31 December 2003

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Hands on the wheel, eyes on the roads
How does Transport and Communications Minister face up to the nation’s woes on those dreaded potholes?
"Looking back at the start of 1998, the situation of the roads remains one of the most important issues today as it was back then. The advantage today is that the Transport Authority, which has now taken over the Roads Department, has an action plan that is being implemented. It also has the experience necessary to understand the defects within the system, to which we have to find solutions."
Both in the question of resurfacing and rebuilding of arterial roads, and village streets, there are around 500 streets to be upgraded, and Galea says this will form the basis of the next five years to come.
"This won’t mean that all the streets will be repaired. Development would still have continued and new streets would have been created."
Despite that, there are still tens of roads that have not yet been improved because of problems of ownership. While there is an authority resurfacing the roads, there are a number of corporations uprooting them, rightly or wrongly, for their own purposes, such as the water services and telephone companies.
"The problem is that when they remove part of a road they usually fail to repair it again. It has to be clarified that these corporations have to mend the roads they uproot as soon as they are ready from their jobs."
And as usual there are the storms, which no matter what, always seem to penetrate the hardened surface of our tarmac:
"I have to make a distinction between certain roads. The press is always keen on reporting on the state of the roads following storms. But if we look at the roads built in the last ten years, no holes actually develop.
"This is partly because they are relatively new. However, in these last five years, we have got contractors to pledge satisfactory standards of road building. We have to assure not only high-level quality in the new roads, but also improve patching to the extent that we will no longer need re-patching week in week out on the same roads.
"We have to see a radical change in the techniques used for re-patching, to ensure higher quality.
"One of my biggest criticisms has been the narrowing of traffic lanes. In this regard, the main priority has been lessening the danger apparent in wide high-speed roads. The other side of the story has it that one-lane roads can only prevent ambulances from reaching accident spots.
"However, one-lane roads do not usually attract accidents like the wide roads where overtaking sees cars crashing head-on. In our country’s circumstances, where we have pedestrians using their cars for a couple of metres distance or jaywalking on the streets, we have to bring to their attention the consequences of their actions.
"To reduce high-speed traffic, we reduced certain roads to one lane and ever since this exercise, we have had no accidents. God willing there will not be any for years to come."

Pensions, liquidity and the right funds at the right time
Valletta Fund Management’s Kenneth Farrugia speaks about VFM’s ongoing internationalisation process and the country’s equity and fixed income markets.
Speaking about the company’s change in strategic partner, Farrugia explains the development has brought added value to VFM’s operations – particularly in light of its internationalisation process and the pensions market, which VFM is actively eyeing.
He explains, "The pensions problem is an issue that has been place high on Malta’s national agenda and having such an experienced player with established IT systems and products for the field will be extremely useful.
"Insight also shares VFM’s internationalisation vision and as such they will be channelling regional internationalisation business through VFM, very much in line with the same philosophy we had shared with Rothschild.
"In this respect we’re on the same track as we were before. We’re still exploring the Maghreb region and after 12 months we’ve established good contacts. We now have a presence in Tunisia, we’ve gone to Egypt and we’re looking closely at Algeria, Morocco and Turkey."
VFM is actively looking at the entire spectrum these emerging markets have to offer and has appointed a large Egyptian brokerage firm with very good contacts in the Gulf region, which VFM is also looking to break into.
Of primary focus to VFM is selling its own funds across the region and, quite literally, structuring new funds for the region, such as the Mediterranean Rim Fund, which, Farrugia explains, has been an outstanding success in terms of performance. In fact, the fund has gained 25 per cent since October 2001.
But despite VFM’s enthusiasm for the emerging markets offered by the Mediterranean region, Malta’s fund management pioneers are still moving along with, and working in parallel to, the domestic market, which, Farrugia explains, offers significant potential.
He explains, "There is the pensions issue at hand and the fact that Malta is now joining the EU is also very positive. Malta as a base for fund administration is an excellent proposition for third party promoters and fits into our business model.
"On the one hand we provide fund administration for third parties and on the other hand we provide retail funds for the market. We’ve built our retail arm very strongly and today VFM’s assets under management are in the region of USD465 million. More than that, if you look at our fund range today, nearly half are third party funds. So we’re carrying administration for our funds and at the same time we’re providing fund administration for a growing number of third parties.
"The Maltese market still holds a great deal of potential and we will keep rolling out funds that we believe offer opportunities for the market, which we have been doing successfully.
"But for the time being we are building our core competence in the bond market and this has been done extremely well. Despite the obvious difficulties of the equity market last year, our suite of products are relatively stable for two reasons: in the bond market we have gone predominantly for investment grade bonds and, secondly, they provide a reasonable rate of return."

The economy, BoV and beyond
Bank of Valletta Chairman Joseph F.X. Zahra speaks about the state of the economy and BoV’s recent successes in its drives for internationalisation and Malta’s potential as a financial services centre.
Zahra begins, "Let’s start off with one very valid point - never has Malta’s openness as an economy been tested as it has over these last years. We now have a situation in which there are no longer any forms of protectionism in terms of trade although there are still a few restrictions in terms of capital movement.
"What we have today is undoubtedly an open economy and this openness is being tested within a very difficult environment where the international economy is at a very low ebb and, for the first time after so many years, we are hearing talk of deflation, even in Germany – Europe’s major economy.
"Knowing that Malta is highly reliant on the international scene, this type of international environment would definitely impact the Islands, which it has done over the last two years.
"I believe, even within this challenging international context, that the economy has been pretty resilient in terms of trade, where we have seen slight improvements over these last months, and even in tourism, which one would have expected to have been hit much harder than it has been.
"As to how these ailments could be remedied, answering this question would require an entire interview in its own right, but there are two very valid points that must be mentioned.
"The first is that we need to think more and more of a strategic orientation for this country. We have been working very hard in acceding to Europe and with all its implications. Now, however, we need to have a stronger, clearer strategic orientation as to what form the Maltese economy will take in the coming five to ten years.
"This strategic orientation will also have to be based on a diversification of sectors. We need to consider what the GDP contributions of sectors such as financial services, tourism and manufacturing will be in the future.
"This diversification would definitely help in increasing our resilience while we face these changing international scenarios. I think we have to be more forthcoming in terms of what’s being expected from the various sectors and how these sectors would interrelate, ensuring that none of these sectors have a negative impact on any other sector."
And on Malta’s potential as a regional centre for financial services:"I think that Malta’s entry into the European Union has enhanced its potential as a financial services centre. Any financial centre’s success is based on its reputation, its credibility and to which international forum it attaches its name.
"Malta’s major advantage as a financial services centre, and I want to emphasise this, would not be any fiscal incentives offered but would instead come from the inherent advantages the country has. One advantage is its strategic location on a geographical basis, but there is also the Maltese human resources element. We’re dealing with people who have been living in an environment in which financial services are already at an advanced stage. Going back in the past we can cite the contribution Barclays gave when it had occupied a strong position in Malta in the 50s and 60s. This had also created a cadre of people who have inherited a strong tradition in the financial services sector. "Of course there is also the language issue and I must stress that we shouldn’t simply be looking at the English language, which is of course the business world’s lingua franca, but we have to also ensure we improve our skills in other languages as well. Using our fluency in the Italian language would particularly help to attract the Italian market and fluency in French, German or Arabic would also help in giving the Islands a competitive advantage as a financial services centre.
"I must of course also mention the country’s information and communications infrastructure. I think the large investments that have been made by corporations, particularly by Maltacom, over the past years in ensuring a state-of-the-art infrastructure is an important ingredient that contributes largely to Malta’s development in this respect."


Continues on page 4

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
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