Close to €50 million to be invested in Hal Ferh complex

Joseph Vassallo

Jan 12th 2010, 00:30

@James Portelli: The non-egalitarian entrepreneur's duty is indeed as you describe it; however it is the politician's job to obtain real value for his country's assets. I also agree with your " like us who have nothing better to do" especially since we have no control over the undisclosed editing that takes place which takes the wind out of the sail of any constructed argument. This makes this type of dialogue worthless because opinions are not faithfully presented.

James Portelli

Jan 11th 2010, 06:38

@J. Vassallo

It's not an entrepreneur's job to be egalitarian and ponder on how the rich shouldn't become richer and the poor poorer! His job (with a duty to his Board) is to identify what, where, how, how much, at what cost, for whom to produce/supply in order to maximize return within a reasonable framework of corporate social responsibility.

Anything else is for politicians, sociologists, anthropologists (and people like us who have nothing better to do than read the Times and comment to the articles!) to debate.

Joseph Vassallo

Jan 10th 2010, 11:34

@James Portelli: Meanwhile, as billions are invested for that return (the employment equation being irrelevant), the economies of USA, Spain, Germany, Italy, UK et cetera, are suffering from high unemployment as they wait for the ripple effect. Thus, the rich will get richer and the poor will get poorer.

Joseph Vassallo

Jan 10th 2010, 11:07

@Joe Vella: "Banking Market" derives from the fact that banks advertise and "compete" against each other to sell their "products" i.e., to borrow peoples savings cheaply in order to lend them out quite expensively. If that is not a marketplace, please tell me what is. In UK, we currently have pensioners' savings borrowed by banks 0.1% being loaned at interests of up to 29%.

In my opinion, (1) the price paid for the site is very low,(2) this will be another timeshare project and (3) being a perpetual emphyteusis it will revert to IHL instead of to government/nation.

john debono

Jan 9th 2010, 21:31

I hope that the same fate could follow suite for other premises and facilities, that are presently lying in shame or are derelict, like White Rocks Complex, unused Barracks, and many old historical buildings lying idle. These could all be tourist attractions and generate revenue. In connection with tourism, I would like to mention the classic old buses. It would be a pity to lose the collection of classic buses, which are a heritage to Malta in themselves. I suggest they are kept, and a transport Museum is set up. It would be shameful if we lose even just one bus of the old fleet, let alone to lose the lot.

Ron Saliba

Jan 9th 2010, 20:43

@M Psaila

The silly argument is yours mate. The investment is for the future, and has nothing to do with the international economic situation at present.
what beggars believe is that any crisis is put down to international circumstances,yet investment is attributed to your highness Dr. Gonzi! But telling me to remove my 'red blinkers' is what had me in stitches. Cos you are truly mistaken to judge me as an MLP fanatic! Perhaps your view of Dr. Gonzi as the 'savour' is mistaken too.

N.Grima

Jan 9th 2010, 20:24

@ Joe Vella -- I think Adrian Sciberras meant trade creditors.

@ Adrian Sciberras -- it is true that large hotels in Malta have been renown for such practices; however, with the new legislation and lower-cost judicial procedures enacted pre-EU accession, creditors are much more protected - e.g. should there be no mention of interest in credit terms, there is a default interest rate (and a default credit period for that matter if also not agreed upon) which applies... which also brings me to two important points - 1) if you don't bother to sign a decent contract which provides for late payments, maybe you still have to learn another lesson or two on how to do business; and 2) depending on a handful of clients (a form of "dependency risk") is commercial suicide. And btw... who has ever gotten rich overnight from running a hotel?! The payback on such investments is very long relative to most other investments!

TBRIFFA

Jan 9th 2010, 20:06

I like the way the Zahra's run their hotels, and I admire their hard work, but I do agree with a attard, I hope the new place complements the surrounding environment. If I could make a small suggestion, this time around they should use indigenous trees from the Gaia nursery across the road instead of importing from Sicily. Good luck guys!

Adrian Sciberras

Jan 9th 2010, 19:24

@Joe Vella.

It seems you are not aware of the delaying tactics some companies use to defer payment. This is particular when the projects/debt grows.

The big companies use their large size to bargain the best price, and then they take long to pay, when the creditor demands money the company threatens the creditor that its going to seek another supplier. Eventually in a case like a hotel it will have many suppliers waiting to get a cheque for a job done a year ago, and if you stop supplying it, it will take 3-5 years to collect your dues. Ask any contractor of any nature building, supplies, equipment, food, stationery etc...

Obviously the value of the debt is interest free, and will go down in value over time due to inflation.

Have a look and ask around and you will see better, yes, some companies generate enough cash to pay their wages and (urgent payment) and directors use funds to live wealthily in villa's, drive SUVs and leave creditors waiting.

I am not saying this to IHG, I just hope it doesnt become one of these companies.

Joe Vella

Jan 9th 2010, 18:46

@ Joseph Vassallo

Economics 101 will tell you that each EURO invested, in developing the property alone will by the time that EURO finds its way all the way down the economic ladder the value of that EURO will BE TEN TIMES THE VALUE in economic activity.

Can you please tell me where did you coned the term "Banking Market" from and what it exactly means,

M Psaila

Jan 9th 2010, 18:41

@ Ron Saliba
What a silly argument my dear! Of course Dr Gonzi has alot to do with this investment. Who in his senses would invest so much money at a time when the international economic situation is not at its best if it werent for sound economic policy that we have in Malta?? And who is responsible for this sound economic policy if not Dr Gonzi as Prime Minister!!

Remove your red blinkers my dear and thank god that we have weathered the storm quite well as evidenced by this investment by the Zahra family!

Ron Saliba

Jan 9th 2010, 17:54

Ohh some people you can never please and come up with stupid comments believing that they KNOW IT ALL when in fact they know zilch.

@Mr. Joseph Farrugia. DO you know where hal ferh complex is?

@marisa cassar: First do not write in caps as it is RUDE. Secondly, Gonzi has nothing to do with the investment. He was invited by the Zahra family, who are going to invest in this project for their PERSONAL gain. If the country gains with them, than good luck to all.

Will All the political freaks stop commenting on everything. It is getting so boring!

James Portelli

Jan 9th 2010, 17:41

@ M. Brincat
@ J. Vassallo

Which economics book have you been reading?

Private sector investments are driven by return on investment / profits. In the process (and in this case) people will also be employed and a ripple effect of services also be engaged (i.e. travel agencies, transport services, professional services etc.). From the entrepreneur’s perspective the investment : employment equation is irrelevant. In a free market what, where, how, how much etc. to produce/supply is determined by return … anything else (whether or not it contributes to the overall socio-economic sector) is incidental.

Well done IHG. Keep up the good work … there is definitely going to be a positive economic multiplier effect.

a attard

Jan 9th 2010, 17:40

I hope this project will respect and compliment the area it is set in with low lying bungalows and lots of greenery such as the Danish village. The Radisson hotel is already ecstatically well out of proportion in this otherwise natural beauty spot. The character of the area needs to be retained at all cost. Malta does not need anymore Bugibba style holiday complex type of buildings especially in this area!

Joseph Vassallo

Jan 9th 2010, 16:44

€50M for 200 jobs seems rather high too. It is irrelevant that it isn't government money. That's €250,000 per created job. Can some economist tell us what the going rate is for creating a job in Europe? It is notably not a labour-intensive investment. Lots of cleaners and watchmen, I suspect so who will be applying for those jobs?

The area sold (83,000sm for €12M) seems to be understated. Can anyone confirm the area or is that a commercial secret? Consider that 1 square kilometre is 1,000,000sm and we are talking about a former military establishment.

In a banking market that is paying peanuts for pensioners' and workers' savings, any future bond issues will continue to be well-subscribed.

Ten out of ten for the developers for their acumen.

Enzo Caruana

Jan 9th 2010, 16:08

Please do your best and keep politics out of this venture. Island Group Holdings is a private company that has invested millions of euros to enhance Malta's enormous tourist potential. Let us wish the Zahra family all the luck in the world to make a big success out of this project.

marisa cassar

Jan 9th 2010, 15:56

A CLEAR SIGN THAT THE MALTESE ECONOMY IS IMPROVING .. WELL DONE MR ZAHRA AND WELL DONE PRIME MINISTER FOR ATTRACTING SUCH INVESTMENT IN DIFFICULT TIMES

D Debono

Jan 9th 2010, 15:37

well i hope that mr winston zahra acknowledges that this investment by his company is a sign of investment in the country governed by sound policies!

Joe Vella

Jan 9th 2010, 15:10

@ Adrian Sciberras

So what if the project is funded by creditors. Creditors only lend money not because of the interest that they will be received in return but because they have confidence in those that they are lending money to that they have the ability to pay not only the interest amount but the principal amount as well. In other words, the creditors in their due diligence not only believe but conquer that the project in question is viable.

My friend, if you check into the financing of capital project by the private sector you will find that by in large are financed either by secured bank loans or by raising the necessary funds by the issuance of bonds calls or other monetary certificates.

For IHG, on their part, to be taking this risk they must be very hopeful and confident in the present and future prospects of the Maltese economy.
















How many capital projects that you know

Adrian Sciberras

Jan 9th 2010, 14:22

Well done and good luck IHG.

I just hope that this investment is well capitalized and not done at the expense of creditors (just like the whole hotel industry, taking years to pay off creditors to get free interest).

No need to mention any particular hotel, because all 3 to 5 stars hotels work this way.

winston v zahra

Jan 9th 2010, 13:58

hI guys, you got it all wrong. This is an investmnent by our Company Island Hotels Group plc
Dr Gonzi was only visiting the site.
Winston V Zahra.

Robert Caruana

Jan 9th 2010, 13:46

@ M.Brincat.

I bet you are a guru in economics. In which University do you lecture?

M.Brincat

Jan 9th 2010, 13:42

@Darren Muscat

Yep for a minute thought it wasn't a private company.

P. Zammit

Jan 9th 2010, 13:37

@D.Muscat ... you understood correctly. The project is a private investment.

It's Mr.Brincat whose got the blinkers on.

Darren Muscat

Jan 9th 2010, 13:25

@ M.Brincat.

I dont know if i understood correctly, but I dont think the 50 Million Euros are coming from our taxes, it's the private company who's investing that amount.

I think you are trying to politicise it.

M.Brincat

Jan 9th 2010, 13:11

I might be retarded, but 200 jobs aren't worth the 50 million