What We Think

May 2, 2022

Regulating the platform economy

Over the past few years, the world has started going through a new economic revolution, disrupting the economy, businesses, labour markets and our daily lives in a way not seen since the industrial revolution. Driven by technological innovations and increased online connectivity, the role of digital labour market matching is rising. At the heart of this change is the rise of the platform economy. COVID has only accelerated this revolution.

Due to the lockdown measures, most activities have moved online, this proving to be a lifesaver for some, especially in the restaurant business. The pandemic has led to an increase in the use of online services and an increase in the breadth of users, including those who were not using such services before. As the COVID-19 crisis is lasting, the shifts in consumer behaviour may last as well. Closure of shops and travel restrictions have impacted many sectors of the economy. Businesses in the tourism, hospitality, transportation, and event-focused sectors have experienced the hardest economic shocks, while retailers had to turn to ecommerce to pursue their activities by plugging into online platforms and the associated ecosystem including last-mile delivery. It is here that the platform economy has proven to be instrumental for a number of agents. In the case of food delivery platforms, these fulfilled several differing needs by different economic agents. Sellers that needed last-mile delivery; buyers that wanted to enjoy the variety of meals from the comfort of their home and workers that wanted to work within their flexible parameters. It may be argued that digital platforms have improved the lives of consumers, by enhancing the quality, cost and accessibility of services

While the gig economy has been talked about for years, the rise of the economy through digital platforms is relatively new. As the platform economy evolves, there are both new opportunities as well as new challenges that arise with heightened complexity. The current debate on the working conditions of couriers and the recently issued guidelines issued by the DIER are a case in point.

However, let’s start from the basics.

 

What is the platform economy?

The platform economy is a complex phenomenon that is significantly disrupting the general concept of what is referred to as normal jobs. It is any type of digital platform that uses the internet to connect dispersed networks of individuals to facilitate digital interactions between people. Within the platform economy there is a triangular relationship between three parties; the platform; the worker and the customer or customers as in the case of food delivery the customers are both the restaurant owners and the end-user. It is the job of the platform to connect people with demand, the customer/s, to people that provide supply, the worker.

Traditional linear business models create value through creating products and services that are sold to a customer. Platform based business models on the other hand, create their value by connecting users, both consumers and producers, on an online network. The platform does not own the means of production, but rather creates the means of connection. The strength of the platform economy lies in its ability to eliminate trade barriers by using increased information sharing between different players. This creates a much more open economic system, with much greater participation of its users. And this where the concept of equity comes in.

 

Is there hope for an equitable platform economy?

As with many other technological change and disruption, the platform economy forces us to re-evaluate laws and regulations. There needs to be some sort of regulatory catch-up in terms of laws and regulations and ultimately in enforcement.

Unfortunately, we often talk about platform workers as one big cohort. There is huge diversity in the type of platform workers. One can differentiate between three main cohorts of workers; first, the primarily dependent worker who fully relies on the earnings of the platform; the partially dependent worker who uses the platform as a part-time job; and the supplemental worker who uses the platform to create supplemental earnings. In addition, the platform economy has also been a very inclusive employment market giving people the ability of finding flexibility that suits their lifestyle or commitments.

Given the surge in demand from end-users for delivery services, businesses providing couriers to platform operators have been established. It is here that platform companies do not have visibility of the conditions that these couriers are being subject to. It is also here that the true challenge exists, and it is where codes of conduct and charters, together with a renewed regulatory framework are needed which will then be followed by enforcement. Given the complexities it might also be time to discuss a new employment category that seeks to protect workers whilst still supporting the inherent flexibility of platform workers.

Done right, we can shape a fair future of work. The platform economy is here to stay. It is important for stakeholders to come together and find the best route forward to bring an equitable platform economy for the benefit of all parties.

 

For further information on the above kindly contact:

JP Fabri

What We Think

April 28, 2022

The Effect of Global Crises on Investment Migration

Recent worldwide events have had an impact on most industries, including Investment Migration. The investment migration industry will keep having to change and adapt to the demands brought as a result. Brexit, Covid-19 and the recent ongoing Russia-Ukraine war between have had an impact on the demand and eligibility for residency and citizenship programmes, and the ways in which applications are submitted.

Unlike other sectors it seems that Investment Migration benefits from crisis, but why is this? According to the Investment Migration Executive 2021 survey of RCBI clients, 67% of the respondents chose the ‘need for mobility and the ability to travel freely’ as the main reason for obtaining citizenship or residence by investment. It is likely that recent events and crisis’s made individuals re-evaluate their priorities, leading them to seek access to countries which would provide a safer life for themselves and their families, this includes countries with a stronger health care system following the pandemic.

The most popular residence by investment programme in 2020 was that of Portugal’s Golden visa. With the Schengen zone being closed for most of 2020 high-net worth individuals realized the importance and value of having a European residence card. The freedom of movement is taken for granted until that freedom is taken away and the pandemic put a spotlight on the perks of having a 2nd residence.

The recurring extensions of the lockdown currently occurring in Shanghai, China and various restrictions imposed on Shanghai residents without advance warning is leaving them frustrated, concerned and uncertain on whether their lives will ever return to normal . This has spurred an increase in enquiries for obtaining a second residency or citizenship. In this specific case, the requests are leaning towards the increase of physical relocation and the relocation of applicants’ assets to RCBI countries.

The motivation for ultra-HNWI to secure alternative residence or citizenship is becoming more personal, with applicants looking to diversify not only their options for investments sake but to improve their lifestyles. For years to come, diversification of residency and citizenship through investment migration will be a robust and sustainable solution for ever changing social, political and economic circumstances.

Malta continues to provides a number of solutions to clients seeking relocation in terms of residence, tax residence and also citizenship. Get in touch with our team should you wish to organise a call to understand how we can assist.

 

For further information on the above kindly contact:

Nicky Gouder  Rachel Micallef  Jessica Debono 

March 17, 2022

Productivity matters

Productivity matters greatly for the wellbeing of every person in Malta. It is key to supporting high quality and rewarding jobs, and funding public services. Unlocking Malta’s productivity potential will help build a stronger more resilient economy that delivers inclusive and sustainable growth.

On February 22, the National Productivity Board launched the National Productivity Report 2021. The report, entitled Digital Malta, focuses on the role of the digital transformation as a tool that can foster productivity gains leading to improved economic outcomes and to a higher quality of life. The Report presents the outcomes of Digital Transformation Readiness Index that was rolled-out amongst a representative sample of Maltese firms to gauge their readiness to implement and reap the benefits of transformation.

The Index is aimed at shedding light on the micro foundations of digital transformation and firm readiness through twenty-two indicators across five main dimensions being governance & leadership, people & culture, capacity & capability, innovation, and technology. The results highlight very specific gaps in Malta’s digital ecosystem as well as in the readiness of companies across sectors, particularly the low-productivity ones, to truly embrace and internalise digital transformation. Based on the results, the report presents a holistic policy framework to support a digital Malta which will enable the country to achieve higher productivity. In addition, twenty-five specific recommendations are put forward across five enabling factors being talent & skills, research & innovation, financing & incentives, infrastructure & security, and policy & governance.

Despite Malta’s strong and resilient economic performance over the past few years, its productivity performance unmasks several structural economic challenges the country and specifically non-service-based sectors are facing. Malta has successfully steered its economy towards service-based sectors. This has led to the formation of two main sectoral-based clusters. The first cluster, represented by the gambling, information & communication, and other service-based sectors, presents higher-than-average productivity which generated a high-level of value-added with a leaner workforce. In contrast, the second cluster of more labour-intensive sectors has failed to generate high levels of productivity. Even when benchmarked against European countries, Malta’s non-service-based sectors are losing ground compared to other European countries highlighting reduced competitiveness and slower productivity gains. This has an impact on Malta’s national productivity and economic outcomes. Various other economic challenges exist that are structural in nature including unfavourable demographics, low educational outcomes, and fragmented ecosystems. Increasing productivity is the only way to maintain income growth and access to essential goods and services. Since the first industrial revolution, the introduction of new technologies has contributed to higher productivity in firms and in the economy. On this basis, the development and incorporation of new technologies into production processes is essential for growth.

There is no doubt that digital transformation is a key policy goal across many countries including the European Union and Malta as COVID has accelerated the push towards digital transformation. The digital agenda strongly promoted by the EU, supported by a clear strategy and generous funding mechanisms, provides a strong framework within which Malta can operate; membership of the envisaged Digital Single Market will also strengthen Malta’s competitive position. Malta’s digital readiness places it among the front-runners within the EU – Malta performed above the EU average across all five dimensions of the Commission’s Digital Economy and Society Index (DESI) in 2020 and ranked 5th out of the 27 EU Member States. With a strong policy vision, supported by an investment package of the European Union, particularly the Resilience and Recovery Fund, Malta is well-placed to capitalise and accelerate digital transformation.

Improving productivity is not only an important economic goal, but it can improve the quality of jobs and lead to an improved quality of life. It remains an important concept that needs to be understood and analysed properly. To this end, it is also being recommended that apart from this annual report, the National Productivity Board establishes a research programme and collates supporting datasets to assess and benchmark the driving factors behind productivity differentials between firms, and particularly Maltese firms, to build a broad evidence-base for further enterprise policy intervention. One such stream of research will be to further refine the proposed Digital Transformation Readiness Index and to have an annual report which can benchmark and trace sectoral developments towards digital transformation. Organisations, sectors, and countries are reimagining, reshaping, and retooling for a new era driven by fast technology developments which are impacting our daily lives, employment, consumption behaviours, business models and production processes. Embracing digital transformation has become a matter of survival and if harnessed fully, it can lead to productivity enhancements, improved growth and employment opportunities and better economic outcomes that ultimately can lead to improved quality of life.

 

What We Think

March 4, 2022

Update regarding press release issued by the Parliamentary Secretariat for Citizenship and Communities

In a Press Release issued by the Parliamentary Secretariat for Citizenship and Communities, dated the 2nd of March 2022, it was announced that all applications by nationals of the Russian Federation and Belarus with Community Malta Agency and Residency Malta Agency have been suspended. These agencies handle Malta’s Permanent Residency Programme and Citizenship for Exceptional Services by Direct Investment applications.

The press release states that as a result of the current situation in Ukraine, the due diligence checks required as part of the procedure of these investment migration applications cannot be effectively conducted. Therefore, all applications which are being processed by the authorities have been put on hold and submission of new applications will no be entertained. For applicants which already possess a Maltese residence card issued under these programmes, the residence card will remain valid during this suspension period and requests for renewal of expiring cards will be examined on a case-by-case basis.

Agencies have stated that they would also consider a review of the legally stipulated timelines should this suspension be lifted in the future.

For further information on the above kindly contact:

Nicky Gouder

What We Think

March 2, 2022

The economic importance of investment migration

Residence and citizenship-by-investment (RCBI) programmes enable individuals to acquire an additional residence or citizenship by making an exceptional economic contribution to another country. This is achieved by successfully completing the application process which comes with a RCBI programme.

These programmes are structured to attract much-needed foreign direct investment, and ensure that the investment contributes to the welfare, advancement and economic development of the country, primarily real estate development, business development and job creation. Interest in these programmes has accelerated in recent years thanks to a combination of factors including improved visa-free travel in many RCBI countries, business access to a new market, tax incentives, and more recently, the mobility issues brought about by the COVID-19 pandemic.

RCBI programmes must be run in a manner which is legal and transparent, in keeping with the constitution of the nation offering the residence and citizenship, and minimizing the risk of corruption and money laundering. Ensuring that the individual is also obtaining a sound legal right to their new permanent residence or citizenship.

High-net worth individuals from emerging market economies are driving the trend in the RCBI industry. Data from the US EB-5 programme, which allows foreigners to invest in real-estate projects in exchange for a fast-tracked green card application, highlights this shift in demographics. Whilst China is still the predominate source, making up about 80% of all applications, places like Vietnam, India and Brazil have been sources of growth in the past few years. European investment migration programmes are showing signs of the same trends, with applications from over 50 countries being registered. Furthermore, since Brexit there has been an interest from UK citizens for the first time.

Investment migration has forged new economic sectors and has enabled the development of cutting-edge infrastructure, start-ups and R&D programmes. Over the past few years, investment migration has been defined by growth and expansion, to reach an estimated global value of €20 billion. According to research conducted by the Investment Migration Council, almost 100 countries around the world now offer investment migration programmes, with some countries generating between 2 per cent and +30 per cent of their GDP from these programmes.

The COVID-19 pandemic is showing to have a far more devastating impact on the world economy than the 2008 global financial crisis, and has fostered a rise in individual interest in increasing the access to mobility by means of an additional residence or citizenship. Despite mobility being defined by travel restrictions, border closures and quarantine requirements, investment migration can be utilised to induce gains and add to economic recovery by attracting fresh capital and talent, and fueling much needed investment.

Investment migration is especially important for smaller countries, which are considered by international development agencies as economically and ecologically vulnerable. Revenues accruing to the RCBI programmes can substantially fund public infrastructure reconstruction, flows of foreign finance associated with investment migration have provided a significant contribution to public sector revenues, contributing to the improvement of health systems, bringing clean water, and an enhanced sanitation structure.

 

For further information on the above kindly contact:

Nicky Gouder

What We Think

February 28, 2022

UGlobal Article - 'The impact of the Ukraine war on the migration industry in Europe'

Seed's co-founder, Nicky Gouder, shares his insight on the impact which the war in #Ukraine is having on the #investment #migration industry published on Uglobal.

https://www.uglobal.com/en/immigration/posts/the-impact-of-the-ukraine-war-on-the-migration-industry-in-europe/ 

 

What We Think

January 27, 2022

2022. VUCA is the name of the game

What is VUCA?

Coined for military operations, the acronym for a volatile, uncertain, complex, and ambiguous external environment has become highly used in management and in economics when explaining operating environments. The past few years has reaffirmed that we are truly living in a VUCA world and looking into 2022 the trend is expected to continue.

 

2022 & VUCA

Globally, the spread of the omicron variant is already restarting a phase of measures and lockdowns which will further impact already strained supply chains and increase the uncertainty around a robust economic recovery. Risks to the global economy remain on the downside as global inflation concerns have already forced central banks to review their monetary policy stance. Gone was talk from the Federal Reserve, European Central Bank or Bank of England that rapidly rising prices were temporary, transitory, or transient. Instead, they began to worry about high inflation being “persistent”.

 

The global challenges: supply and energy shocks

There are two main challenges the global economy faces: supply-chain constraints and energy inflation.

The shipping bottlenecks have exposed one of the most serious threats to the global economy as it continues to slowly emerge from the pandemic: whether the worldwide shipping jam remains gridlocked or begins to flow again in 2022. If the bottlenecks persist, freight costs will remain high, space for cargo on ships will be limited and retailers and manufacturers will have to endure chronic delays. That could in turn fuel inflation, prompt supply chain upheavals and accelerate consolidation of shipping networks, fundamentally changing world trade.

On the energy front, the global economy was shaken by a major crisis in 2021. Prices for oil, gas and electricity surged as our economies reopened after the shutdowns imposed in response to the coronavirus (COVID-19) outbreak. Though last year’s events were extraordinary on many levels, spikes in energy prices are a common phenomenon. Since the 1970s, sharp movements in energy prices have been a recurring source of economic dislocations and volatility. And yet, the roots of today’s shock are likely to go deeper. While in the past energy prices often fell as quickly as they rose, the need to step up the fight against climate change may imply that fossil fuel prices will now not only have to stay elevated, but even have to keep rising if we are to meet the goals of the Paris climate agreement.

 

Malta’s challenges for 2022

On a local level this will surely leave an impact on our small and open economy which depends entirely on imports across a number of sectors. With inflation edging up and local businesses feeling the pinch of tighter supply chains, 2022 is expected to lead to higher cost-push inflation. Economic fundamentals remain strong, and forecasts see the economy continue to recover robustly. However, uncertainty around the spread of the virus is expected to impinge on the tourism industry. The temporary support measures that Government implemented and saved thousands of jobs and various enterprises are also expected to taper off. Malta is expected to continue making headway in its efforts to be removed from the grey list and one hopes that the possible risks will be mitigated as much as possible. With an election happening in 2022, further uncertainty might also impinge on the recovery. From an economic point of view, it is imperative that Malta’s productivity is high on the agenda as it is only through a sustained improvement in productivity that the island can remain competitive, attract investment, sustain public finances, and contribute to an improved quality of life. It is therefore critical for the country to address sectors that are losing in terms of productivity and reforms to support such improvements need to be given priority and incentivized. It is specifically for this reason that Government support tied to COVID should also include conditionality elements that focus on implementing measures that tangibly improve productivity.

 

Looking ahead

As we look ahead, the operating environment remains highly uncertain on a global level. Further government-led investments especially as European funds start being disbursed and invested into the economy will support the recovery. The effective implementation of various strategies and policies will also play a key role in supporting the recovery as well as using Malta’s traditional agility to carve out new opportunities in emerging sectors or markets. Agility and adaptability are in fact going to be key ingredients for Malta’s resilience in 2022.  

 

This article first appeared on The Sunday Times of Malta.  

For further information on the above kindly contact:

JP Fabri

What We Think

January 17, 2022

There is no such thing as a work-life balance

The work-life balance concept has been thrown at us quite regularly, particularly over the last couple of years when we are (finally!) giving more importance to our mental health. This concept is about finding a balance, both in time and in energy, between work and life.

I never agreed with this concept, nor do I believe there is such a thing as a work-life balance.

The notion seems to imply that ‘work’ is a negative aspect of our life, and we need to manage it accordingly. We never hear about a ‘family-life balance’, or a ‘friends-life balance’, this is because family and friends are associated with positive aspects of our lives, and work should too! Work is not an external part our lives which we need to ensure we balance off with everything else, but it is an intrinsic part of it and possibly one we spend most time on. Therefore, it is extremely important that we are satisfied, motivated and most importantly, happy at work, because otherwise our whole life, which includes our relationship with family and friends, is going to be miserable.

The more we speak about a ‘work-life balance’, the more we make it acceptable that being unhappy at work is ok because it seems that it simply needs to be balanced out with the rest, more positive, aspects of our life. We do not need to run away from work to live our life, nor can we, work is a major part of our life, which we need to dedicate the same energy to as with everything else and ensure that it contributes to our overall wellbeing.

As with anything else, if we overdo it, and spend too much time working, this will result in a negative impact on our overall happiness. However, this applies to every aspect of our life, including the time we spend with family and friends, not just to work. I believe in a ‘life balance’, whereby we dedicate the right amount of energy and time to aspects of our life which motivate us and make us ultimately, happier individuals. This could include time spent with family, friends, traveling, and also to work. The differences with work are two-fold – firstly, we spend a lot of time there – typically around 60 – 70% of our lifetime, apart from when we are sleeping. Secondly, because, in most cases, not working is not an option. These two factors reinforce the need to ensure that we are truly happy at work and that our wellbeing at work reflects positively on other relationships in our life.

It is not something to run away from - we need to make sure that we look forward to going to work, wherever that may be, with all its ups and downs that it brings. Being happy at work doesn’t mean that things will always work out the way we want them to. It is about working hard at something we are passionate about and understanding that problems are simply situations which need to be dealt with.

I like to compare work with sports – the team that is having most fun is the one which is winning game after game, however, this is also the team that is working the hardest in order to achieve those results. Passion is key.

 

For further information on the above kindly contact:

Nicky Gouder

What We Think

January 15, 2022

Seed opens up an office in the UAE

Seed is pleased to announce that, after managing and working on a number of projects in the UAE, it has decided to set up and open an office in Dubai, UAE. Together with local partners, this office will serve the local projects which Seed is working on within the region and provide a more flexible and smooth operation within the market.

Seed’s co-founders JP Fabri and Nicky Gouder stated that they are extremely happy with the opening of the new office, which was the next logical step for Seed given the amount of work being done in the region.

Apart from managing projects, Seed also assists international companies which are looking to invest in the region in terms putting them in touch with decision makers and taking them directly to the individuals who are able to take a final decision on specific projects.

 

Our offices:

Seed

Office number 119

Sheikh Rashid bin Saeed Al Maktoum Building,

Saeed Tower 1,

Sheikh Zayed Road

Dubai

Telephone: +971 58 300 9394

 

What We Think

January 6, 2022

Applying for a PSD2 license: tips for fintechs

The introduction of the Second Payment Services Directive (PSD2) enables innovative financial technology companies, known as FinTechs, to enter the world of payments.  But obtaining a payments license can be an uphill struggle.  Senior Consultant Daniel Attard shares some tips for FinTechs embarking on the licensing journey after giving a brief overview of PSD2 and licensing.

PSD2 is a fundamental piece of payment legislation in Europe.  Its accompanying regulations drastically impact the financial ecosystem and infrastructure for banks, payment service providers, fintech’s and businesses using payment data for the benefit of consumers.  In this sense, PSD2 is often perceived as an enabler.  Payment data is among the most sensitive types of consumer data, and thus it is heavily regulated across Europe.  For FinTechs to make use of the enabling activities provided by PSD2, they need to obtain a financial services license, which in Malta is granted by the Malta Financial Services Authority (MFSA).  This step can be intricately complex, and as a result many FinTechs face challenges complying with the requirements and with the process. 

The proportionality principle

Whether you are a bank or financial institution with 5,000 employees or a start-up with 10, the same regulation applies.  How do you deal with this? And when is good, good enough?  How do you apply the principles on which the regulation is based without ‘overdoing’ it and staying true to the nature of your business?

The answer is not straight forward, and the reality is that one needs to remain constantly aware of the evolving rules and regulations concerning your business environment and reconciling the two.  With every change, keep asking yourself what this means for your business, how should you respond?  And what are the consequences of those choices?  Tips that can help you stay on top:

  • Stay in close contact with the regulator. Discuss what you do and why you do it, including your interpretation of the regulation, translated to your business.
  • Rethink your governance. Make sure you have a solid second and third line of defense.  Solid means someone (or multiple people, depending on the size of your business) that can relate to your business, stand next to it but at the same time act independently, distance themselves, and ask the right questions.  This can be done internally, or outsourced, depending on your size and business model.  Such a structure will allow you to generate insights that are as objective as possible, not clouded by business dilemmas, hence both improving your business as well as your compliance success. 

Align risk assessment to business activities

I often notice that companies regard obtaining a PSD2 license as a checklist exercise, whereby a set of documents are produced for the regulator and not necessarily aligned to the business philosophy or operation. This is especially true in risk assessments which run the risk of being merely desk-based exercises and not truly reflective of what is actually done in the organization. A proper risk assessment will help you ask and answer fundamental questions in a structured way, enabling you to act and take precautionary measures if and when necessary.  It is important to first visualize your business as a whole – assessing risks associated with different compliance topics will be automatically part of that exercise. 

Take compliance a step further

Despite all the differences, the one thing FinTechs generally have in common is the constant drive to innovate and improve.  In that process, being compliant is often seen as a must, and not necessarily as an integrated part of their core business.  When applying for a license your company is “vetted” on how compliant you are.  Don’t make the mistake of viewing this as a one-time exercise.  Especially in financial services, compliance-related topics and regulations are a major part of your product and service delivery.  Embed compliance as a part of your day-to-day business – not just because you must but because it will help you.

Do what you said you would do

In the process of obtaining a license, it is completely understandable that you will present the best version of yourself to the regulator.  Do however keep the bigger picture and longer-term in mind.  Knowing how your processes work, including where you might have potential gaps, is important.  Not only for obtaining and maintaining your license, but also to seize opportunities where they arise.  An external advisor, someone who knows the application procedure, can help you prioritise. 

Be patient, the regulatory landscape is fast evolving

As a final remark: the FinTech community, its participants, and regulator are fast evolving whilst technology developing even faster.  Given this fast-paced environment, it is critical for any applicant to be patient and recognize that the regulator might not have all the answers to queries or to issues as they arise. Mutual understanding and respectful communication is key to ensuring a smooth licensing process.

 

For further information on the above kindly contact:

JP Fabri

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