Gibtelecom: In the news
[translated from Capital Magazine, June 2012]
Gibraltar: special feature
Fabian Picardo, the key to a bright future
Lawyer, Fabian Picardo, is, since December 2011, the new Chief Minister of Gibraltar. A leader full of energy and proud of what his home country can offer the world.
Gibraltar is the ideal place to live and do business. That is the message that Fabian Picardo, new Chief Minister of Gibraltar and leader of the Socialist Labour Party of this British Overseas Territory, is transmitting to the European Union and the rest of the planet. The strength of this young lawyer, who graduated from Oxford and is Gibraltarian to the core (he grew up there and returned there after university), led him to beat the social democrat Peter Caruana in the December 2011 elections. Now, his eagerness is directed towards bracing for the big leap forward of the Gibraltarian economy in a European and global context.
Picardo is very clear about things, starting with the advantages offered by this territory located at the south of the Iberian Peninsula for those willing to bet on it. And he doesn’t put a ceiling on his aspirations to consolidate this growth which, like a salmon going up the river, places Gibraltar against the current of the global economic crisis being experienced for the past four years.
One of the great strengths of Gibraltar is, without a doubt, its geographical location. Two and a half hours by air from London – with the time zone of central Europe – it enjoys one of the most diverse and buoyant small economies on the continent, with a focus on tourism, shipping and financial services. “Our great disadvantage is, by far, our best asset – our size,” says Picardo, who also notes that the Gross Domestic Product of Gibraltar grew by 4.8% in 2011, with high employment and good forecasts for coming years. Definitely more than can be said for the majority of countries in the current climate.
The Gibraltarian leader proudly remembers the birth of the Gibraltar National Party, providing his political development, in 1991. He was then only 19. “We were a group of friends interested in politics and current affairs, at a time when there was always someone rebelling against everything. Exactly 20 years later, many of us who started that adventure formed a Government: I think it is a good training period for such a difficult, complex and demanding job as Chief Minister for Gibraltar. It is also a privilege, and requires the investment of much time and effort to do it properly: it’s what the people of Gibraltar expect.”
After making clear his personal and professional convictions, Picardo understands that Gibraltar has much to offer foreign investors: opportunities and high rates of return. “Our economy is going to continue developing, and as a result we will need more offices, more hotels …. Spain is out neighbouring country and their businesses could do very well here. We are interested in new contracts, with Spain as well as with the whole of the EU.
Gibraltar is a model nation in the regulated financial services industry: as such, it is positioned at the top of the list of the Organisation for Economic Cooperation and Development. Also, it leads the global online gaming industry. Picardo, conscious of the importance of the sector, highlights the possibilities that this territory, which is small in terms of surface area but big in terms of the opportunities it can offer other industries, can provide. “Beyond the EU we want to develop Gibraltar as an interesting location for music, TV and cinema production, as we have a lot of flexibility in fidelity laws and because companies only contribute 10% corporate tax, one of the lowest percentages in the EU.”
Picardo is also very interested in banishing old ghosts and grudges between Spain and Gibraltar, which transcend the current economic climate and are rooted in historical events. “Our situation is very different to what has been painted by various Spanish governments. I invite anyone to come and see with their own eyes that we are a friendly, hospitable people, with services that have a distinctly Mediterranean flavour, culinary diversity with notable influences from Italy, Malta and Spain, dream beaches and indigenous flora and fauna, with species which are not found anywhere else in Europe. If you are in the market for something special, different, exciting, capable of doing more in seven square kilometres than in cities ten times as big, Gibraltar interests you.”
Among the official bodies operating on the Rock, there are three that can be labelled as cornerstones of the Government: the Finance Centre, the Port Authority and the Tourism Board. The Finance Centre, directed by James Tipping, emphasises in their regulatory operations a commitment to quality over quantity and promoting the arrival of business wanting to lay their roots in Gibraltar in the long term. Spanish retail banking, for example, have this market in the current climate. Financial services account for 30% of Gibraltar’s GDP: the principal sectors managed are banking, insurance, asset management and private services. A figure as an example: Gibraltarian insurance companies manage 10% of British car insurance.
Tipping stresses that one of the reasons for the success of the Finance Centre is its commitment to transparency. In this respect, more than 20 bilateral agreements for exchanging of fiscal information have been signed, including a good number of EU countries, as well as the United States, Australia, New Zealand and South Africa. As well as the agreements which have already been signed, they are in the advanced stages of some others, with Mediterranean countries (including Spain) as counterparts. In this sense, the adoption of European directives relating to financial services (standards for operation in the EU framework) is another of the values that makes Gibraltar an interesting business partner.
Another of the serious efforts of Gibraltar in a financial context is the end of its status as a tax haven. The emergence of the Income Tax Act and its adoption last year is a further step in the change in regulation, based on low (and not zero) tax pressure. This has not gone unnoticed by the International Monetary Fund, who in the last decade has carried out conscientious analyses on the proactive change in financial regulation in Gibraltar, which can in fact be classified as a pioneer in some segments, such as supervision and regulation of professionals. The breadth of vision of Gibraltarian financial services also focuses on the stock market, with a special emphasis on hedge funds.
Gibraltar’s two main commercial partners are the United Kingdom and Spain. The Tripartite Forum of Dialogue which is maintained between them has brought together positions and noticeably improved an understanding affected by political reasons, and which prospers thanks to important collaborative events, such as the entering into operation of the Instituto Cervantes (working on the Rock for about a year).
The Port Authority is of paramount importance to the Gibraltar Economy. Each year 100,000 ships transit through the Straits, which means a lot of offshore and onshore activity. It is necessary to have detailed monitoring of all these movements, as well as a license for port activities. Also, the necessity arises for the existence of strict security controls, both for commercial ships and recreational vessels. And the zone actually requires two other incidental resources: environmental control and security and rescue patrols, due to the high incidence of trips from North African citizens without visas to enter the EU. The high figures for turnover and movement of goods, as well as the low port taxes and its privileged geographical location, makes Gibraltar a competitive market in the shipping industry.
With respect to tourism (10 million visitors each year), Gibraltar puts its focus on its historical legacy and, consistent with its size, on day visitors for the purposes of leisure, shopping and business. Another of the undeniable attractions of the colony are the apes, of a unique species in the world, and the magnificent Moorish castle from the eighth century, central in the Arabic reign in Gibraltar. Tourists also look for aquatic activities, with the reefs and dolphins being major attractions.
The private sector, in geometric progression
Gibraltar’s pillars of development analyse the rising value of the local businesses and their main expectations for the future.
Gibraltar has laid the foundations to reach an objective that is as complex as it is exciting: reinvent itself without leaving behind its traditional attractions for investment. The tax advantages live alongside strict regulation, and the willingness to do business with Spain is reaffirmed.
Gibunco: solid values in constant growth. The Gibunco Group is the engine of port activities in Gibraltar: The Bassadone family (with John at the head) is behind this giant that began operation in 1965 in a very specialised area, the maintenance of ships (submarine cleaning of ship hulls, specifically) and that today covers all financial and technical areas of the shipping business.
The script of Gibunco’s early business seems to be taken from a film, or more so a TV series that is now in its forty-seventh successful season. Bassadone recalls the first steps, including the sacrifices: he left school at 15 years old to help his dad. “I became a diver to do the underwater cleaning of ship hulls: it wasn’t my thing. I tried the commercial side straight away, although I look back at that first stage as a valuable apprenticeship. I formed a diving team and offered our services to ship owners: bit by bit, we started to provide more services related to shipping.
The human factor was central for the development of Gibunco. “During my whole life we have been very close to ship owners, and began to work with them in other ports. With time we became involved with the American company Butterworth, which was owned by Exxon. When the parent company decided to concentrate on petroleum exports, we offered to buy the business, which included taking on the American Armada as a client. This positioned our commercial name in the world, and allowed us to continue to explore new commercial opportunities.”
There is no doubt that the Bassadone’s have a business sense in their genes, and Gibunco is the most notorious display of this. That positioning in the American market had a dragging effect: expanding frontiers and objectives. “Thanks to a joint venture with CEPSA” – recalls John Bassadone – “we could then complete with the major oil companies in the port of Gibraltar. We then founded Peninsula Petroleum in London, with my son fronting it, and excellent results from the start. We began to do business in other ports, as well as directly acquiring materials from suppliers to offer to our customers around the world. We also got credit insurance, to safeguard the business as a contingency. At the end of the day, we are a family business, and we believe in continuity, with a performance based on honesty.”
The youngest member of the saga guarantees the continuity of the family in the sector. “I have confidence in my son’s work. He has developed the business in a competent manner, and works even harder than I did at his age, he doesn’t waver. The business is in good hands, and I don’t doubt for a second that we will continue to expand, with new lines of operation. I also understand that the survival of our values over the generations is guaranteed. We need to continue to focus on our goals, the rationalisation and control of our growth. We like to work with solid foundations and a vision for the future. I am proud of our employees all over the world. They are loyal and committed to their work and contribute to the formation of the most important pillar of our business.”
Bassadone is confident of the strength of the new Gibraltar Government led by Fabian Picardo and their measures aimed at controlled economic growth. One of the avenues for growth, from the perspective of Gibunco, is the reinforcement of commercial relationships with Spain, leaving aside partisan issues and situational disagreements. “Gibraltar is often used as a political football by Spanish political parties. In any case, we are not worried about escalated tensions with Spain: the contrary would be rare in the word that we live in. “
Gibtelecom, one step ahead. Gibtelecom is the primary reference when it comes to telecommunications in Gibraltar. 50% state owned, it maintains an excellent relationship with Telefonica, its main partner for many years. The Gibraltarian company is currently focused on an attractive development plan, the Europe India Gateway (EIG), which connects three continents and positions the Rock in the best place as an international communications hub. The submarine cable is the most significant investment by Gibtelecom to date, and their participation in the project is circa 5%. In their plans for growth, the company sees itself allied to some of the global giants in the sector such as AT&T, British Telecom and Bharti India. The main advantages for this growth are the business’s collateral vision and, above all, the capacity derived from the new EIG investment, which makes it a preferred vendor on a global scale of bandwidth services on the open market.
Tim Bristow, CEO of the company, stresses Gibtelecom’s interest for commercial trading with Spanish operators. “I hope that telecommunications companies will consider buying our bandwidth capacity. We are growing: if GDP in Gibraltar rose by 4.8% in 2011, in our sector growth was 10%. I think we are a good barometer for the economy.”
Bristow highlights that the vision for Gibtelecom goes further than the local market, thanks to the diversification of the business. “We are new in the data centre sector, but it is an area of great interest to us. As such, I think that the next stage of evolution will be towards cloud services, as well as television via Internet and IT services in general. We understand that consumers are demanding technologies which meet all their needs at the same time: in the future people will simply buy one device that can do everything.”
Victor Chandler, the winning bet. Victor Chandler is a real pioneer in the online gaming area. His numbers speak for themselves. He has half a million customers in 160 countries around the world. Mr Chandler’s recognition transcends the borders of Gibraltar: he is categorized as the first bookmaker to realise the importance of the game using the internet. What’s more, he has an image as the perfect gentleman which has helped him a lot when doing business. In 1998, due to the high tax pressures facing the game in the United Kingdom, Chandler decided to move to Gibraltar. Many followed his footsteps in the sector, and overnight the Rock was converted into a benchmark of the global gaming sector. “The decision to move to Gibraltar was largely determined by the volume of business in the Far East, and the reluctance from citizens in this part of the world to adopt British gaming taxes. I agree, the tax pressures were excessive and unfair. We have also grown through development of online betting: at the start there were many more telephone bets, nearly 98%, and now it’s the exact opposite.”
“We launch new products to the market each day,” states Chandler, “and we focus our investment in technology. Luckily, we own the technology that we use, which is unusual in our sector. 98% of our business is on the Internet and smartphones, but it has been the advancement in technology and the ability of bandwidth which has made the difference. Now we need experts in languages, a scarce skill in Gibraltar, which we need to overcome with urgency.”
The consolidation of the brand BetVictor throughout the world gives prospects to Chandler, who has set his sights on the growth of his business in Spain and South America: in fact, he is already in advanced talks with two media companies in Spain to achieve joint ventures, and he also already has a business partner in our country.
Bassadone: emerging emergency. The name Bassadone Motors says a lot of things both inside and outside Gibraltar. The most important one is their status as the first reference when it comes to looking for aid vehicles in emergency situations. In second place, it evokes a family business established for several decades, which has known how to reinvent itself and grow. The third alludes to its visible head, George Bassadone, unanimously considered the most successful businessman on the Rock. In recent years his vision has transformed a family car sales business into an international agency for the supply of emergency vehicles, with governments and multinational agencies as top customers.
The key to Bassadone is excellence, the detail. With Toyota as the suppliers of the primary materials (4X4 vehicles), the job of the Gibraltarian company is to prepare each car for extreme conditions. A meticulous craft which achieves excellent results. “Our market is very small and specialised, and we work to high quality standards. This makes us unique’, says Bassadone, “we are 250 motivated people rowing in the same direction, for the business to continue growing and strengthening. Europe is our current goal: we want to start distributing vehicles throughout the continent.”
Bassadone has also put his hopes on an increase in land which would allow him to operate in a more ambitious manner. “We are pending the reclamation of around 60,000 square metres of land, but whilst we wait for this matter to be resolved we depend on five vehicle parks in Gibraltar.”
The size of Gibraltar, as the Chief Minister Fabian Picardo explained, has two faces. For Bassadone it is an advantage overall. “Businesses have a very direct access to the Government to resolve any kind of problem. The administration is very sensitive to the issue, and treats each case in detail to promote entrepreneurial activity. Also, Gibraltar has a financial and legal regime which is very advantageous, which stimulates inward investment, especially in the banking and insurance industry. Spain has, in Gibraltar, a place to strengthen its business position.
Sapphire Networks: connected to success. Lawrence Isola is a member of one of the most respected families in Gibraltar. One of his principal efforts is Sapphire Networks, a telecommunications company existing for over three decades and with a solid network which has become in recent years the basic sustenance for the financial activity and the gaming industry. They also have a data centre and are constructing another.