The yachting and superyacht industry is not intuitively the obvious subject for the Malta Institute of Management. However, the Yacht and Superyacht Symposium held recently went well beyond what the name implied.
Institute head Reuben Buttigieg explained that there were various ancillary services missing and that consultation was not at the level it should be given the potential for the island. The MIM is in fact soon presenting a study on the reality and the opportunities.
As Finance Minister Edward Scicluna said, the strategy is to move up the value-added chain – and there is nothing higher up the chain than a superyacht.
However, Malta’s role does not need to be insular. Speaker after speaker delved into the various treaties, conventions, regulations and directives that apply to the sector – and the anomalies between them.
One of the most complex is the VAT regime: not because of the huge disparity in rates, but because there are so many concepts that are ill-defined. For example, boats can get a discount on VAT if a boat spends a “reasonable” amount of time out of territorial waters – with no help defining what “reasonable” would be.
Charter rules also vary from country to country and the mere mention of withholding tax made speakers roll their eyes.
The complications are not limited to fiscal matters. Yachts are registered in one country and operate in several, with a crew of multiple nationalities. Quite apart from visa issues, there is also considerable uncertainty when it comes to calculating where their social contributions should be paid, not to mention certification, insurance, indemnity and more.
The keynote speaker, Thierry Voisin, the president of the European Committee for Professional Yachting, vented his frustration and while he appreciated that getting the world to align might be overly ambitious, he saw no reason why member states within the EU could not agree on definitions and provide clarity.
He laid down an important challenge to the host country: Malta should use its EU presidency to get the member states together and simplify the rules.
The idea of charting a new course is not entirely without precedent for Malta. After all, Maltese diplomat Arvid Pardo is known as the “Father of the Law of the Sea Conference”. In 1967, at the UN General Assembly, he called for international regulations to ensure peace at sea, to prevent further pollution and to protect ocean resources. He proposed that the seabed constitutes part of the common heritage of mankind, setting off a 15-year process that led to the United Nations Convention on the Law of the Sea.
The global fleet of superyachts is forecast to reach 6,000 by 2020, and many of those are old yachts, in need of refit – which Malta is increasingly well-placed to offer. The sector employs some 33,000 crew and supports 260,000 jobs, according to Voisin, with a $32 billion impact on the world economy.
Ten per cent of the original cost of a superyacht is spent every year on its upkeep – far more than is the case for a villa or plane.
Promoting the island as the leader of change would help to put us on the map. The island is at the centre of the Mediterranean, something we have heard ad nauseam. Pardo was able to bring the world together all those years ago. Who will pick up the baton and do that again?