Maltese businesses unlikely to be hit by fresh Greek austerity

Maltese-owned businesses are unlikely to suffer any noteworthy ripple effects of the fresh round of austerity measures just approved by the Greek Parliament. 

“The exposure of Maltese business to Greece isn’t high, and indeed no businessman has yet approached us to voice concerns about the latest austerity measures,” Malta Chamber of Commerce president Anton Borg confirmed with MaltaToday. 

Premier Capital, owned by brothers Marin, Beppe and Melo Hili, operates 21 McDonald’s restaurants in Greece and indeed acquired a development licence to enter the Greek market in 2011, when austerity measures had already hit the country. 

“We were conscious that we were entering a market with an enormous potential and a changeable environment,” a company spokesperson told MaltaToday, adding that they will continue to invest in delivery innovation and staff training. 

She pointed out that their Greek McDonald’s restaurants, led by managing director Victor Tedesco, served 6.7 million customers in 2014 and 3.4 million customers between January and June this year. 

The Greek Association of Branded Food Service Chains has warned that the austerity reform to raise VAT on food service from 13% to 23% would amount to the “kiss of death” for the sector. Yet, the Premier Capital spokesperson sounded a more optimistic tone.

“We have experienced VAT rate fluctuation and changes in customer spending power in Greece before,” she said. “In this latest scenario, our commitment to our customers, to our team and to the Greek market remains consistent. We will ensure customers continue to enjoy the same best value they expect from McDonald’s as we continue to operate an efficient business.” 

The restaurant VAT hike could also indirectly impact the Greek subsidiary of Miller Distributors, Malta’s major newspaper and magazine distributors. 

“Since we print and distribute international newspapers and magazines, the impact of these new austerity measures is intrinsically related to their impact on tourism to Greece,” the company’s chief executive, Malcolm Miller said, while specifically noting the 10% VAT rise.

“Greek tourism dipped while their government was negotiating with its creditors, but it is now back on track. It is unlikely that the new austerity measures will significantly impact tourism, but it is still too difficult to predict how it will pan out. These new austerity measures are going to be very difficult to implement.” 

Malta’s national lottery company Maltco has also allayed fears that the Greek austerity measures could disrupt its operations, despite the fact that the majority of its shares are owned by Intralot, a Greek gaming company. 

A Maltco spokesperson explained that Intralot’s Greek business contributed less than 3% to its total turnover in 2014 and less than 2% in the first quarter of 2015.

The Greek economic crisis has hit local business in the past, with Go plc deciding in 2012 to write off their investment in the Greek telecommunications company Forthnet.  In 2014, Go indirectly injected €6 million into Forthnet, but a

financial expert confirmed with MaltaToday that any impact on the Maltese telecommunications company would be “insignificant”.