Malta adopting financial services directives

The House of Representatives on Wednesday unanimously gave a second reading to a Bill to amend various financial services laws, adopting the EU Directive on Capital Adequacy of Investment Firms and Credit Institutions and the Markets in Financial Instruments Directive (Mifid).

The Bill was introduced by Parliamentary Secretary Tonio Fenech, whose comments were reported yesterday.

Opposition finance spokesman Charles Mangion confirmed the opposition's support for the Bill, saying the directives aimed at setting minimum standards which had to be enforced throughout the EU as a single market for financial services was created.

Financial services were assuming particular importance in the Maltese economy and that of the EU. A multitude of new financial products was being created and they were being increasingly sold across borders. This was creating new jobs and generating wealth.

The directives laid down how credit institutions had to calculate the risks they faced and make provision for them in the interests of their clients.

There were also new requirements on supervisory activities aimed at protecting clients.

Dr Mangion welcomed the way the financial services sector had evolved. This was a sector which had always enjoyed bi-partisan support and it was making a name for itself owing to the efficient Maltese workforce and the fair and efficient regulatory regime. Other sectors of the economy should take lessons from what was happening in financial services.

Another sector which Malta could develop was maritime activities, including ship registration. Malta had the potential of developing more opportunities here as a services provider.

Dr Mangion augured that comparable progress would be made in tourism, which was more labour intensive and very important for the economy.

The Labour MP referred to some attempts in the EU to harmonise taxation and noted that a number of member states were holding firm against such proposals.

Malta, he said, should consider first and foremost how such proposals would impact its economy.

In order to make progress, in financial and other sectors, Malta needed to anticipate and not react to situations.

Winding up, Parliamentary Secretary Tonio Fenech agreed with Dr Mangion's comments on how the Maltese financial services sector had developed and said the bi-partisan support gave a sense of security and continuity.

Any suspicion or perception that could have remained about Malta being an offshore financial centre was removed when Malta joined the EU and the characteristics of Malta's unique taxation system were given the all-important all-clear by the EU late last year.

Whenever EU directives were proposed the government took a proactive role to safeguard national interests.

Referring to proposals on VAT harmonisation, Mr Fenech said these involved the mechanism of VAT rather than its expansion to new products or raising of current levels. The reverse charge mechanism could make sense in some sectors, but not in others. One important aspect of the one-stop shop was where VAT should be collected. For example, when one rented a car which was used in three countries, which country would collect VAT? The same applied for yachts chartered from one EU country but which they visitied several ports.

Mr Fenech also spoke on the recent setting up of Finance Malta which would spearhead promotion of the Maltese financial services sector.

At the same time more importance was being given in the education sector to careers in financial services so as to ensure that there were enough human resources to cope with growth.

Concluding, Mr Fenech said the creation of a single market for financial services in Europe was very important, not least because Malta would be able to employ its competitive edge to entice more firms to base themselves here.