80% of busi­nesses report in­creased turnover over past year

Malta Independent - - NEWS -

The eighth edi­tion of the Fam­ily Busi­ness Sur­vey held by PwC showed that as many as 80% of fam­ily busi­nesses in Malta have re­ported in­creased turnover over the past 12 months.

The re­sults from this study were pub­lished dur­ing the Fam­ily Busi­ness Fo­rum or­ga­nized by PwC and BOV, dur­ing which the ram­i­fi­ca­tions of the newly pub­lished Fam­ily Busi­ness Act on these busi­nesses was ex­plained by Min­is­ter for the Econ­omy, In­vest­ment and Small Busi­ness Dr Chris Car­dona.

The PwC Fam­ily Busi­ness study in­ter­views thou­sands of se­nior ex­ec­u­tives from across 50 coun­tries, in­clud­ing Malta. In the lo­cal scene, as many as 98% of all busi­nesses are SMEs with the vast ma­jor­ity be­ing fam­ily run, mak­ing up about 80% of lo­cal em­ploy­ment.

Min­is­ter Car­dona has on mul­ti­ple oc­ca­sions de­scribed fam­ily busi­nesses as the pil­lar of Mal­tese econ­omy.

Fam­ily busi­nesses uni­ver­sally fail or shrink due to the lack of suc­cess in trans­fer­ring their busi­ness be­yond the sec­ond gen­er­a­tion. The Fam­ily Busi­ness Act en­cour­ages such suc­ces­sion and the re­cently an­nounced Bud­get in­cen­tive for 2017 will al­low all those busi­nesses which trans­fer their busi­ness to their chil­dren in the com­ing year to ben­e­fit from a re­duc­tion of tax from 5% to 1.5%.

The PwC sur­vey shows that only 20% of fam­ily busi­nesses in Malta have a ro­bust, doc­u­mented and com­mu­ni­cated suc­ces­sion plan in place, while less than half of fam­ily busi­nesses in Malta claim that the fam­ily and busi­ness strat­egy are com­pletely aligned, con­sid­er­ably lower than the global av­er­age (69%).

Apart from the ini­tial boost for 2017, the Fam­ily Busi­ness Act will pro­vide in­cen­tives that cover le­gal and ac­coun­tancy ad­vi­sory ser­vices, ar­bi­tra­tion, ed­u­ca­tion and train­ing, and ex­tend to loan guar­an­tees, mi­cro in­vest­ment, con­ces­sions on duty and lease re­newals of gov­ern­ment premises.

The Act was pub­lished on the 9th of Septem­ber as Chap­ter 565 Fam­ily Busi­ness Act Laws of Malta and can now be found on­line where one will find the leg­is­la­tion as well as the fis­cal in­cen­tives.

The im­ple­men­ta­tion of the Fam­ily Busi­ness Act proves more es­sen­tial with the new find­ings of the PwC sur­vey, with 60% of fam­ily busi­nesses sur­veyed gen­er­at­ing an av­er­age of 24% of turnover from over­seas mar­kets, and as many as 52% of fam­ily busi­nesses rec­og­niz­ing the im­por­tance of estab­lish­ing new en­tre­pre­neur­ial ventures.

The min­is­ter noted how the new leg­is­la­tion whilst aid­ing to en­sure their sur­vival through the gen­er­a­tions will guide and pro­vide strate­gic plan­ning and pro­cesses that will al­low such busi­ness to ex­plore and ex­pand their ventures abroad.

“This Act will for­mally recog­nise the cru­cial role of this sec­tor. And we wanted to do what we could to se­cure its fu­ture. A great deal of peo­ple contributed, and I think we have leg­is­la­tion that all of us in Malta can be proud of. But now we have to make sure it works well in prac­tice,” said Min­is­ter Car­dona.

The min­istry has also re­cently won EU Funds, on the ba­sis of the of­fi­cial le­gal def­i­ni­tion of a fam­ily busi­ness Malta has adopted. This will make Malta one of the very few EU Mem­ber States to have ob­tained of­fi­cial statis­tics on fam­ily busi­nesses, and the first to have been able to carry out a sur­vey based on leg­is­la­tion.

The min­is­ter also an­nounced how dur­ing the Mal­tese Pres­i­dency of the EU Coun­cil, the min­istry will host a high-level busi­ness trans­fer con­fer­ence, al­low­ing for the dis­cus­sion of the pi­o­neer­ing Act, the re­sults of the sta­tis­ti­cal sur­vey as well as other ar­eas con­cern­ing busi­ness trans­fers.

For­mer Prime Min­is­ter of Fin­land and cur­rent Euro­pean Com­mis­sion Vice-Pres­i­dent for Jobs, Growth and Com­petive­ness Jyrki Katainen will be in at­ten­dance.

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