Unless there is political will coupled with specifically designed fiscal incentives to lure local and international business to Gozo, the sister island’s financial services sector will not realise its potential, according to one of Gozo’s most pro-active practitioners.
Michael Grech, managing director of Michael Grech Financial Investment Services Ltd, told The Sunday Times that practically none of the new international business won through efforts to market Malta as a financial services centre had reached Gozo.
And despite a considerable, experienced talent pool and an adequate IT infrastructure, the sister island was suffering a brain drain as Gozitan professionals based their families in Malta to avoid travelling.
Mr Grech has just invested €5 million in The Brokerage, a state-of-the-art, six-storey block in Victoria offering dedicated office space to professional services firms. He prides himself on having attracted Volksbank, the German bank, to be the anchor tenant to The Brokerage, and is confident that with “hard work and sweat” other big names will move into the landmark.
But he warned that the potential of the wider financial services sector in Gozo, which currently encompasses the larger banks, a few local operators, and representative offices of Malta-based firms, remained unlocked.
“The authorities need to come up with attractive measures like tax breaks or employment incentives that are different to those offered in Malta for international businesses to consider Gozo,” Mr Grech stressed.
“Gozo needs to enjoy positive discrimination, a concept the EU tolerates where regions not enjoying the same benefits as the mainland are concerned. Take the fund management business: professionals in this sector come from a particular culture and usually have young families seeking a tranquil lifestyle. With a fiscal carrot, they could be convinced to work from Gozo.”
He added there were numerous, highly experienced Gozitan professionals working for the international names in the financial services sector in Malta. Mr Grech believed scores would willingly return to Gozo, families in tow, if the right job opportunities were created.
Gozo’s entire business community faced considerable challenges related to competition and connectivity, and the commercial sector was largely in favour of a permanent link between the islands as too much time, money, resources and energy were wasted in travelling across the channel.
At The Brokerage’s official inauguration by Prime Minister Lawrence Gonzi late last month, Mr Grech told the gathering that Gozo’s growth hinged on the creation of job opportunities for young people.
“If for this to happen certain decisions had to be taken, let us take them,” he urged.
Mr Grech has put his money where his mouth is. The Brokerage – by his own admission part of a long-term vision for his own business and for Gozo, with a pinch of madness thrown in for good measure – sees Mr Grech turn a corner in an eventful career.
He joined HSBC Bank Malta’s predecessor Mid-Med Bank in 1978 aged 18, and was based in Valletta’s Merchants Street, where he also had an apartment. He recalls living the typical Gozitan youth lifestyle away from home and fending entirely for himself for four years. He returned to Gozo in 1982 and worked his way up the bank’s ranks until 1991.
At a time when no brokers existed in Gozo, Mr Grech branched out alone and opened an office at home offering professional investor services to a clientele of business people.
He moved into a rented office in Victoria in 1994 and took on a handful of Gozitan commerce and banking and finance graduates; over the years the staff evolved into a team of 10 with a wide range of financial services expertise.
Three years ago, Mr Grech eyed a building under construction in Victoria’s St Marta Street and decided it would help realise a dream – a dedicated financial services landmark in Gozo’s capital.
No expense was spared: security glass, a high standard IT infrastructure, electricity generator and extensive accessibility measures meant the investment totalled €5 million.
Two-thirds of The Brokerage’s 1,500 square metres of office space is currently occupied. Besides three companies under the Michael Grech Financial Investment Services umbrella, The Brokerage hosts a ground floor stationer, Volksbank, First United Insurance, Turner Group – the professional services firm – and the offices of the Malta Council for Economic and Social Development and the Malta-EU Steering Action Committee, which were secured following a tendering process.
Mr Grech’s own business rebranded to reflect the move into The Brokerage, and the managing director explained that behind the cosmetics was a sharper client focus.
“We never look at the bottom line first because, if we did, our focus and priorities would change,” he emphasised. “Unlike most institutions we do not impose targets on our sales team.
“We never push any particular product or company: we examine our clients’ requirements and act accordingly. We have a very high client retention rate and most of our staff has been loyal for 15 years. Those factors are important to us.”
A two-member team at the firm’s satellite office in Birkirkara served a “substantial” Maltese client base and is to relocate a few metres away to ground-floor premises in Fleur-de-Lys to ensure better accessibility.
Mr Grech’s companies, which also include a trustee function, have amassed an international clientele mostly of Maltese migrants based in the US, the UK, Australia and Canada introduced to the firm by local relatives. Non-Maltese clients living abroad have also been won through existing customers’ recommendation.
Mr Grech, who is vice-president of the Gozo Business Chamber and also sits on the board of Malta Enterprise, said he, like many other local professionals, marketed the country with foreign brokers or at trade events overseas.
“But I need something extra to market Gozo specifically,” he pointed out. “The authorities have to come up with that something extra. Gozo’s GDP is 75 per cent that of Malta, and there is still a lot of potential. But in the meantime, Gozo is shrinking.
“It is high time a decision is taken on the islands’ connectivity. All it boils down to is a road paid for by taxpayers, just like any other between localities in Malta. The fundamental principle is no different. With the political will, everything is possible.”
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