A New Business Year Full Of Challenges

26th December 2017

They say the past is no guarantee of future performance, but as far as the economy is concerned, 2018 promises to be a good year that is expected to carry on the current growth streak. 

They say the past is no guarantee of future performance, but as far as the economy is concerned, 2018 promises to be a good year that is expected to carry on the current growth streak. Businesses are seeking to capitalise on numerous opportunities in a variety of sectors, and sales, exports, employment and investment appear to be on an upward trajectory, with enterprises across all sectors showing marked optimism about the future.

RE/MAX Malta CEO Kevin Buttigieg

Property was one of the foremost industries for Malta in 2018, with RE/MAX Malta CEO Kevin Buttigieg confirming that the company is currently operating in “an exceptionally vibrant market” in all of its industry sectors, namely buy-to-let investments, investments by individuals and companies that are new to the market, as well as buying and renting of properties by foreigners and locals. “These sectors exclude the significant influx of foreign workers requiring accommodation when settling in Malta. Maltese clients are the main players in the industry, which is a clear sign of a strong property market and a somewhat unique scenario when compared to other countries, where the market is based on foreign capital, and therefore a glitch on the horizon can cause their whole market to crash.”

“The first-time buyers’ scheme introduced last year as well as the new schemes announced in the last Budget will continue to buoy the market to unprecedented levels. At RE/MAX Malta, we are working to add to this initiative in order to further encourage and make it easier for our clients to get on the property ladder. This year, we opened four new offices and envisage that six more will be open for business by the end of next year, which would obviously entail substantially increasing our manpower.”

Raymond Vassallo, CEO of JM Vassallo Vibro Steel Ltd

Over in the field of construction, the outlook remains strong and positive, but the industry is facing various operational issues especially shortage of personnel and workers, confirms Raymond Vassallo, CEO of JM Vassallo Vibro Steel Ltd. Discussing challenges in 2018, Mr Vassallo cites the unfair competition with regards to undeclared imports entering our shores through free customs entry services. “The situation has been alarmingly aggravated since the introduction of excise duty on steel. Another factor of great concern is the restricted and shrinking space to discharge merchant vessels at the quay. Vessels arriving late on Friday very often remain stranded till Tuesday morning, until they are allocated a space to dock inside the port. Along with the lengthier time period it takes to clear imports from customs since the introduction of the excise duty in 2017, this has resulted in delays in unloading imports from vessels.”

“In 2018, we will also be opening a new showroom dedicated specifically to green and energy-efficient products,” Mr Vassallo revealed. “This would benefit developers, investors and residential owners as a fully dedicated team of knowledgeable and qualified personnel will be available to give information and advice on the innovative green products available. During 2018 we are also planning to organise more training and application sessions for Isomat and Kerakoll products, in order to train professional applicators on the correct ways such products are to be used and applied.”

Franco Azzopardi, Chairman and CEO of Express Trailers

Meanwhile, logistics continues to be an important sector for Malta, as an international hub connecting three different continents. Franco Azzopardi, Chairman and CEO at Express Trailers, says that sustained economic growth in recent years has attracted new operators in different sectors to Malta’s market, namely in the gaming, maritime, aviation, construction and real estate sectors, which also brought a marked increase in Malta’s population besides an increased number of tourist arrivals, which has led to an increase in importation, consequently causing a growing imbalance when it comes to export. “The market’s reaction saw two new players entering the transport sector in the form of shipping lines carrying RO-RO trailers, which provided more possibilities in terms of sailing times and port destinations and hence, more competitiveness,” he says. “Today, the main challenge for operators is finding the right tradesmen and skilled workers for the job. Resourcing the right human capital is turning out to be a major obstacle, even for a company like Express Trailers which enjoys a good degree of attractiveness as an employer.”

“I reiterate that the challenge of an ever-widening gap in the imbalance between import and export persists, increasing the pressure on import costs to finance the freight to export empty trailers. If we manage to attract more northbound hubbing of cargo imported from, for instance, the Far East, this will help. This was one of the main reasons that led Express Trailers to invest in more warehousing space, better racking and more equipment, in order to push for more growth in the field of managed warehousing.”

Felipe Navarro, President and CEO at MAPFRE Middlesea

Within the local insurance industry, Felipe Navarro, President and CEO at MAPFRE Middlesea says that the main challenge in 2017 was related to the new level playing field created by the implementation of Solvency II. “It has brought about a new way of observing and catering for the capital needs of insurance companies. The risk, compliance and actuarial approach is being given more importance, and the industry has had to invest a lot to be in line with Solvency II. The advantage within our group is that we have sufficient capital to deal with this – the two companies within our group are financially stable, and we are leveraging the control functions already active in the group, which has made the adaptation quite smooth for us.” Furthermore, the application of the Insurance Intermediaries Directive, which Mr Navarro says will change the way insurance reaches the client, is posing its own set of challenges.

Despite such obstacles, however, MAPFRE Middlesea experienced major growth in 2017, and looks forward towards further developments next year, with Mr Navarro anticipating that the home insurance and home contents cover market will continue to grow, as home owners invest serious money into refurbishment projects, as well as their home’s interiors. “Other areas I believe will grow are life protection, moving beyond the purchasing of a life protection policy only due to mortgages, as well as pension plan schemes. Private and occupational pension plan schemes are still new products to the market, and locally, we are the leading group in marketing a satisfactory final solution for the client in this area. However, there’s a need for greater awareness about this, so that young people can plan ahead for the future when joining the labour market.”

Lionel A. Lapira, CEO of Plaza Centres p.l.c

Meanwhile, on the retail front, Lionel A. Lapira, CEO of Plaza Centres p.l.c, says that 2017 was challenging from a political, social, economic, technological and market perspective. “The retail market has faced intense competition over the past few years and competition will continue to grow with the opening of further stores. Both new and established retailers faced a very challenging market, with replacement – as opposed to new demand – being the key challenge. From a company perspective, the group maintained high occupancy levels whilst seeking to consolidate its market share.” In 2018, Mr Lapira envisages further growth at a group level as the company seek to improve and consolidate the 2017 performance. “Further investment in the group's premises is also planned. Having said this, we will remain alert to the external challenges which impact the industry's dynamics whilst maintaining a traditional prudent approach to the market. As always, the challenge is to maintain a competitive advantage in a highly competitive industry.”

“The main challenge in our location is the road infrastructure, as traffic has become a veritable nightmare. Offering a different proposition is one of the key factors that will determine our industry position and with this in mind, we plan to launch a new concept in the early part of Q2 in 2018. Overall, the outlook for 2018 is no different than this year – challenging, demanding and the opening of further new locations. The challenge for retailers is devising new incentives and schemes to maintain and increase market share.”

Ivan Refalo, Head HR & Corporate Communications at Medavia

Finally, Ivan Refalo, Head HR & Corporate Communications at Medavia, shares his thoughts on the year within the aviation sector. “There were an immense number of challenges for all the business sections within the Medavia Group in 2017, namely the chartering with the company’s own fleet, Aircraft Charter Brokerage and Ground Handling service, as well as for Medavia Technics. The year started off well for the chartering side, with a new contract on a humanitarian mission in a remote country, along with increasing enquiries and a number of secured maintenance contracts with national carriers from Europe, Africa and Russia for the maintenance, repair and operations (MRO). Medavia Technics, the maintenance and design arm of the company, has added multiple maintenance approvals from various national aviation authorities (NAAs) and updated the scope of approval for the Part 21J DOA.”

Mr Refalo says that a substantial growth in headcount was required to address the increasing work demand, in particular within the MRO side. “Originally, a growth of around 25 per cent in MRO headcount was projected for 2017 alone. Current figures show that this estimate will be surpassed by the end of the year. New charter contracts and business relationships with large clients have taken place in practically all areas of the business. Medavia has now also obtained its Part M CAMO certificate and will be adding the service to its portfolio of services already offered to clients.”

Given the likelihood that the positive projections for 2017 will continue well into 2018, Mr Refalo says he envisages that the increased business will affect all areas. “There is likely to be more direct focus on the new and existing charter market and for the MRO to develop further the regional turbo prop market capability and also to develop related workshops to support such activities. Medavia seeks to invest further in the workforce with the greater part going to the technical side.”

The full version of this feature appeared in the December edition of the Commercial Courier

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A New Business Year Full Of Challenges