Successful businesses control strong brands. The brand value, although not found anywhere on the balance sheet or financial statements, is, along with technology and intellectual property rights, the most treasured corporate asset.
Just see what lengths corporations go to to promote their brands, to enhance their appeal and protect their value from attacks by official competitors and counterfeiters.
According to a survey conducted by Brand Finance, the following is the table of the most valuable 10 global brands:
Ranking 2013
Ranking 2012
Brand
Brand Value Estimate in millions USD
1
1
Apple
87,304
2
6
Samsung
58,771
3
2
Google
52,132
4
3
Microsoft
45,535
5
5
Wal-Mart
42,303
6
4
IBM
37,721
7
7
General Electric – GE
37,161
8
10
Amazon
36,788
9
9
Coca Cola
34,205
10
12
Verizon
30,729
In 2006, Coca Cola was the top brand and Apple, Samsung and Google, now the top three global brands, were not even in the top 10 league. Nokia was the sixth most valuable global brand back in 2006, whereas in 2013 it had to be rescued through a take-over by Microsoft.
Brands matter! If the Apple brand is estimated to have a value of more than USD87 billion which is not on its balance sheet, that amounts to some 20 per cent of its market capitalisation and its value has to be nurtured and protected. Nokia slept on its laurels and did not smell the challenge when Apple launched its first iPhone in 2007.
Brand building is a very long process demanding timely investments, research and development in quality products that not only meets but also anticipates client needs, and huge investments in aura building through promotion and advertising, which make clients proud of carrying the product or consuming the service even if they have to pay premium prices for it. It is the reason why yuppies want to be seen carrying an iPhone in one hand and a Starbucks cup in the other as they enter their hedge fund offices with a Luis Vuitton handbag/man-bag hanging from their shoulders.
Malta needs to invest in its brand. It will help attract more and better quality tourism. It will put us more frequently on the shortlist of investors considering where to place their next project. It will help us compete to attract financial services that presently restrict their functions to London, Luxembourg and Dublin even though we have the elements with which to compete, bar the track record.
The on-going controversy about government’s proposal to launch an Individual Investor Programme has to be considered in the context of whether it helps or hinders the building of the Malta brand. The government is proposing to offer citizenship to a very restricted international clientele who pass strict checks on their suitability for citizenship and who are prepared to pay nearly one million dollars for acquiring Malta citizenship for their own and their immediate family.
The government is leveraging our soft assets, as good housekeepers should. Every country tries to make the most of the resources it is endowed with. Oil countries build their oil industry, technology countries build brands like Apple and Google, which were mere garage operations a couple of decades ago. Switzerland built its successful economy on financial services and pharmaceuticals in the context of a stable neutral country in the heart of Europe. So there is nothing untoward in the government’s plan to leverage our asset as a peaceful and stable location to generate revenues, which can then be used for further development.
The Opposition is being highly critical of the Programme; so critical that one has to make an effort to understand whether they are against it as a matter of principle and should not be launched whatever the conditions, or whether they agree with the principle of drawing economic value from citizenship awards but are not agreeing with the proposed specific mechanisms of the government’s scheme.
Assuming that in spite of pronouncements indicating the contrary, the Opposition is not against the scheme as a matter of principle, then one finds three major objections that have been raised by Opposition members, at least as I understand their criticism:
1. That the Scheme as proposed renders Malta as a disreputable tax haven attracting shady characters to launder their ill-gotten riches through Malta’s brand.
2. That the Scheme has no conditions regarding minimum residency and clients can acquire Malta citizenship without any obligations to live here.
3. That the scheme bears no conditions to make other investments in Malta beyond the payments necessary for the acquisition of citizenship.
The government would do well to conduct further consultations with the Opposition to re-assure that the first objection is based on misplaced fears and that the due diligence process would be robust and would help to build rather than devalue the Malta brand.
As to the second and third objection, while desirable, such limitations would exclude a large swathe of prospective and desirable clients from considering Malta citizenship. The typical applicant would be a successful and fully law-abiding entrepreneur in a rather unstable country, or in a country whose stability is being threatened by exogenous or indigenous events, who plans to continue his business in his native country, but requires an insurance policy to have a place they can still call home in case the perceived threats materialise.
If the Opposition is genuine in its objections, there should be no major difficulty in the government giving the necessary assurances to ensure that they back the Programme or at least do not object to it. However, there is enough reason to conclude that the Opposition’s objections are not based on genuine grounds; that their objections are mostly because they cannot accept seeing the government exploit an opportunity they did not smell and are uncomfortable seeing the government acquiring financial resources that would permit it to deliver on its electoral promises.
This is a fair observation considering that the Leader of Opposition made a statement in the House last Wednesday which is shocking and which attacks the very foundations of our democracy. He is reported to have stated in Parliament that “a future PN government would review the citizenship scheme being introduced by government and might even withdraw citizenship awarded to foreigners”.
This is a scorch earth policy at its best. It is the style of the pseudo democracy of the Tea Party in the US Congress – that the minority view has to prevail over the will of the majority even if it means bringing the country to a standstill. It is absolutely no way in which to gain genuine consultations from the majority.
When in government, the PN will have all the power to stop or change any Programme introduced by its predecessor. What it does not have a right to do is to disown any obligations properly contracted by the Government of Malta. Just imagine what would happen if the present Labour government disowns any contract signed by the last PN government, including the BWSC contract, no matter how much they disagree with it.
Irrespective of whether a future PN government would have any constitutional right to withdraw citizenship without reason as laid down by law, it is very damaging to the Malta brand for such loose talk to be made by the Leader of the Leader in Parliament as it creates instability and seeks de facto to impose the minority view on the majority. It is irresponsible loose talk that really makes us look like a banana republic.
www.alfred-mifsud.blogspot.com