The Malta-Venice-Riga connection
What do Malta, Venice and Riga have in common? Not much, apart from Mariner – a Maltese company set up to invest in and operate ports and terminals around the world. Mariner’s Marin Hili speaks to The Malta Financial and Business Times.
The shipping industry is one of the most competitive in the world, a fact that doesn’t bother Hili. He explains, "There is, of course, competition but what would worry me is if there was no competition. If you don’t have competition, it will come nevertheless. If you’re in business you have to have competition and if your business is a good one, it would naturally create competition. We compete very well. We provide a good service - at a good return for us, let’s make no mistake about that."
On the future, Hili expects that Mariner "will continue looking for further investments and we are in discussions to this effect at the moment.
"In this type of business the most important and difficult factor is to secure the concession. Once you have that, the other things follow. It’s not like buying a hotel, when you agree on a certain price and it’s yours. When you’re dealing with a port there’s a lot of different vested interests at play, considering the high multiplier effect port operations have - you have shipping agents, pilots, tug boat operators and the local port authority to name a few. It isn’t that simple, in fact it’s a very long and complex process. There are also a lot of toes that can be stepped on so you have to tread carefully.
"One advantage that we had, in Riga for example, was the fact that we come from a small country and as such they don’t see us as ‘taking over’. A port is a very strategic point in a country and while what they look for first are the business prospects we can develop, it does help that we are not viewed as a threat."
On the subject of exactly who Mariner is in discussion with at the moment in its expansion drive, Hili keeps his cards close to his chest, "We are talking to several parties at the moment, but it takes time. You could close a deal in two months or in a year. But, as I said, securing the concession is paramount. Once you have a concession, if you wanted to sell it you would be able to cash in on it the next day.
"When investing in a port or terminal what we look for is the location, if there’s a market to be serviced and if there is substantial scope for development. We are always looking at opportunities and if these factors are in place you take it from there."

The MSE - yesterday, today and tomorrow
The Malta Stock Exchange started out just over a decade ago with some 8,000 accounts. Today the number has surged to 150,000 and although its track record is formidable, its future is even more so. Exchange General Manager Eileen Muscat speaks about the Exchange’s change in role from regulator to promoter:
"Since October the Malta Stock Exchange no longer has the role of regulator and we are now operating purely in a competitive environment. The new legislation put in place allows for a multiplicity of exchanges and as such any sort of monopoly the Exchange had in the past has been or will be removed by certain provisions of the Act coming into force.
"This leaves the Exchange looking at its operations in a different way. We were, in a way, always hampered or held back from certain activities due to our role as regulator since there was always a certain conflict of interest between regulating and operating.
"One example that comes to mind is that because we were the listing authority, also considering that we were responsible for their obligations once a company has been listed, a certain conflict of interest would arise in that you could not try and encourage companies to come on the list and then you would be regulating them.
"Now the Exchange has been freed to a certain extent, opening the way for us to go out to companies and offer other services to companies that we couldn’t offer before.
"The removal of our regulatory powers means that we are now operating in a purely commercial sense. The Exchange, although it has never been a private company, was always a self-financing operation - basically we offered services that we charged for and through this charge we were able to cover our operating costs. The only government subsidy we received was the initial injection when we were first set up. However, that has now been repaid many times over in the sense that the services we offer to government are offered at a subsidised rate.
"Although we were never a private company in itself, we were always run with the mentality of bringing back our operating costs. I have to say that we did make a certain amount of profit, but, unlike a private company, our main aim was not to make a profit but to recuperate our operating costs.
"Now in this new scenario, although at the moment we can say that we are the only exchange in Malta there is nothing in the new legislation to prevent another exchange from being set up. We are now competing, with EU accession, in a greater marketplace. So one has to look at the services we offer and the framework in which we operate, which is a selling point in the sense that the Maltese market is a regulated market with a very strong infrastructure.
"The time we spent before the new legislation went through had allowed us the time to build up our infrastructure. This is a selling point in comparison to perhaps other exchanges that could come on board locally – that we have proven systems in place. This also means that we can now look at other options such as other services that we can offer, perhaps even services to non-listed companies.
"We provide, for example, registrar services to listed companies and we are looking to see if we can extend these services to non-listed companies. For example, depository is a very big service provider. We are looking at all these things, while also looking to streamline our operations to make them more cost effective.
"So we are also looking at the set up of the Exchange within the new scenario. There is no private shareholding, but we are an entity set up under law so we’re also looking at how we can alter the set up of the Exchange to that of an actual company, perhaps, with a view to making it more cost effective and efficient. All these factors are being looked at and this is how we see the Exchange developing in the future.
"The new legislation and the new regulations coming on board have also opened up the possibility of bringing different instruments into the market. Apart from the shares, funds, bonds and government stock there are a lot more instruments out there that would make the market more attractive."

Containerisation, globalisation pushing shipping to new heights
Carmelo Caruana Company Chief Executive Beppe Hili speaks about what the advent of globalisation and containerisation has meant for Malta’s shipping industry.
At the helm of Carmelo Caruana, Hili has seen the shipping industry change drastically over the years, thanks particularly to the advent of containerisation in the industry.
Asked to what extent the industry has developed, Mr Hili explains, "Things have certainly developed. I wouldn’t say that in those days things were primitive, but they were close to it. Back then we used to handle shipments by discharging them on barges, with cargo coming in loose boxes – a state of affairs that led to all sorts of problems such as theft and breakages.
"Now the advent of containerisation has changed the face of the industry when it comes to general cargo. The oil shipping business, however, has remained the same but the vessels have become larger, more sophisticated and safer - especially now with more stringent safety measures being introduced.
"The main change in the industry has been in general cargo transportation. For example, it was even unheard of 30 years ago to have cargo transported by trailer. And as time passes, more and more commodities are being transported by means of containerisation. Up to about four or five years ago, I would say particular commodities, such as sugar, were still being imported in bulk in loose bags as opposed to utilising containerisation methods. Today this has changed and much of these commodities are coming in containers as well, which benefits local firms in a number of ways.
"Nowadays the same bottling plant or factory can buy sugar to suite its weekly needs, as opposed to ordering in such bulk. Because the service is reliable, you can bring in just one container if you need only 20 tonnes. Other commodities have also gone in the same direction."
Hili also sees a large scope for growth due to Malta’s impending EU membership come May next year and the ensuing increased business from China and the Far East.
Hili explains, "At the moment, you can have a Chinese factory, for example, competing with a European or North African factory. These Far Eastern countries’ manufacturing industries stand at a disadvantage given the 17-day shipping distance from Europe, especially for short orders.
"However, if these companies were to already have their goods in Malta, they would be in a better position to compete with European factories and have their goods sent over in a mere day or two."
Containerised world trade has increased tremendously since its introduction and forecasts predict the segment to continue increasing at 10 to 12 per cent a year.
This growth is, in part, the result of increasingly globalised trade. Mr Hili explains, "Before you would have a factory manufacturing goods in Germany, now these are moving to China. As such the goods have to be transported and this is a two way stream, with raw materials being shipped from Europe to China and with the end product has to be shipped back to Europe. This is one of the main reasons why containerisation is doing so well at the moment, how long this will last, we don’t know, but it should last at least for the next few years.
Port competition in the Mediterranean region has undoubtedly been on the increase lately, I ask Mr Hili how he sees the Malta product weathering the storm.
He comments, "I see no reason why Malta won’t fare well with the competition levels in the Mediterranean, there is a lot of room for improvement, but with the right management there is no reason why we won’t continue to compete healthily."

End