Archive for September, 2016

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Malta’s success – an interview with Kenneth Farrugia, Chairman of Finance Malta

In on September 23, 2016 by NEWCO

Kenneth Farrugia FinanceMalta

For many years now, I have been looking at Malta with feelings of surprise and admiration.

While it is true that its historical circumstances and geographic location forced this country/island to find effective ways of survival early on, no one could have predicted that it would have achieved this in such a determined and resilient manner. Not only has it been able to maintain significant economic performance in comparison to other countries in the euro zone, but it has done so during times of great economic and social turmoil, both in Europe and North Africa, its two neighbouring continents.

Recently published numbers do not lie: in 2015 Malta saw a historical 6.3% growth rate, the second highest in the European Union and everything suggests that this trend will continue in 2016 and 2017. This success is due to a consistent increase in investment and private consumption, both leveraged by a diverse economic development strategy based on attracting foreign direct investment (FDI). The financial services sector is the main reason for attracting FDI to Malta, as shown by the data published in February by the Malta National Statistics Office: during the first half of 2015 financial activities and insurance accounted for 98.1% of FDI, corresponding to an estimated flow of €5.2 billion and an increase of €3 billion year on year.

The timing could not have been better to talk to the chairman of one of the main contributors to this success story, namely Kenneth Farrugia, Chairman of FinanceMalta, the body that promotes the financial services industry, which recently earned the Silver Label awarded by the European Secretariat for Cluster Analysis. This is the only organization in the country and the first European cluster operating in the financial services sector to obtain this recognition.

“Malta has learned many lessons from the crisis”

 

In response to our question about what has been the formula for this success, Kenneth Farrugia explained that Malta has learned many lessons from the crisis that hit Europe in 2007/2008. Because of its geographic location, the country has been at the centre of various crises – the ongoing problem of various countries in North Africa and the financial crises of Southern European countries. One of the lessons learned was the importance of maintaining a rigorous and conservative attitude toward financial activities. According to Kenneth Farrugia, Malta was able to stand out thanks to the extremely conservative and prudent manner in which Maltese banks have managed their assets. The Maltese banking sector is very strong and is the foundation of the growth of the international services sector in Malta.

However, the major leverage for Maltese growth was the internationalization of its economic sectors. In the 1980s, when Malta decided to join the European Union, it had to adapt its entire legislative framework accordingly. During the first phase, operators became aware of the new opportunities that this would bring, but they started mostly by serving the domestic market. When Malta joined the European Union, the sectors gained an entirely new dimension, thanks to the internationalization of the country’s economy. This is illustrated by the fact that there are currently some 27,000 fund managers in Malta, while 10 years ago there were only a handful of them.

In the opinion of Kenneth Farrugia, Malta’s value proposition lies in the fact that it has one, single, serious and business-oriented regulator, a solid legislative framework and political and economic stability. The quality of its resources and infrastructures are also important, of course, and although these factors are of a less objective nature, they play a very significant role when it comes to the decisions made by foreign investors, and they make the difference when choosing a jurisdiction for internationalization.

“Malta’s value proposition lies in the fact that it has one, single, serious and business-oriented regulator, a solid legislative framework and political and economic stability”

 

While internationalization is crucial, diversification of economic sectors is no less important. The strategy of the Maltese government has been precisely that: stimulate the development of various economic sectors and benefit from ensuing synergies and complementarity. Today, financial services already contribute to 13% of Malta’s gross domestic product, but tourism continues to be a sector of great importance to the economy, both in terms of product and job creation. However, the country has always had a strong maritime tradition and Malta’s registry is currently the largest in Europe and the seventh largest in the world. More recently, we have also seen the aviation sector develop, both commercial and private (private jets) with the appearance of major commercial and private operators that have resulted in increased direct flights from Malta to other major business centres, such as Dubai. Other sectors that have seen growth are the film industry (the Gladiator was filmed in Malta) and the health and medicine sector, which are industries with great potential for growth and economic impact.

“As regards substance, our actions are based on proportionality”

 

All of these developments inevitably generate questions about the response capacity of the country regarding the substantial needs of its investors. In answering this question, Kenneth Farrugia was decisive: “Substance is the cornerstone of any investment in Malta. No licence is granted if substance is not created in the country. However, the Maltese authorities are very much business-oriented and they act in accordance with proportionality, i.e. we believe that substance must be required in accordance with the business plan and the reality of each company. We must offer these conditions for investors to find in Malta the answer to their needs for substance. From a taxation point of view, this is a very important aspect, in so far as we must ensure that we are dealing with real activities that are at the heart of the income that is subject to benefits.”

As such, the government has created incentives for companies to attract highly qualified professionals from abroad, and more and more professionals have chosen to reside in Malta. Not only are the tax incentives important, but there are many advantages in having a stimulating professional activity on a small island, because the balance between one’s professional and personal life is quite incredible, not to mention security, good climate and good accessibility. In addition, there has also been an effort to increase the domestic offering of qualified resources through investment in training, free childcare and incentives for working mothers. Kenneth Farrugia went on to add, “We are aware that this combination between a qualified local offering and the capacity to attract professionals from abroad is very important in responding to our clients’ needs for substance.”

“If we stop innovating, we stop growing”

 

Anyone who follows Malta’s development rapidly understands that it is its meticulous implementation of its strategic vision that sets the country apart. One of the key elements of its strategy is innovation. Kenneth Farrugia points out that it is not only possible for Malta to continue to innovate in financial services, but that it is indispensable. “If we stop innovating, we stop growing and we are convinced that innovation is the main differentiating factor that sets Malta apart from other jurisdiction. We must constantly innovate and improve our value-added offering and make an effort to implement a consistent pipeline of new ideas flowing out into the market. However, innovation does not merely involve new products; it has various aspects: we can innovate through legislative changes, improved processes, increased quality of services . . . Innovation has always been at the heart of our activity and we have been able to keep up the pace during different phases and cycles. We have no doubt that we will continue to innovate.”

We also have no doubt that Malta will continue its top level performance and serve as model for performance and management of economic development.

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NEWCO receives “SME Leader” award for the sixth consecutive year

In on September 12, 2016 by NEWCO

Estatuto PME Líder

For the sixth consecutive year, NEWCO has won the award for SME Leader, awarded by the Institute Supporting Small and Medium-Sized Enterprises and Innovation (IAPMEI), reinforcing its strength and growth capacity, along with its competitive strategy.

The SME Leader distinction is a seal of approval for companies, attributed by IAPMEI in partnership with Turismo de Portugal (the Portuguese Tourist Board) and a group of partner banks. The aim is to honour the merit of Portuguese SMEs that distinguish themselves through top level performance, based on a series of demanding criteria related to economic indicators and the highest rating grades.

This award has distinguished NEWCO’s rigorous and innovative management, together with the quality of its economic performance and underlying risk profile.

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Madeira accumulates “Tourism Oscars” and once again wins award for “Europe’s Leading Island Destination”

In on September 9, 2016 by NEWCO

Madeira

During a ceremony in which Portugal was the big European winner of the 2016 edition of the World Travel Awards (WTA), Madeira was once again awarded the title of Europe’s Leading Island Destination, its competitors having included the Azores, Balearic Islands, Canary Islands, Cyprus, Crete, Guernsey, Jersey, Malta and the 2015 winner, Sardinia.

Created in 1993, the WTA are internationally recognized as the “Tourism Oscars” and are awarded annually to recognize, reward and celebrate excellence in various tourism areas, including hotels and airline companies. In this year’s edition, Portugal won in 24 out of the 110 categories (*), in voting conducted by the general public and by over 200,000 tourism professionals from close to 160 countries.

The ceremony of the 23rd edition of the WTA took place in Sardinia, Italy, and was attended by Eduardo Jesus, Madeira’s Regional Secretary of the Economy, Tourism and Culture, who stated that the award is “a recognition of Madeira, its population and all those who work in the sector, making Madeira known more and more on a daily basis for various reasons, based on a global strategy of always wanting to do more and better.”

Madeira has therefore once again obtained international recognition and has won a title it had already won in 2013 and 2014, in addition to receiving an international award at end 2015, outclassing “giants” in island tourism, such as Bali, Barbados, Crete, Cook Islands, Jamaica, Maldives, Mauritius, Saint Lucia, Sardinia, Seychelles, Sicily and Zanzibar.

According to recent statements from President of the Regional Government of Madeira Miguel Albuquerque, Madeira hotels should reach a total of seven million overnight stays this year, having attained international recognition by winning three awards in the category dedicated to Europe’s leading hotels and resorts (Pestana Porto Santo – Leading All Inclusive Resort; Choupana Hills Resort & Spa – Europe’s Leading Boutique Resort; and The Vine Hotel – Europe’s Leading Island Hotel & Spa), and two awards on a national scale (Hotel Quinta do Lorde Resort, Hotel & Marina – Portugal’s Leading Green Hotel and Belmond Reid’s Palace – Portugal’s Leading Hotel).

For a region whose economy is essentially based on international services, with tourism and the International Business Centre being the major sources of income for the regional economy, this recognition represents an incentive for maintaining the quality of a region that is recognized for its friendly and cosmopolitan population, in addition to other qualities that attract a large community of foreigners of various nationalities who have chosen Madeira as their home.

To get to know all of the advantages of living in Madeira, download our guide “Living in Madeira” or contact us.

(*) Categories:

  1. Europe’s Leading Airline to Africa: TAP Portugal
  2. Europe’s Leading Airline to South America: TAP Portugal
  3. Europe’s Leading All-Inclusive Resort: Pestana Porto Santo All Inclusive & Spa Beach Resort
  4. Europe’s Leading Beach Destination: Algarve
  5. Europe’s Leading Beach Resort: Hotel Quinta do Lago
  6. Europe’s Leading Boutique Hotel: Vila Joya
  7. Europe’s Leading Boutique Resort: Choupana Hills Resort & Spa
  8. Europe’s Leading Business Hotel: Myriad by SANA Hotels
  9. Europe’s Leading Cruise Destination: Lisbon
  10. Europe’s Leading Cruise Port: Port of Lisbon
  11. Europe’s Leading Design Hotel: Altis Belém Hotel & Spa
  12. Europe’s Leading Family Resort: Pine Cliffs Resort, a Luxury Collection Resort, Portugal
  13. Europe’s Leading Hotel Villas: Private Villas at Vila Vita Parc (Algarve)
  14. Europe’s Leading Inflight Magazine: Up Magazine (TAP Portugal)
  15. Europe’s Leading Island Destination: Madeira
  16. Europe’s Leading Island Hotel & Spa: The Vine Hotel (Madeira)
  17. Europe’s Leading Landmark Hotel: Bairro Alto Hotel (Lisbon)
  18. Europe’s Leading Luxury Resort & Spa: Conrad Algarve
  19. Europe’s Leading MICE Hotel: EPIC SANA Algarve Hotel
  20. Europe’s Leading New Resort: Pine Cliffs Ocean Suites, a Luxury Collection Resort
  21. Europe’s Leading River Cruise Company: DouroAzul
  22. Europe’s Leading Tourism Development Project: Paiva Walkways
  23. Europe’s Leading Tourist Board: Turismo de Portugal
  24. Europe’s Most Romantic Resort: Monte Santo Resort

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