beginning of an improve-ment, even though the situation remains very fragile. Mr Kent Nys-tröm, considered that “the overall picture is still not positive but signs of recovery can be observed”. He once again called on the EU and the Member States governments to restore a favourable regulatory environment instead of imposing additional burdens, as the future of 9 million jobs in the hospitality industry is at stake!

Other issues that were discussed during the Assembly included food labelling and Value Added Tax (VAT). Participants confirmed their doubts on the feasibility and appropriate-ness of the European Commission’s proposal to impose food labelling requirements for non pre-packed food. They claimed that this pro-posal would not only impose bur-

dens, costing the industry billions of euro, but would also be very difficult to apply within certain establish-ments, like small restaurants and snack bars. The General Assembly re-iterated its call on the Coun-cil and the European Parliament to strongly oppose the proposal which, they claimed, risks hasten-ing businesses failures and harm-

ing the European culinary heri-tage. Another hot potato that was also subject to debate and analy-ses was the issue of VAT. Partici-pants reported on the situation in their respective country and on the changes of the VAT rates that have already, or could possibly occur, in the near future. HOTREC called on the governments of the EU Member

States to “make use of the possi-bility to apply reduced VAT rates to accommodation, meals as well as accompanying beverages served in restaurants, to help the hospitality industry survive the current eco-nomic crisis.”

EUROPEAN HOTELS BODYConcerned About Industry's Trends in Europe

Hospitality industry across Europe does not expect a better 2010


The Environmental Permitting and Industry Unit within the Malta Environment and Planning Authority (MEPA) ensures that industry keeps the environment in mind when going about its business. MICHAEL SANT, Manager within the Unit, speaks to KRISTA MICALLEF TRIGONA about the Unit’s role with respect to environmental regulation.

cAn you exPlAin AnD elABoRAte on tHe function of tHe enviRonMentAl PeR-Mitting AnD inDuS-tRy unit?

The Unit focuses on industry, and on the proper management of environmental issues related to the industrial sector. We are respon-sible for the permitting of indus-trial activity as required by EU and national legislation; permits issued concerns various obligations with respect to waste management, emissions, air quality and the han-dling of different substances.

wHAt ARe tHe vARi-ouS kinDS of PeR-Mitting tHAt A coM-PAny cAn oR neeDS to follow?

Environmental permitting is the process of obtaining a permit to operate; permits issued have condi-tions that are designed to mitigate environmental impact.

The type of permit varies accord-ing to the environmental risk asso-ciated with a specific activity.

Industrial activities of major risk, as defined by the Integrated Pollu-tion Prevention and Control (IPPC) Directive, are the most onerous level of permitting. There are cur-rently fifteen installations in Malta that qualify as IPPC sites; these include installations in the energy sector, the waste management industry, and some in the manu-facturing and pharmaceuticals industry.

Enterprises that fall beneath the IPPC threshold require an environ-mental permit. While to date, under this category, the Authority has issued permits for waste manage-ment installations and other enter-

prises that handle volatile organic substances or fuel, however, we are developing further this level of envi-ronmental permitting, to include the permitting of all enterprises that are an environmental risk, and that have definite obligations in terms of waste management, emis-sions, and discharges.

tHe MAlteSe econ-oMy iS MADe uP of MicRo enteRPRiSeS, witH feweR lARgeR inDuStRiAl PlAy-eRS in tHe MARket. DoeS MePA tAke tHiS into conSiDeRAtion wHen DRAfting enviRonMentAl PeR-MitS?

Given that micro enterprises form up to 95 per cent of the Mal-tese industry and have a cumulative

impact on the environment, MEPA has issued a set of General Binding Rules (GBRs) to cover the regula-tion of such industries. These GBRs are currently in the their public con-sultation stage, as they are bring discussed with industry, NGOs and other stakeholders.

General Binding Rules differ from traditional permits, in that an operator will sign up to a spe-cific standard set of conditions that are specific to the sector in which they operate. Therefore, if operators, that work in the sec-tor related to vehicle maintenance and refurbishment, register under the GBRs of this particular sector, they will be provided with a set of conditions, and will eventually be audited according to whether they are adhering to the conditions or not. These General Binding Rules (GBRs) can be viewed on our web-site at: http://www.mepa.org.mt/gbrs.

wHAt ARe tHe MAin cHAllengeS Being fAceD in tHe AReA of enviRonMentAl PeR-Mitting?

The main challenge we face with Environmental Permitting is the translation of legislative require-ments into practical measures, in a manner that is both environmen-tally-friendly as well as business-friendly. Legislation tends to be somewhat generic and theoretical, and so here industry requires much assistance in implementing these legislative requirements into prac-tice.

Another challenge for us is trying to match the supply of environmen-tal services with the demand. There are a number of industries that are searching for cost-effective solu-tions to their environmental prob-lems, for example in terms of waste management. The permitting pro-cess helps in the identification of

IS BEING ENVIRONMENTALLY

FRIENDLY YOUR

PRIORITY?


solutions together with identifying areas where the local environmen-tal services industry may develop and grow to satisfy this demand.

wHAt tyPe of Moni-toRing iS cARRieD out?

When an environmental permit is issued, the performance of an enterprise is audited against permit conditions. This means that site vis-its take place regularly, with the fre-quency of the intervals being deter-mined by the level of risk associated with an enterprise, as well as the level of compliance shown by that particular enterprise. An enterprise that follows ‘good practice’ stan-dards will not be seeing us as often as one that is in default of permit conditions.

The environmental conditions may also require a degree of envi-ronmental monitoring. For exam-ple, a particular emission point may require particular monitoring according to the legal requirements or permit conditions. However, the obligation to monitor may vary according to the sector and type of emission, generally depending on risk level.

wHAt RelAtionSHiP DoeS MePA HAve witH inDuStRy in tHiS fielD?

This Unit has only been estab-lished just over a year ago and we can say that we are satisfied with the level of co-operation we are finding with most enterprises, although we have had both posi-tive and unsupportive experiences. To mention one, we have worked positively and found a healthy co-operation with the pharmaceutical

sector, a sector that is generally compliant with respect to environ-mental issues.

The relationship with certain other sectors requires more work, in that there are serious environ-mental concerns which require attention, and where better co-operation between the Authority and the sector is required.

Lack of co-operation, means that enterprises will face enforcement action further down the line; how-ever, it should be noted that there are many companies in the private

sector who take pains to be compli-ant, and do the right thing.

A serious concern we share with industry is the issue of a level playing field, where conditions are applied equally across the board. Our attention shall be on those areas where certain enterprises have an unfair advantage given that they are avoiding the costs of envi-ronmental management of their operations.

The main challenge we face with Environmental Permitting is the translation of legislative requirements into practical measures, in a manner that is both environmentally-friendly as well as business-friendly.

for more information you can visit the MePA website http://www.mepa.org.mt/environmentalpermitting or contact the environmental Permitting and industry unit on telephone number 22907230.


cAll foR A PRoPoSAl unDeR tHe 2010 woRk PRogRAMMe ‘PeoPle’ of tHe 7tH ec fRAMe-woRk PRogRAMMe foR ReSeARcH, tecHno-logicAl DeveloPMent AnD DeMonStRAtion ActivitieS

This call falls under the 2010 work programme ‘People’ of the 7th EC Framework Programme for Research, Technological Develop-ment and Demonstration Activities. The programme is further divided in two, namely the ERG and IRG programmes. Besides being active in research in a Member State or an Associated Country, the appli-cant host organization must work jointly with a researcher. The dead-line for submission is Septem-ber 7, 2010 at 17:00 - Brussels Local Time.

Another call for proposals under the same Framework Programme concerns the action Researchers’ Night 2010 for Coordination and Support Actions. This scheme pro-vides 2 different types of actions to be financed:

i) co-ordination or networking actions – aimed at coordinating research activities and policies

ii) Support actions – aimed at contributing to the implementa-tion of the Framework Programme and the preparation of future Com-munity Research and technological development policy of the devel-opment of synergies with other polices, or to stimulate, encour-age and facilitate the participa-tion of SMEs, civil society organi-sations and their networks, small research teams and newly devel-oped or remote research centres in

the activities of the thematic areas of the Cooperation Programme. Support actions normally focus on one specific activity or and one specific event.

The deadline for submission for this programme is Janu-ary 13, 2010 at 17:00 – Brussels Local Time

cAll foR PRoPoSAlS 2010 foR tHe lifelong leARning PRogRAMMe (llP)

The Lifelong Learning Pro-gramme (LLP) is intended for all types and levels of education and vocational education and training. The LLP is established to contrib-ute through lifelong learning to the development of the EU as an advanced knowledge based society, with sustainable economic devel-

opment, more and better jobs and greater social cohesion. A multi-tude of programmes exist, such as Comenius, Grundtvig In-Service Training, Comenius Assistant-ships, Leonardo da Vinci Mobility and Erasmus Intensive Language Courses and the Jean Monnet Pro-gramme.

cAll foR PRoPoSAlS foR tHe PRoMotion/AcceSS to tHe MARket

This call for proposals is related to the implementation of a sup-port programme for the European Audiovisual Sector in order to facili-tate and encourage the promotion and movement of Audiovisual and Cinema Works at trade shows, fairs and audiovisual festivals. These events may play an important role in the promotion of European works within the EU and internationally. It

also aims to improve the network-ing of European operators by sup-porting joint activities on the Euro-pean and international markets by national public or private promotion bodies.

For activities starting between June 1, 2010 and up to Decem-ber 31, 2010, the deadline for sub-mission is december 7, 2009; whereas for annual activities tak-ing place in 2010 and activities starting between January 1, 2011 and May 31, 2011, the deadline is June 30, 2010.

EU FUNDING OPPORTUNITIES

tHe MAltA BuSineSS BuReAu PRoviDeS guiDAnce AnD SuPPoRt to coMPAnieS wAnting to Benefit fRoM eu funDing oPPoRtunitieS.

for more information you can visit www.mbb.org.mt or send an email to [email protected]


Q. you HAve Been SeRving AS MAltA’S PeRMAnent RePRe-SentAtive to tHe euRoPeAn union eveR Since MAltA joineD tHe eu in 2004 AnD HAve Been in A PoSition to foSteR cloSe tieS witH MAny influentiAl euRoPeAn-level oRgAniSAtionS AnD inSti-tutionS, AS well AS otHeR inteRnAtionAl BoDieS. How Do you DeScRiBe tHiS exPeRi-ence So fAR?

A. Creating and sustaining produc-tive relationships with the players in European fora is one of the key elements of my role as Permanent Representative. This was also the case before our accession to the EU when I served as Chief Negotia-tor throughout the long and com-plex membership negotiations that started back in 1999. Then, as now, positioning Malta as a credible part-ner with whom Europe can do busi-ness was vital. Overall, my experi-ences in this area have been very positive. I believe that from day one of membership, despite the obvious learning curve involved, Malta has proved to be an effective Member State of the EU, and has made, and continues to make, a meaningful contribution to the Union’s ongoing development; all this while ensur-ing the best possible framework for Malta’s economic development and the widest possible participation for the Maltese public in Europe’s suc-cesses. As Malta’s Permanent Rep-resentative to the EU, I look back upon our effective participation in EU fora - at all levels – with pride and genuine gratitude that I have been able to play a part in forging the country’s future.

Q. it iS eviDent tHAt MAltA’S PeRMAnent RePReSentAtion HAS A StRAtegic PivotAl Role to PlAy witHin tHe context of eu MeMBeRSHiP AltHougH i SuSPect tHAt MAny PeoPle in MAltA, incluDing locAl BuSineSSeS, ARe not fully AwARe of tHe Role AnD ReMit of tHe PeRMAnent RePReSentAtion. wHAt ARe youR coRe AReAS of ReSPon-SiBilitieS AnD wHAt iS tHe nAtuRe of youR oPeRAtionS in BRuSSelS AS PeRMAnent RePReSentAtion?

A. The Permanent Representation does play a pivotal and strategic role in the framework of the relations between the Maltese Government and the EU Institutions, notably the Commission. We are basically the coordinating interface between the Government and these Institutions.

You could say that our main mis-sion in this regard is to coordinate and usually communicate and pro-mote Malta’s position within the EU. This includes relations with the European Parliament. In the Council of Ministers our role is dif-ferent since the Council not only manages aspects of the European Union but is also part of the legis-lative process. This requires very close, ongoing liaison between staff at the Permanent Representation in Brussels tasked with following the particular policy areas with the EU Government structures in Malta, both at a central, coordinating level within the Office of the Prime Min-ister through the EU Secretariat, whose work I also oversee, as well as with the EU Affairs Directorates in all Ministries.

Pushing Malta’s Agenda in Brussels

eu affairs

On Monday morning he participates in the Cabinet meeting in Valletta. Soon after he rushes to the airport to catch a plane to Brussels. On Thursday night he catches the plane back to Malta and on Friday he chairs the Inter-Ministerial Committee for EU Affairs in Malta. This is the hectic travel schedule of RICHARD CACHIA CARUANA, Malta’s Permanent Representative in Brussels. In an interview with CLAIRE AZZOPARDI, Mr Cachia Caruana states that in times like the present, when the whole world is in the middle of an economic slow-down, the benefits of membership are reaped in the best possible way.

dar malta, which houses the offices of malta's permanent representative to the European Union.


We need to be always in a posi-tion to participate effectively in the Council, the Committee of Perma-nent Representatives known as COREPER, as well as the hundreds of working groups involved in the preparatory discussions on poli-cies and legislation. These discus-sions are the basis upon which the future developments in the Union are determined. By participating effectively we can identify any chal-lenges or opportunities that are of special interest to Malta at a very early stage and take the necessary steps to deal with them effectively.

Q. wHAt woulD you SAy iS tHe MAin tHRuSt of tHe PeR-MAnent RePReSentAtive’S RelAtionS witH tHe eu HAS Been in Recent yeARS? wHAt MAin AcHieveMentS HAve Been SecuReD to DAte, PAR-ticulARly tHoSe tHAt woulD Be of DiRect inteReSt to tHe BuSineSS coMMunity? wHAt MAin cHAllengeS tHAt you HAve encounteReD So fAR?

A. The main focus of the Per-manent Representation’s work is ensuring that Malta’s interests are represented and where necessary also safeguarded at the European level. When one considers that we have been members of the EU for just over five years, I think the fact that we successfully joined the Eurozone and the Schengen area during this time is a key achieve-ment. I also consider the agree-ment of the financial package for Malta for the period 2007-2013, where over €1 billion were allo-cated to Malta to use over that period to be of major importance. These are all important develop-ments that are having a positive effect on the business community. There have also been discussions on foreign policy questions, taxa-tion questions, SME concerns on the Regulation on the Registration,

Evaluation and Authorisation of Chemicals (REACH) where Malta’s role in the Council and in Parlia-ment had a real impact. Not to be underestimated, also, is the fact that, following years of debate and uncertainty, accession has finally provided a clear, long-term direc-tion for Malta. This sense of pur-pose and security is a necessary foundation for economic growth, and gives our business community a framework within which they can operate and plan ahead effectively and with peace of mind.

Q. eu MeMBeRSHiP HAS AlReADy BRougHt MAltA cloSeR to tHe ReSt of euRoPe in MAny DiffeRent wAyS. it iS neveRtHeleSS iMPoRtAnt tHAt excellent DiPloMAtic tieS ARe foS-teReD to enSuRe gooD tRADe RelAtionS. But Do you tHink tHAt, geneRAlly SPeAking, MAlteSe BuSineSSeS AnD MAltA’S eMBASSieS in eu countRieS ARe Being effec-tive in foSteRing BuSineSS, inveStMent AnD coMMeRciAl tieS?

A: In the run up to EU Member-ship the Maltese Government cre-ated a business environment that is light years ahead of what we had been used to just 15 years before. In that sense I feel that the groundwork has been set for a bet-ter market place. Having said this, I am not implying that the govern-ment’s work should stop there, as I still believe that the government could do more to assist our busi-nesses in fulfilling their potential especially when it comes to doing business abroad. I, however, also sometimes get the impression that some local businesses lack an ele-ment of self-confidence and instead rely on the government to facilitate their operations. There are many examples of local businesses that

have grown beyond recognition over the past few years whose lead one would do good to follow. Clearly the Malta Business Bureau has a full role to help business achieve the self-confidence they need in the European Union.

Q. Do you tHink tHAt MAl-teSe eMBASSieS – AnD MAyBe MAltA’S PeRMAnent RePRe-SentAtion – cAn Be Bet-teR StRAtegicAlly MoRe SyncHRonizeD AnD BetteR utiliSeD to get MoRe inveSt-Ment AnD BuSineSS yielD foR MAltA?

A: In 2009, Malta invested around €13 million in its diplomatic and consular representation overseas, which although responsible for other tasks, is also entrusted with assisting overseas investment into Malta and increasing the export of Maltese goods and services. There have been several success stories in this regard, however at the end of the day, we would all like to achieve more. The Permanent Representa-tion and the EU Secreteriat at OPM are fully focused on ensuring the most business friendly environ-ment possible through the Euro-pean Union’s institutions and bod-ies. This line, the government line, is taken both in policy formulation, legislation and the implementation of legislation. The bilateral Embas-sies in Malta are part of this pro-cess. The rest of the Ministry of For-eign Affairs is likewise focused on helping Malta achieve more.

Q. Do you tHink tHAt MAl-teSe BuSineSSeS ARe cuR-Rently fully exPloiting tHe oPPoRtunitieS offeReD By tHe euRoPeAn Single MAR-ket? linkeD to tHe lASt queStion, Do you tHink tHe fRAMe of MinD of tHe AveR-Age MAlteSe BuSineSS HAS ADjuSteD to tHe eu ReAl-

ity, tHAt oBviouSly exPoSeS locAl BuSineSS to equAlly cRiticAl cHAllengeS AnD oPPoRtunitieS?

A. With access to the Single Mar-ket, Maltese businesses have shifted from a marketplace of 400,000 individuals to one of 500 million. The shift in the mindset of local business that is required to adjust to this new reality is enor-mous, and takes time. As in the case of other Member States, some businesses have made this shift, but not all have. The number will eventually increase as the years go by. The outlook of businesses in the EU’s founding Member States is different to that of businesses in newer Member States because they have had generations to make the adjustment and the adjustment they have had to make is incremen-tal, growing as the EU has grown.

Q. oveRAll Do you tHink tHAt eu MeMBeRSHiP HAS So fAR PRoveD to Be veRy Bene-ficiAl foR locAl BuSineSSeS?

A. Definitely. In fact it is times like the present, when the whole world is in the middle of an economic slow-down, that confirm the ben-efits of membership in the best possible way. When one witnesses the effects this crisis is having on countries like Iceland those who opposed EU membership should blush.

Q. tHe Recent RefeRenDuM in iRelAnD HAS given tHe gReen ligHt to tHe ADoP-tion to tHe liSBon tReAty. given tHAt no otHeR MeMBeR StAteS iMPeDe itS ADoPtion AnD tHe tReAty iS RAtifieD, wHAt ARe tHe MAin cHAngeS tHAt you Believe will Be of inteReSt to MAltA, AnD MoRe SPecificAlly to tHe MAlteSe BuSineSS coMMunity?

A. Following the recent positive outcome of the Irish Referendum and the subsequent signature, of the Czech ratification instruments, the ratification process of the Lis-bon Treaty has finally come to an end and this treaty will enter into force on 1 December 2009.

The political decision of the Mal-tese Government to seek EU mem-bership was taken on the conviction that this provides the best possible means for securing Malta’s socio-economic growth in an increasngly globalised world economy, while allowing us to realise our full potential as an independent state. What the Lisbon Treaty does is modernise EU rules which were designed for a union of 15 Mem-ber States so that they can bet-ter cater for a Union of 27 or more Member States. These reforms are aimed at ensuring that the EU as a whole realises its full poten-tial in today’s world, and hence EU businesses also stand to gain. The decision-making process should be quicker and, more transparent, and this will give the EU the possibil-ity to better implement its policies which are aimed at ensuring eco-nomic growth and competitiveness, improving employment and social conditions and promoting scientific and technological progress.

Q. wHAt iS youR own oPinion on tHe futuRe of euRoPe? wHAt AReAS Do you tHink tHe eu neeDS to give PRioRity to?

A. The world is clearly evolving and, if we want an effective EU, we need to ensure that it evolves at the same rate. If not we will end up with an antiquated Union that is unable to deliver what we have learnt to expect of it. There have been per-ceptions in the past that the EU is a slow-moving monolith, at times too caught up in bureaucracy and detail to respond effectively enough

Pushing Malta’s Agenda in Brussels

from left: richard cachia caruana, Hon. Tonio fenech (minister for finance, Economy & Investment), prime minister Lawrence Gonzi.


to changes and challenges within and outside its borders. These include demographic shifts, envi-ronmental issues such as climate change and the global security threat. However, working within the monolith has allowed me to see an EU at work that can be decisive, and that has a clear strategic vision of where we should be heading. Yes, consultation and debate can be lengthy and this often gives rise to the accusation that there is more talk than action, but I feel that the this is primarily a positive sign of a dynamic ongoing dialogue between the Institutions and the Member States and between the Member States themselves. The fact that the Lisbon Treaty is now set to enter into force on 1st December will also invigorate the Union, and give it the mechanisms it needs to func-tion more effectively as an enlarged Union of 27 Member States. I think that this gives us a firm basis for working more effectively together as a Union and this should bear positive results. For example, this impacts one area that is of spe-cial interest to Malta, that of illegal immigration, where the concerted action of the Union as a whole is vital if this issue is to be tackled effectively. I hope that the aims of the Treaty in this respect are trans-lated into concrete action, and lead to more cooperation and solidarity in this and other areas.

Another key element of this agenda is the consolidation of a stronger international role for the Union by which Europe’s external policy arm will be harnessed more effectively. I think that this will give Europe a clearer voice when dealing with our partners world-wide and will direct our economic, humani-tarian and diplomatic strengths to better promote our interests and values in an international context. I definitely see this as a priority area for the Union.

In terms of the economy, I also feel that the Lisbon Strategy initi-ated in 2005 is providing a sound policy framework for Europe’s eco-nomic growth and this is now well established in all Member States, including Malta. With its emphasis on ‘growth and jobs’, I think that the main strength of the Strategy is that it provides a general road-map for boosting economic prosperity, employment and competitiveness across the Union, which each Mem-ber State can then tailor according to its own individual profile and pri-orities. In Malta’s case, for exam-ple, our post-2010 priority areas in in terms of the Lisbon Strategy are education, climate change and energy policy, research and innova-tion, as well as the improvement of the business environment. In this context, the effective utilisation of available EU funds by the Govern-ment and the business community is key. The EU should continue to refine this Strategy to ensure that it remains a dynamic force.

Q. tHe effectS of tHe gloBAl econoMic cRiSiS HAve HAD A fAR ReAcHing iMPAct on All eu MeMBeR StAteS. HoweveR, it iS eSSentiAl tHAt tHe PuBlic AnD PRivAte SectoRS Alike continue to

enSuRe tHAt tHey ReMAin coMPetitive AnD AttRAct fDi flowS. wHAt iS youR oPinion on tHiS? Do you tHink tHAt tHeRe iS Any PoSSiBility tHAt MAltA coulD Benefit By tHe DeveloPMent of A ‘MentoR-SHiP ScHeMe’ to fAcilitAte tHe excHAnge of exPeRtiSe, exPeRience AnD knowleDge in key AReAS?

A. Yes, I’m in full agreement. Both the private and public sectors have an important role to play in ensur-ing the competitiveness of the country that encourages FDI flows; the trade unions also have a con-structive role to play in this area

Mentorship schemes are likely to provide a positive contribution to our economy given that the sharing of knowledge can help guide busi-nesses to save time and money. There are several Maltese com-panies that have been successful in their transition from locally-ori-ented production to an export-ori-

ented market base. Often this has been done through effective and efficient collaboration with foreign partners. These partnerships are particularly beneficial in the build-up of know-how and expertise transfer by foreign companies to national companies.

Q. MAny PeoPle ARe AwARe tHAt youR Role involveS SHuttling Between MAltA AnD BRuSSelS eveRy week. MoSt of tHe tiMe you SPenD tHe woRking DAyS in BRuS-SelS AnD tRAvel to MAltA foR weekenD MeetingS AnD cABinet on MonDAy MoRning. cAn you give ouR ReADeRS An

inSigHt on wHAt youR tyPi-cAl week iS like in teRMS of MeetingS, woRk AnD tRAvel-ling?

A. On Monday mornings I par-ticipate in Cabinet as well as, on occasion, Cabinet Committees. I then rush to the airport and board

the flight to Brussels. The focus of my week in Brussels is the meet-ing of the Committee of Perma-nent Representatives (COREPER II) which is held on Wednesday and usually lasts all day. This Commit-tee is responsible for institutional matters and for the preparation of Council meetings which are attended by Ministers. There is on average at least one such Council meeting each week, which I attend together with the Minister or Minis-ters concerned. I reserve Tuesdays for dealing with internal Permanent Representation issues. I meet staff in groups so that we can discuss the major issues of the moment and I can review any communica-

tions that are to be issued by the Permanent Representation to the Institutions. On the other hand, Thursday is normally reserved for external meetings, such as my counterparts from other Member States or Commission officials. I also meet Maltese Members of the European Parliament, the Euro-

pean Economic and Social Commit-tee, and the Committee of Regions as required since they deal with the same items that we do in Council and it is important that our posi-tions are coordinated.

On Fridays I normally chair the Inter-Ministerial Committee for EU Affairs (IMC) in Malta. The man-date of this Committee is to discuss and approve Malta’s position on proposed EU legislation and obvi-ously requires siginificant prepara-tion beforehand since I have to go through each and every item that is to be discussed in some detail. I also attend MEUSAC on a regular basis, as well as the Committee for Permanent Secretaries when-ever there are agenda items with an EU element. I also use Fridays to have meetings on particular issues or dossiers that require spe-cial attention, meeting the officials concerned in order to resolve any issues or define a way forward. In cases where an incoming or outgo-ing EU-related visit is in the pipe-line I also hold meetings with all the officials concerned in order to coordinate the necessary prepara-tions for the visit so that we get full mileage out of it.

Well, there you have an insight into my ‘typical’ working week. However I can only say that the only really ‘typical’ thing about my role is that there is no such thing as a ‘typical’ week – the number of unexpected issues and develop-ments that suddenly crop up make this impossible; it cetainly means that one doesn’t get bored. I have to be flexible enough to focus on these issues as they emerge and take the necessary action.


Meli Car Rentals have recently continued consolidating their posi-tion as leaders in the local limou-sine service market with the launch of their latest limousine, the new BMW 7 Series stretched limousine.

“We feel that alongside other substantial investments currently being undertaken to upgrade our extensive fleet, it is fitting for us to crown our company’s 30th anni-versary by launching this gem of a limousine as our latest flagship,”

said Reno Meli, Managing Director of Meli Car Rentals. “As a family-run business currently in its fourth generation and with an involvement in transportation going as far back as 1902, we are immensely proud of our tradition of being leaders in the local transport services market. In line with this tradition we constantly offer our clients top-class limou-sines driven by a team of highly-trained specialised drivers to com-plement the experience.”

The BMW 7 Series is the result of perfection in design and supreme engineering on the drivetrain, on the chassis, in terms of safety systems, driver assistance, and comfort. And at the same time the sophisticated but very modern interior proves that both driving and riding in the BMW 7 Series is a truly impressive experience. The BMW 7 Series also introduces the new generation of BMW's trendsetting iDrive control system. A newly developed Control-ler with direct selection buttons and

a high-resolution 10.2-inch Con-trol Display facilitate intuitive man-agement, control and activation of numerous functions. The long-wheelbase version of BMW's Lux-ury Saloon comes with the longest wheelbase in its segment. In prac-tice, this means particularly gener-ous space and roominess within the car. The BMW 7 Series is unique in its design, in the driving experience, in the control concept and in its all-round efficiency. An unparalleled balance of driving dynamics and

fuel economy, combined with very low emissions, gives BMW a leading position, now also in this segment.

As expected of vehicles of this calibre, the BMW 7 Series is packed with luxury features and refinements that one would nor-mally associate with the trans-portation of high-level dignitaries and VIPs.

IFC, a member of the World Bank Group, is investing in FactorRus, a joint-venture of Transcapital Bank, Moscow and FIMBank, Malta. Fac-torRus will offer receivables financ-ing and other services to Russian corporates and SMEs.

As a result of the financial crisis, bank financing for Russian com-panies has become scarce, and FactorRus will help fill this gap with short-term funding against receivables.

“We are pleased to launch this new business,” said Olga Gryado-vaya, Chairperson of Transcapital-bank. “It is a timely and strategic expansion of our product range, and will enhance our ability to provide customer-focused solutions.” FIM-Bank President Margrith Lütschg-Emmenegger said that “FIMBank’s

expansion to Russia is a significant step in our strategic growth. We expect FactorRus to develop rap-idly and become a significant player in a market which offers excellent opportunities.” Snezana Stoiljkovic, IFC Director for Central and East-ern Europe, stated: “We are glad to further our cooperation with FIM-Bank and Transcapitalbank. Fac-toring is still nascent in Russia. As the market grows, we will also sup-port the development of a suitable regulatory framework.”

IFC, a member of the World Bank Group, fosters sustainable eco-nomic growth in developing coun-tries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to busi-nesses and governments. Trans-capitalbank is a strong private-

sector Bank with supranational shareholders that include the Euro-pean Bank for Reconstruction and Development and DEG, one of Ger-many’s largest government-spon-sored development institutions. Transcapitalbank is considered one of Russia’s most dynamic banks and is ranked the ninth most stable financial institution in the country. It is also among the top 20 com-mercial banks in trade and struc-tured finance in Russia. FIMBank is a leading provider of trade finance and factoring solutions. Headquar-tered in Malta, its strategy is to fur-ther strengthen its global presence, with a focus on emerging markets and enhancing the product range on offer, namely trade finance, structured commodity finance, fac-toring, forfaiting and support bank-ing services.

The news of the Russian joint venture follows hot on the heels of FIMBank’s announcement of a joint venture with Punjab National Bank, India’s second largest public-sec-tor bank, Italian Bank Banca IFIS and Blend Financial Services Ltd. Through this joint venture, in which FIMBank has an interest of 49 per cent, Mumbai-based company India Factoring will be in a position to carry out factoring, forfaiting and trade finance activities in India. These joint ventures represent the implementation of projects which were promised to FIMBank share-holders and bondholders within the context of the Bank’s strategic plan.

Meli Car Rentals break new ground in limousine comfort Mr Reno Meli, Mr Henry Scicluna,

Mr Hugh CaruanaMr David Catania, Grazielle Camilleri, Mr Reno Meli

FIMBANK launches factoring joint venture in Russia – FactorRus

for more information about fiMBank and its global factoring operations please visit www.fimbank.com

AWARENESS


Microsoft, the worldwide leader in software services has recently announced the worldwide availabil-ity of its new Windows 7 operating system. Inspired by the company’s mission that it provides services and solutions that help people and businesses realize their full poten-tial, Windows 7 delivers on a simple premise: make it easier for people to do the things they want on a PC. The new operating system offers a streamlined user interface and significant new features that make everyday tasks easier and allow people to get the most out of com-puters of all styles and sizes.

“With Windows 7, there’s never been a better time to be a PC,” said Microsoft CEO Steve Ballmer. “Together with our partners, we’re introducing more choice, flexibility, and value in the market than ever before. With Windows 7, you’re sure to find a PC that fits your life.”

Building Windows 7 has been a collaborative process from the beginning, with Microsoft’s engi-neers and designers working with customers and partners to build an operating system that delivers on the vision of the PC, simplified. In a speech in New York, Ballmer thanked the millions of volunteers who helped improve the product by testing early versions.

Pierre Mallia, Country Manager for Microsoft Malta said that this new operating system reaffirms

that Microsoft is not merely a prod-uct vendor but the provider of a platform that enables customers to create an optimum infrastructure and deliver the solutions that their business needs to increase effi-ciency, whilst saving on cost. Win-dows is the heart of this platform.

Designed to meet the evolving needs of the users and IT profes-sionals, Windows 7 Enterprise is the most advanced Windows oper-ating system for business PCs. Thanks to its features and bene-fits, this version drives lower total cost of ownership as it helps users stay productive anywhere, while enhancing security and control, and simplifying PC management across any organisation.

As Franchise owner and director of RE/MAX Tigne I have always sus-pected that Sicily is a treasure just waiting to be discovered but was never really convinced until now. As the saying goes ‘seeing is believ-ing’, so together with four of my top associates and the professional guidance of a prominent Sicilian lawyer also accompanied by two Sicilian property consultants, I set off to discover what Sicily truly has to offer the Maltese citizen. After

visiting various locations and see-ing many fantastic properties for myself, I am now confident in the knowledge that Sicily is not only a land of many treasures but offers countless exciting investment opportunities to meet every pocket. This still virgin terrain, offers us Maltese the opportunity to own a fantastic holiday home either out in the country or on the coast in loca-tions such as Ragusa, Ispica, Mod-ica and Noto, among others. These

regions are all within minutes from Pozzallo thus being our select loca-tions. Considering that to reach Sicily from Malta we are looking at just one and a half hours with Virtu Ferries and 35 minutes by plane this makes for the perfect getaway to the privacy of your own ‘Villetta’, or ‘Cottage’ surrounded by luscious landscape and enjoying absolutely breathtaking views.

So if the question is WHY SIC-ILY? The answer would have to be as follows: considering its proxim-ity to Malta and the fact that total relaxation and ‘quality’ family time is almost impossible to achieve on the Maltese Islands, due to such limited space resulting in ‘tight liv-ing’ and ‘high stress’, I can honestly say to the Maltese citizen that Sic-ily is a dream come true, since with the kind of money that would allow us a two bedroom apartment in no particularly prime location in Malta and Gozo, families can now own a

totally private property with hect-ares of private land if preferred, to be enjoyed all year round in a cli-mate similar to ours, around peo-ple whose language most of us speak fluently and whose culture we relate to. All this, set in a land filled with countless baroque towns and villages, beautiful beaches, golf courses, not to mention the delicious local cuisine served in so many quaint restaurants.

Making Sicily even more attrac-tive is the new airport in Comiso which is set to open very soon. This new airport will link the province of Ragusa with the rest of the world and is therefore increasing invest-ment and new interest. Here at RE/MAX Tigne we are now all set to embark on what we firmly believe is the beginning of a new and excit-ing wave of investment for us Mal-tese. We have done our ground-work and are fully informed and up-to-date with the Sicilian buying

and legal processes. We are build-ing our database daily with new list-ings offering unbelievable value and “Our cutting edge is this: we deal direct with the Sicilian owners thus guaranteeing the very best price to our clients.”

So just in case you are wonder-ing when the opportune time might be, I am confident that right now is the time to seriously consider investing in your very own piece of Sicily!

The first document and record management storage facility in malta has created the possibility for clients to free up part of their office space. The new facility is exclusively dedicated to document storage and archiving. The new solution offered by rentastore makes it possible to reduce costs, while maintaining peace of mind.

Rentastore is a newly estab-lished joint venture between Rent-astore International and Salvo Grima Group. Offering a solution to help beat the recession, Rentas-tore Malta, is offering a new service providing clients with an option to reduce their costs.

Having maintained a strong repu-tation over the last ten years, Rent-astore International has provided this unique service in Ireland and in Spain and has won the confidence and trust of leading commercial and public organisations, and is now set to achieve the same results in Malta.

In addition to storage space, Rentastore also offers compre-hensive records management, data protection services, and destruc-tion solutions from its locations in Ireland, Spain and Malta.

Rentastore applies its expertise, as well as its experience, to offer solutions for storage challenges, including, cost reduction, regula-tory compliance and disaster recov-ery planning.

William Bodenham, Chairman of Rentastore International is more

than pleased to be associated with Salvo Grima and is looking forward to providing high levels of world-class service in the record manage-ment industry, emphasising that, “from the second our clients give us their documents, to the second they get them back, the documents will be stored securely and managed professionally in centrally located and specialised premises.”

The all inclusive monthly charge covers Rentastore’s service through the complete custodial chain and includes:

The Malta document storage facility is run by full time staff who have been professionally trained and security cleared. The same day inclusive retrieval and delivery service ensures full confidential-ity of their customers’ documents and records.

Rentastore International not only offers quality competitive global service but also provides a solution for indigenous companies that wish to release valuable office space to reduce costs.

Why Sicily?

Worldwide availability of Microsoft’s new Windows 7

RENTASTORE MALTAA solution to help beat the recession

By Michael Bonello

AWARENESS

call Michael on 9944 0165 for further details and a private presentation of value properties at Re/MAx tigne office.

rentastore management at their new premises.

for further information contact Rentastore on tel: 2124 3777 or email: [email protected]

1) Secure and confidential doc-ument collection

2) Supply of tamperproof archive boxes

3) Computerised bar-coded tracking system

4) Same day data retrieval and delivery

5) Secure end of life shredding service


Albert Mizzi is a name that is very well known amongst the Maltese business community. As the saying goes, he has ‘a finger in many pies’, all of which have proven to be suc-cessful. While Mr Mizzi is now past the traditional retirement age, his energetic enthusiasm and sharp business acumen have never faded.

Sitting in his office overlook-ing one of his latest projects – the development of MIDI Project in Manoel Island – Mr Mizzi is ani-mated and he dives right in the deep end, talking about the state of busi-ness and the economy in Malta. He does not mince his words when he claims outright that the economic downturn has had an impact on all sectors of the Maltese economy, saying that “sales have gone down in all sectors. Profitability has also gone down due to increased com-petition and there is less liquidity on the market,” he says, “but I do expect things to improve towards the middle of next year,” he adds with a wry smile.

Mr Mizzi goes on to say that while the economic recession brought many European countries to their knees, Malta was not hit to the same

extent. “Given the deep effects that the economic downturn had on all European economies, I believe that that many things will change... hopefully for the better! Better reg-ulation is obviously needed across Europe, especially in the financial and banking sectors, to ensure that banks and credit institutions are based on more solid foundations,” he says.

Even though Mr Mizzi admits that the economic downturn has had an effect on all sectors and businesses, including his own, he is nevertheless upbeat about the existing opportunities that are still ripe for the taking. He takes Malta’s accession to the European Union as one example, saying that even though membership brought about a significant increase in competi-tion, Maltese businesses can still prosper if they monitor the market and their competition well.

“I have to say that I do believe that Malta is well positioned as an EU member – I cannot imagine where we would be now with this recession if we were not part of the EU. Now, even though the EU does mean increased competition,

we also have the advantage of the single currency and the opportunity to penetrate the single market,” he says.

Access to the European market and adopting the single European currency are certainly the first ben-efits of EU accession that spring to mind, but this does not change the fact that making the most of the Single Market does require a significant shift away from the tra-ditional Maltese business model. “Local businesses still have to fully adapt to the fact that the ball game has changed. We are now fully integrated into the European market and can no longer afford to only focus on the local mar-ket. We need to adapt ourselves to these opportunities, we have to realise that Europe is on their door-step – we need to open the doors!” he claims.

Doing business beyond our shores should not be a completely new concept to the local economy – tourism has been a pillar of the economy for decades. In fact, Mr Mizzi is also very well known as being the longest serving chair-man of Air Malta. His experience

in the travel and tourism indus-try is extensive and he has seen it develop throughout the years.

“The tourism industry has changed. Years ago, Malta did by marketing itself with the typical ‘sun, sea and sand offer’. But today the whole of Europe is more acces-sible and this model will no longer work – there is fierce competition on all levels... between destina-tions, airlines and hotels,” he says. “We need a better, cleaner strategy where all stakeholders collaborate, both strategically and financially, to market Malta more effectively on the international level.”

While Mr Mizzi has years of expe-rience under his belt, his appetite for new challenges seems to be insatiable. He takes a hands-on approach to one of his latest major investments, MIDI, which will see the transformation of Malta’s rather neglected Manoel Island. “The project has been doing well even though it is moving slowly due to the economic downturn. But we have adjusted our sales focus towards the Scandinavian market and have had good results,” he explains.

But even though you would expect a project the size of MIDI to keep Mr Mizzi fully occupied, at least for a while, it seems that that is not entirely the case. “I have a few other projects in mind,” he says with a twinkle in his eye. “The cur-rent climate can present a few good investment opportunities but we need to make sure that the time is right before making a move,” he says.

Mr Mizzi is certainly what people call a visionary, in his own words he has “been in the world of work for too long... I have been working since 1945!” Even though he says this with a chuckle he becomes seri-ous when he concludes that “I am nothing more than a hard worker. I learnt that half of your successes are down to luck, but you also need to have good ideas, you need to believe in them and you need to enjoy doing it. I love going to work and I love what I do!”

ALBERT MIZZI'S INSATIABLE APPETITE FOR BUSINESS

inTerview

ALBERT MIZZI has been at the helm of many large-scale projects and his name has become synonymous with success and innovation. CLAIRE AZZOPARDI talks to Malta's living business legend about the issues that are currently on his agenda.


“I have to say that I do believe that Malta is well positioned as an EU member – I cannot imagine where we would be now with this recession if we were not part of the EU. Now, even though the EU does mean increased competition, we also have the advantage of the single currency and the opportunity to penetrate the single market.”


Late PaymentsHAMPER BUSINESS DEVELOPMENT

The original Late Payments Directive was first introduced in 2000, to combat late payments in commercial transactions between businesses and also between busi-nesses and government authorities. However, despite some improve-ments during the past years, late payments are still a common occurrence, not just in Malta, but also across the EU.

Late payments create problems with regards to the development of businesses and can be even held responsible for bankruptcies of otherwise viable companies. This is even more so, when we talk about SMEs. Unfortunately, the current payment culture can not always be applauded and was felt more intensely during the past months, due to the economic crisis.

Based on a commitment in the Small Business Act, the Com-mission is suggesting a new and updated regulatory approach which builds on the 2000 directive, and which aims to tackle the situation on late payments more effectively.

A study carried out in 2006 enti-tled ‘Review of the effectiveness of European Community legislation in combating late payments’ pre-sented by Jean Albert, noted that late payments where stabilising since the 2000 directive, rather than decreasing across the European Union, and that these still repre-sented a problem to business.

The recast proposals tabled by the European Commission herald three major changes to the cur-rent Directive on Late Payments. First of all public authorities would be obliged to pay within 30 days or pay a flat rate compensation of 5 per cent of the amount plus inter-est. Secondly, businesses will be entitled to claim both late pay-ment interest and reimbursement of any recovery costs. Thirdly, even small amounts of payments may be claimed back even those resulting to less than €5. These new rules are optional for businesses, meaning that they are legally entitled to take action but not obliged to do so.

The MBB has recently held a high-profile Business Breakfast to discuss these imminent changes to the Late Payments Directive. Through the results of the Busi-ness Breakfast and also a survey carried out amongst Malta Cham-ber Business Sections, the MBB also published a report entitled ‘Settling Late Payments on Time’, which aims to evaluate the extent of the problem of belated payments in commercial transactions.

Ms Maarit Nyman, Commission Representative from the SME Pol-icy Development Unit of DG Enter-prise also addressed the audi-ence and discussed the issue of late payments in detail. “Late pay-ments remain, according to public consultation and impact assess-ments, a problem for enterprise as

EU Member States are gearing up to adopt and implement the new Late Payments Directive. AMANDA SCIORTINO, Executive at the Malta Business Bureau, discusses the impact that the new proposals will have on the way local businesses operate.


they make the day-to-day running of business difficult. For this rea-son the Commission proposed the recast to strengthen and simplify some of the provisions in the pre-vious directive, and to present new initiatives, especially with regards to payments from public adminis-trations to enterprises."

Although the main aims of the changes to the Late Payments Directive are certainly commend-able, some representatives from the local business community have expressed their dissatisfaction with the recast, claiming that it did not represent their needs and that there should have been an impo-sition of shorter credit periods as opposed to the possibility to impose interest on late payments.

However, Ms Nyman also addressed this issue, claiming that the Commission respects the principle of contractual freedom and believes the contracting par-ties should be free to agree on the terms of the payment.

“On the transactions between a company and a public adminis-tration, which are considered to be the most problematic as con-firmed through public consulta-tion, the Commission proposes as a general rule a limit of 30 days for payments. The final form of the proposal depends ultimately on the co-legislators, being the European Parliament and Council which are both currently discussing the pro-posal,” she says.

Another potential problem that was highlighted during the meet-ing was the fact that the new rules proposed were not obligatory, where businesses believe that

this may render the recast fairly useless. When prompted about this Ms Nyman said that “the new rules are optional for business so that they still have the flexibility to extend payment periods for the sake of good customer relations, although public authorities are obliged to comply with the proposed revisions.”

According to Ms Nyman, the ulti-mate aim of the recast exercise is to reduce the problem of late pay-ments. “Member states are always free to adopt more stringent rules if they deem this necessary. Ms Nyman believes that awareness raising and information campaigns on the negative effects in order to create a more prompt payment culture.”

Ben Butters, EU Affairs Director at Eurochambres, also welcomed the proposal. He stated that it “has the potential to ease to an extent the life of businesses, particularly SMEs. In this framework, Euro-chambres stresses the need to refine and develop some of the pro-visions of the current proposal, with the aim of improving its content and clarity.”

Mr Butters continued to say that while the stricter payment condi-tions for public authorities were certainly welcome, Eurocham-bres would “prefer to see a more coercive interest rate mecha-nism implemented vis-à-vis public authorities, rather than a fixed and arguably arbitrary lump sum, as included in the current proposal.”

from left: angelo Xuereb (chairman, aX Holdings), maarit nyman (commission representative of the SmE policy development Unit – dG Enterprise), George micallef (mBB president), reginald fava (chairman, Healthcare

Business Section – malta chamber), Keith fearne (managing director, IcT Solutions).


Business NewsMBB Update

During the last couple of weeks in September, a lot of work was con-centrated on research and drafting of a report entitled, “Settling Late Payments on Time: Analysis and Recommendations on the Recast of the EU Late Payment Directive”. This was compiled on the basis of questionnaires received from the membership of the Malta Cham-ber in the ambit of the Recast of the Late Payments Directive. The aim of this report is to evaluate the extent of the problem of belated payments by public and private bodies in com-mercial transactions. The MBB’s position was constructed from a synthesis of different perspectives adopted by European Business associations and sectoral industry groups. The report finds that overall there are considerable problems for

business through belated payments both in terms of business-to-busi-ness transactions and also those from public authorities. The analy-sis of the questionnaires also points towards a disproportionate inci-dence in terms of both frequency and effective duration of outstand-ing payments by public authorities in Malta. Copies of the report were presented to the Prime Minister and the Leader of the Opposition as well as to the Minister of Finance, the Economy and Investment, Maltese MEPs and other relevant authori-ties. E-copies were also distributed amongst interested parties.

In October and November the MBB also worked on the EU’s ‘I2010’ strategy which aims to boost Europe’s lead in ICT and to unlock the benefits of the informa-tion society for European growth and jobs. This programme was adopted in 2005 and is reaching its final stages this year. In order to gauge the impacts of this strategy, the Commission issued a consul-tation document on nine various aspects of ICT in Europe. This was done with an aim to create a ‘new digital agenda’ in order to be able to meet the emerging challenges and to unlock the potential of the inter-net as a driver of growth especially to boost the economic recovery. The report analyses and portrays the feedback gathered from the Malta Chamber, ICT members, which will be presented to Eurochambres and Business Europe in order for them to present the Commission with a common position. In this report the MBB focused on the most rel-evant sections to Maltese-ICT related business which are ICT for a growth and jobs agenda, creating a 100 per cent connected society and economy through a high-speed and open internet for all, consolidating

the online Single Market, making modern and efficient public ser-vices available and accessible to all.

The MBB has pointed out vari-ous issues in the report, however it feels that one of the most impor-tant aspects of this consultation should be the building upon the potential of ICT to create a stronger online Single Market as this is now more important than ever to boost economic recovery. The new digi-tal agenda must strive to develop an improved digital infrastructure across a broad range of commercial services, making e-services more accessible throughout the EU and to create a vision based on desired end results. As a consequence the development of a thoroughly con-nected European society and econ-omy through high-speed and open internet raises serious challenges especially with regards to privacy, security of networks and identified shortcomings within EU network investments. Hence, equilibrium between the best possible use of innovative services and the associ-ated risks with regards to privacy and security must be struck. The ambition of an EU digital single mar-

ket is to be the core guiding objec-tive for a post-I2010 strategy. In this regard, substantial measures must be taken into consideration, as this would be an initiative from which both companies and consumers will benefit. For this to become a reality there is a paramount need to increase consumer confidence in online business transactions, in particular in cross-border e-com-merce, in both goods and services. This can be achieved through the development of best-practice codes of conduct and through the dif-fusion of various EU-wide trust-marks. Once this confidence is instilled in consumers, e-govern-ment, e-learning and e-health tools can be fully developed, deployed and exploited commercially by the private sector.

RePoRt on i2010RePoRt on lAte PAyMentS

Currently the MBB is in the pro-cess of finalising a brief practi-cal guide to the Services Direc-tive (Directive 2006/123/EC). The Services Directive was concluded through a co-legislative process involving the Council and the Euro-pean Parliament in 2006. It should be implemented by the end of this December by the EU-27 Member States’ authorities. Essentially, the Directive aims at reducing barriers to cross-border trade in services, mainly by establishing uniform procedures for business licensing throughout all Member States. It is seen as an important building block for the Lisbon Agenda, with its core aim being to facilitate the creation of an internal market for services. Among the Services Directive’s main objectives is the removal of legal and administrative barriers for the development of cross-bor-der services, therefore increas-ing competition within the internal market. The Services Directive also aims at improving the quality of ser-vices provided and the fostering of more administrative cooperation in the EU.

The European Commission has identified certain obstacles to the free movement of services, namely complex and costly procedures to obtain permits and licenses, lack of information about legal require-ments, clarity on requirements to establish business in other Mem-ber States and discrimination on nationality. The MBB paper, which is in the pipeline, aims to pres-ent Guidance Notes on practi-cal aspects emanating from the transposition of the Directive, par-ticularly its implications for local business. The transposition of the Services Directive is being steered through Parliament where a series of amendments to local licensing regulations namely affecting the Malta Travel and Tourism Services Act, the Trading Licensing Act and rules on regulated professions such as the Accountancy Profession Act and the Employment and Training Services Act are being discussed by MPs. In the meantime, the MBB Guidance Notes will be made avail-able once finalized over the coming weeks.

SeRviceS DiRective MAnuAl

Activities Update

On the October 1 the MBB organ-ised a business meeting to dis-cuss the imminent introduction to changes to the EU’s Late Payments Directive and also to elaborate upon the ‘Settling Late Payments on Time’ report. The event organ-ised at the Hotel Phoenicia aimed to address the issue and discuss how this burden on Maltese business could be alleviated. A panel moder-ated by Mr George Micallef (MHRA President and President of the MBB was composed of Ms. Maarit Nyman (Commission Representa-tive SME Policy Development Unit of DG Enterprise), Mr Reginald Fava (Chairman, of the Importers, Dis-tributors and Retailers Economic Group and of the Health Care Busi-ness Section, Malta Chamber), Mr Keith Fearne (Chairman of the Infor-mation Technology Business Sec-tor, Malta Chamber) and Mr Angelo Xuereb (Chairman of the Federa-tion of Building and Civil Engineer-ing Contractors). The panel agreed that the proposed recast would be beneficial for different sectors. The Health Care sector clearly stressed that the Article of the Directive, clearly obliging payments to be set-tled within 30 days after goods and services are delivered, would be

imperative. The IT sector felt on the other hand that the national tribu-nal system is not efficient enough to settle small payments. The con-struction sector feels equally scep-tical, especially because the new rules emanating from the direc-tive are optional. Where business is entitled to take action to claim flat rate compensation and charge interest on late payments, most

constructors would opt to avoid entering into this litigation for fear of not being invited to participate in future works or tenders.

lAte PAyMentS BuSineSS BReAkfASt


SeRviceS DiRective BuSineSS SeMinAR

On the November 19 the MBB organised a high-profile business meeting to analyse and discuss the imminent implications of the EU’s Services Directive transposition. The event organised at the Hotel Phoenicia aimed to discuss and inform members about the advantages and new regulations arising out of this Directive also including heightened guidance from a National Perspective through the participation of Hon. Tonio Fenech, Minster for Finance, the Economy and Investment, and also Ms. Phyllis Farrugia from the Malta Government Task Force (MFEI) who gave a detailed presentation on the implementation of the Directive in Malta and its effect on business. A panel chaired by Ms. Vanessa McDonald (Editor Di-Ve News Portal) was also present at the event. The discussion panel included the participation of: Mr Kevin J Borg (Director General of the Malta Chamber of Commerce, Enterprise and Industry), Mr George Schembri (CEO of the Malta Hotels and Restaurants Association), Mr Julian J Mamo (Chairman of the Service Providers Economic Group, Malta Chamber), Mr Benjamin Rizzo (President of the Malta Federation

of Professional Associations) and Mr Godwin Warr (Director General Commerce Division, MFEI). The panel evaluated and discussed the impact which the Services Directive would have on Maltese Business and agreed that processes which simplify the procedures and formalities to access a service activity in another country would be beneficial and encourage internationalisation and also pointed out that a point of single contact as demonstrated through Ms. Karen Clements’ (Consultant on EU Affairs, British Chambers of Commerce) presentation is seen to encourage efficiency. They also stated however that it is still to be seen whether or not providing easier access for businesses to provide and use cross-border services would automatically translate into a reduction in prices, improvement of quality and an increase in choices for consumers.

The Brussels office hosted a group of BOV officials for presentations at the La Vallette Businesss Centre on Thursday 9th October. The group that was on an informal visit to Brussels had the opportunity to hold an exchange of views with officials from DG Ecofin. The meetings were organised with the purpose of informing the BOV group of the implications of the current excessive deficit procedure opened by the European Commission against Malta and several other member-states due to the spiralling public deficits. The MBB Brussels office facilitated an informal gathering of Maltese expatriates living and working in

Brussels with the purpose for the BOV officials to be better informed of the retail financial needs of the Maltese community living abroad. BOV are in the process of developing a tailored-made package for the Maltese expat community in Brussels and Luxembourg.

In another event, the Brussels office part-hosted a visit by senior executives from the Mediterranean Bank Network (MBN) on the 4th November 2009 for a joint seminar CEPS-MBN seminar on the difficulties encountered by Euromed business in obtaining access to finance. Senior officials from the Directorate-General

for Trade within the European Commission addressed the group of bank executives on the current state of play of the Euromed free trade area and the political developments linked to the Union for the Mediterranean as well as on the implications of the financial crisis on the Euromed partner economies. A networking reception was held in the evening of the 4th November at the private residence of the Maltese Ambassador to Belgium.

ActivitieS oveRSeAS

MBB President Mr George Micallef, CEO Mr Joe Tanti, and MHRA CEO Mr George Schembri, attended the 60th General Assembly (GA) of HOTREC in Barcelona between November 5 and 6. At the GA, 39 hotel, restaurant and café associations from 24 European countries discussed the challenges and threats faced by the European hospitality industry during the worst economic crisis seen in a lifetime. Various topics were discussed during the two day event including the Food Labelling Directive, the Lisbon Treaty and its coming into force, Standards and Fire Safety. On the occasion,

the participants were presented the new HOTREC publication entitled “Some 60 EU measures affecting the European hospitality industry”. This publication focuses on approximately 60 measures emanating from the EU and which have most direct relevance to the tourism and hospitality industry. This publication is also electronically available on the HOTREC website under the heading Key EU Measures in the publication section of the website (http://www.hotrec.org/pages/news_publications/publications/)

HotRec 60tH geneRAl ASSeMBly

euRocHAMBReS AnD BuSineSS euRoPe MeetingS in BRuSSelS

During the last couple of weeks of October, MBB CEO Joe Tanti, also attended meetings in Brussels concerning EuroChambres and Businesseurope. The first meeting organised by EuroChambres was aimed for ‘Chambers meet MEPs and test their Business Credentials.’ Here, 400 representatives of Chambers of Commerce from 45 countries met, four MEPs (Gunnar Hökmark, EPP; Edit Herczog, S&D; Philippe Lamberts, Greens; Giles Chichester, ECR) representing the largest political groups in the European Parliament and accounting for around 75 per cent of the European Parliament’s membership. A 90-minute debate allowed participants to confront the MEPs on several business-related issues. Chambers urged the Parliament to pursue a business-

friendly agenda and to implement policies that will allow the business community to lead Europe out of the economic crisis and into a period of sustainable growth and competitiveness. They then asked specific questions enquiring the MEPs’ positions on crucial dossiers such as the internal market, the ‘European Innovation Act' and the post-2010 Lisbon Strategy.

In the other event, MBB CEO together with Ing. Ray Muscat (Director General Malta Chamber) attended the Businesseurope Executive Committee meeting which dealt with a vast number of issues related to the European economy and strategy on the way forward. During the meeting participants pointed out that the economic crisis and the installation

of a new Commission and new European Parliament have modified the context in which the organisation and its members operate. In this context the Members of the Executive Committee highlighted the main challenges which Europe has to meet today in order to play at its full strength in the future. These challenges towards European Business included; Access to Finance, Demographic Pressures, Global Competition, Energy and Climate Change.

BuSineSS PARtneRSHiP witH Hotel PHoeniciA

Since May of this year, Hotel Phoenicia and the Malta Business Bureau have undertaken a business partnership. During the last months, the MBB has already organised four business seminars on diverse EU and business topics, which were all well attended and with participation of high profile personalities from the EU. The Phoenicia‘s meeting rooms and

Grand Ballroom have been ideal to host such events, whilst it goes without saying that the service provided by the Phoenicia and its staff to the MBB and its Members has excelled. Malta Business Bureau President, Mr George Micallef expressed that ‘The MBB is pleased to be associated with the Phoenicia and augurs that the partnership will continue in the

long term”. From the other end, Mr Charles Azzopardi, General Manager of the Hotel Phoenicia, states that the “Phoenica is proud to partner MBB in bringing the EU closer to the local business community. The MBB is a gold mine of EU related affairs and I encourage member to attend these events”.


new officeAs from Monday November

16, the MBB officially started operations from their new office at Casa Leone in Floriana. The premises were occupied by the Federation of Industry up until last January before the merger with the Malta Chamber of Commerce took place. Any future correspondence should therefore be sent to Malta Business Bureau, Casa Leone, Pjazza Robert Samut, Floriana.

new weBSite

As part of its restructuring initiatives, the MBB has also launched a new website, in order to strengthen its services towards its members and also to raise its profile on the local and international scene. The website was launched with a primary objective of strengthening the MBB’s presence amongst the members of its parent organisations and to offer them a more value added service. The website’s aim is twofold. Firstly it will service the Maltese business community’s needs vis-à-vis commercial opportunities, and the information on tenders, schemes and funding opportunities. Secondly it aims to provide an online platform for easy access to EU policy news, developments and explanatory briefs carrying a business oriented analysis on new EU legislation or proposals. The

website has three distinct levels of membership, where some articles are free to all users of the website, while others are strictly limited to the members of the website.

To become a member of the MBB website is free however, at a third level some select documents may be downloaded or issued at a cost.

congRAtulAtionS MBB PReSiDent

The MBB executive team would also like to congratulate Mr George Micallef, President of the MBB, for his new title as President of MHRA. Mr Micallef was elected at the MHRA Annual General Meeting held on Friday 30th October at

the Intercontinental Hotel, St. Julian’s. We would like to take this opportunity to wish Mr Micallef best of luck for his new appointment at MHRA.

uPcoMing ActivitieS

In the first few months of 2010, starting from January, the MBB shall be organising a series of events entitled ‘Meet Your MEP’. As highlighted in our Business Manifesto published in May 2009, the MBB is aiming to increase its communication of business interests and priorities in relation to the new EP legislature.

To this end, we have taken this idea and constructed it into a number of regular meetings between Maltese MEPs and the local business community. We believe that this will create an opportunity for the present MEPs and business people to discuss and exchange their views on a number of EU related issues. This would establish and maintain an effective channel of communication linking the demands of local businesses with their representatives at EU level, allowing certain business views and expectations to be clearly expressed.

We strongly believe that these regular events will help to better inform our MEPs on the core issues affecting local business, consequently also to enhance the MEPs contribution to the political debates at European level. The first event of this series is planned to take place in January and the topic of discussion for this event is the Small Business Act which was adopted by the EU in June 2008, with an aim to improve the overall approach to entrepreneurship and to promote SMEs’ growth by helping them tackle the problems which get in the way of their development.

The SBA seeks to translate its objectives tangibly through ten priorities which should guide the enterprise related policy formulation and implementation of policies at national level within the 27 EU Member States. This is essential to create a level playing field for SMEs throughout the EU and improve the administrative and legal environment. The SBA also comprises four distinct but related legislative initiatives at community level. The forth coming MBB event will make an assessment as to what extent the SBA principles are now informing enterprise-policy formulation in Malta, thus facilitating local entrepreneurial initiative in the private sector in terms of access to finance, better regulation and internationalisation efforts, amongst others.


THE ECONOMIC DOWNTURNHAS CHANGEDTHE INDUSTRY COMPLETELY

The indispensable role of Malta’s national airline is one that can never be disputed, providing an essen-tial lifeline for Malta’s economy and a connection to the surround-ing region for over three decades. The company has seen Malta live through a number of historic devel-opments and has been witness to substantial changes in the market that have revolutionised the way in which the air line industry operates.

But according to Joe Cappello, Air Malta’s CEO, the recent eco-nomic downturn has changed the industry completely, stating that “the current economic scenario has changed what was considered as being normal in the industry. It has changed the way in which we operate - air fares are much lower, travel frequency is down, the length of stay is also shorter... but we need to adapt to this new environment. For the last 35 years. Air Malta has

business case sTudy

“The problems faced by Air Malta and the industry in general have been complex – there was the significant hike in the price of oil, a loss in the value of the sterling and then the recession. While we have had a difficult season, figures for November are encouraging and we even expect them to pick up in the near future.”

Malta’s national airline, Air Malta, has been operating successfully for over 35 years, providing an essential link to the surrounding region as well as playing a strategic role in the economy, particularly in the tourism industry. The BUSINESS AGENDA speaks to the airline’s CEO, JOE CAPPELLO, about the current state of affairs, the effects of EU membership and the company’s plans for the future.

air malta cEO Joe cappello


managed to compete successfully and I am confident that we will con-tinue to do so.”

Mr Cappello’s optimistic outlook on the future of the company comes at a time when the international air line industry is being faced with sig-nificant challenges. According to The Association of European Air-lines, the latest air traffic figures are rather dismal and are showing no signs of improvement. Figures for 2009 remain locked at around 2 per cent lower than 2008 levels, and the average ticket price has fallen by a significant 15 per cent.

However, Air Malta’s CEO explains that he believes that the industry is currently “bumping along” at the bottom of the reces-sion. “The problems faced by Air Malta and the industry in general have been complex – there was the significant hike in the price of oil, a loss in the value of the sterling and then the recession. While we have had a difficult season, figures for November are encouraging and we even expect them to pick up in the near future.”

This positive attitude is certainly encouraging, particularly when one considers that the airline has been operating in a highly com-petitive environment and has been faced with the multiple challenges brought by the recession.

In fact, one could say that the air-line walks a tightrope, balancing between delivering a needed ser-vice to the country without becom-ing a burden on its people. “We have managed to operate and compete successfully for decades and have achieved successes. We have man-aged to operate without subsidies, we have provided excellent con-nectivity to and from the islands, we have generated income and employment and we have managed to compete successfully against some of the very best airlines in the world,” Mr Cappello points out.

It is certainly true that competi-tion is nothing new to the company. The airline does not rely on the local market for its custom as only an approximate 20 per cent of its passengers are based in Malta. As a result, the airline has had to mar-ket itself on the international level ever since its inception. Following

Malta’s accession to the European Union, the competition become even tougher.

Before EU membership, flights were governed by bilateral service agreements, which were removed once Malta became a full mem-ber of the Union. As Mr Cappello explains, “European airlines can operate to and from any other European destination and while this does increase competition it also offers fantastic opportunities. In fact, Air Malta took advantage of this and started operating from places other than Malta... for exam-ple, we started flying from Reggio and are servicing a number of Euro-pean destinations form there.”

EU accession also brought about a number of other changes. Ground-handling services were now subject to increased competi-tion, and the adoption of the euro was yet another milestone that had an impact on the way in which Air Malta operates.

“The adoption of the single cur-rency was a positive development for us. A good part of our costs and revenues are in euro and has


reduced the risks faced when we used to operate in many different currencies with fluctuating rates of exchange,” Mr Cappello says.

Yet another change brought about by the euro was the fact that it made pricing more transparent – it is easier to compare prices, which is an advantage for the airline’s customers but also for the airline itself. As Mr Cappello points out, “with Air Malta we ensure transpar-ent pricing – the price you see is the price you pay – we do not operate with hidden extras. In fact, we were one of the very few European air-lines that had its website immedi-ately approved for transparency by the European Union.”

It certainly seems that Air Malta is doing many things to the high-est possible standards although this does not mean that there have not been a few challenges along the way. The airline made head-lines earlier in the year when a dispute with its cabin crew drew the media’s attention. Mr Cappello has no qualms about discussing the highly publicised dispute and clearly states that a lot of things were said by both parties, which were later regretted.

“Let me be clear about one thing – Air Malta is a services company. We are only as good as our staff. We invest in our employees, espe-cially when it comes to recruitment and training. On the other hand, we

look for employees with a positive attitude and who are willing to be flexible. We have always managed to recruit quality people and we will continue to invest in our staff,” he says.

But the company is not just investing in its staff. The airline spends a hefty €25 million every year in its efforts to market Malta as an attractive destination. The benefits of this marketing strategy are not only enjoyed by the com-pany but also by Maltese society and the economy at large, as Air Malta strives to place the country on the ‘global map’ and not just its own services.

Hefty investment have also been made in the company’s technol-ogy. The way in which airlines operate has changed significantly throughout the years, with the role of travel agencies waning since the onset of online bookings. Mr Cap-pello explains that while Air Malta still works closely with tour opera-tors, the airline has had to respond to the market’s demands and has invested heavily in the technology it uses. “We have a state of the art internet booking system, a very good website and a revenue man-agement system that helps us to develop the very best pricing pack-ages possible.”

While these investments are continuing to be made against a backdrop of economic recession and a slowdown in air travel, they nevertheless remain indispensible if the air line is to remain viable. Mr Cappello explains that the use of advanced technology allows Air Malta to offer the very best ser-vice. “Air Malta is leading the way in this regard. We are one of very few European airlines to offer check-in through the internet or from a mobile phone and we are also about to officially launch a new online facility, called ‘Manage Your Book-ing’, that allows our customers to change their booking online and without any hassle.”

The CEO also explains that Air Malta strives to base its service around the needs of its customers and of the country itself. In actual fact, the airline does not consider itself simply as providing a means of transport, but rather sees itself as a significant contributor towards the improvement of Malta’s socio-economic reality.

“We have a social responsibility to fulfil and we give great impor-tance to this. We are one of the very few airlines in Europe that carries stretchers, incubators and even cargo – this is an essential service for an island like Malta. We also support philanthropic organisa-tions, the arts and even sports,” Mr Cappello points out. “We work to promote Malta and not just the company and I am confident that we can continue to fulfil these obliga-tions while remaining a key player in this competitive industry.”


European economies have been in the throes of an economic reces-sion for a number of months, but the European Parliament agreed to establish a special committee to tackle the financial and eco-nomic crisis only a few weeks ago. Although it may be late in com-ing, the new committee has been welcomed by many and has been entrusted with the task of analysing the effects that the economic and financial crisis is having on Euro-pean society, particularly those who are more vulnerable to economic fluctuations.

The special committee is made up of 45 MEPs and has been entrusted with a 12 month mandate to assess the extent and impact that the economic downturn and the ensuing recession has had on Member States. The committee is also expected to develop a number of practical measures that will aim to rebuild stable financial markets.

In a recent interview with the EP Press Office, Wolf Klinz, a German MEP who was elected as the Com-mittee’s chairperson, expressed his belief that the committee should actually have been set up earlier.

“This committee should have been set up in Autumn 2008 after the Lehman collapse, when the full scope of the crisis became visible. But given the short time left to the legislature the decision to set up this special committee only took place after the elections in July.”

The Committee , also referred to as the CRIS-Committee, is non-legislative in nature, but will instead focus on establishing a clear way forward for the future, analysing and discussing possible new struc-tures for financial markets, evalu-ating the application of relevant Community legislation and the coordination of action by Member States. The Committee will also be responsible for developing recom-mendations in all relevant areas to prevent a future economic and financial crises.

According to Mr Klinz, the main aim of the special committee is to “develop a holistic approach that will enable it to give decisive rec-ommendations. The solutions pro-posed will underline the need for concerted global action.”

During its first meeting, that was held at the beginning of this month, Rapporteur Pervenche Berès vowed that she would ensure that the Committee focuses on the "financial, economic and social cri-sis, all together" rather than each

individually. At the opening ses-sion, Ms Berès, voiced her thoughts on whether their mandate was to find an exit strategy out of the cri-sis or an entry strategy for a new approach. This question will surely be answered within the next 12

months, while the rest of the Euro-pean Parlaiment and civil soci-ety alike eagerly await the fruit of their work.

EUROPEAN PARLIAMENT BOOSTS EFFORTS TO TACKLE ECONOMIC CHALLENGES

business agenda issue 01

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