10 Nov 2011

The M. Demajo Group has evolved from a company engaged in commission trading in 1910 to a business organisation involved in consumer goods, hospitality, business to business, manufacturing, ICT, the infrastructure, oil, gas and energy and various alliances and joint ventures. The group’s new chairman, Anthony Miceli Demajo, says that the company’s major expansion began in the post-war era where the family anticipated Malta’s development.

I believe conference traffic from China can do the job. We need the Chinese to boost our tourism

“Given the size of the market, this meant entering into several business sectors spearheaded by the second generation. This was their vision and courage which led to greater financial stability and internal expertise. This expansion and diversification was sometimes seen by other family concerns as risky, however our second generation felt that sticking to the ‘status quo’ was the coward’s way out and this is where our strength came from – diversification,” he tells The Times Business in an interview.

He points out that the continuous growth of the group convinced the board of directors to separate the functions of chairman and CEO and appointed him as chairman.

“Previous to my appointment as chairman my predecessor was the late Joe Demajo, my uncle, the chairman and CEO of the M. Demajo Group who was my mentor from the day I joined and with whom I was very close until the day he passed away,” he says with a sense of sadness.

The fourth Demajo generation is now involved in the running of the group but the election of non-family directors has also taken place. How does he balance the family-run aspect of the grouup with the need to involve non-family professionals in the management ?

“Before we talk of the fourth generation I must mention the third which came in with a bang in the late 1960s and early 1970s to give increased momentum to growth and diversification and to consolidate what had been achieved, since most of these businesses were still in their infancy,” he answers.

He says that the third generation of the Demajo family, to which he belongs – he has worked for the company for 46 years and calls the wines and spirits section of the group ‘his baby’ – was so successful in enlarging the business that it soon became clear that additional expertise beyond that available within the family was required and this led to the appointment of non-family directors.

“Such appointments removed the final hurdle to employee advancement where our biggest asset was already our human resources. Today the fourth generation has come of age, all with varied academic competences, and the third generation is ensuring that core group values and principles are transferred to them. These cannot be bought or sold, we have just celebrated our first century and we wish to ensure that our descendants celebrate the second,” he says.

While Mr Miceli Demajo points about that a listing on the Malta Stock Exchange is “possible” he stresses that the M. Demajo Group has been following corporate governance rules for quite a number of years and the Demajo family was possibly the first Maltese family owned business to adopt a strict governance criteria.

“As I see it now, there is no immediate urgency or need for listing. What I am very much in favour of is more joint ventures or mergers of our individual companies with other local or international companies, maybe with other family companies which possibly have a similar philosophy and are successful in parallel or related sectors to those we pursue.”

The M. Demajo Group has been active in North Africa since 1981 – mainly in the oil, gas and energy sectors – and one of its subsidiaries operates its own offices in Libya.

“Our Libyan facilities survived the conflict intact and we have managed to keep all our technical staff throughout this problematic period. Eighty per cent of our business in the region has been provided by Libya through which we also service Chad and Sudan.”

He adds: “Tunisia accounts for the bulk of the remaining business which is now giving us a potential to enter markets such as Mauritania. We have worked sporadically in other Middle East regions during this slowdown period caused by the upheaval in Libya and have started important preparatory work in the Gulf such as in Qatar and Oman.”

Mr Miceli Demajo says the group has built excellent relationships with companies in China and South Korea which are interested in consolidating their European penetration through Malta. By taking a prudent approach in penetrating these new markets, he says, the company has seen encouraging results.

He explains that most of the group’s companies are well established locally so rapid growth is possible only if there is a local upsurge or if international sales increase.

“One main area where we foresee big local market increase is the environmental sector. We have been successful in Malta’s air monitoring programme and we are pursuing other opportunities in the environmental sector .

“I would also like to mention the ICT segment of our group, now housed at the newly launched Demajo Technology Centre, as well as our international efforts, which have been a success either directly or in association with partners in markets much bigger than Malta.

“We have this year added a new joint venture in the financial sector, again in association with local and foreign partners, and the initial results are much better than we had dared hoped for,” he says.

Mr Miceli Demajo says diversification is one of the pillars of the company’s core policy. “We are constantly searching for what else we could realistically do within the limits of our resources.”

He adds: “We have inherited the northern European work ethic from the British. Malta is uniquely placed to achieve even greater results in this region and many of our foreign partners appreciate this point and are willing to work with us to do so.”

Regarding the bleak economic prospects for Europe at the moment he says: “We all know what is happening in Europe and beyond. If Europeans are caught up in austerity measures our tourism and export markets are going to suffer. We must not lose sight of the fact that the US has problems and that the woes of the world’s biggest economy are inevitably going to affect the global economy. As a group we have survived two world wars and the political and social upheavals of the last century and Malta and the Maltese are survivors.

“Still, nobody looks forward to a period of belt-tightening. We therefore need to use our adaptability and the agility of a small country to limit the damage and to resurface as quickly as possible out of any difficult period that may arise.”

Mr Miceli Demajo says the 2012 Budget needs to keep the current international situation in mind and adds that he hopes the government does something about the lack of fiscal enforcement in the country.

“While the legislative framework concerning tax and other revenue is largely in place, little or no effort is made to ensure that the government generates the income that it is owed. Recent statistics released by the EU show that Malta has a massive black economy part of which is surely fuelled by cowboy operators who repeatedly flaunt VAT and eco-tax payments due to a lack of proper enforcement procedures.

“This situation is to the detriment of legally compliant entrepreneurs and investors and does away with the concept of a level playing field for all. In a scenario where Malta’s competitiveness has been criticised it is up to the state to ensure that its own civil service, authorities and public entities improve their efficiency and understand that they need to serve the public and not vice-versa,” he says.

Mr Miceli Demajo says a large number of goods are brought into Malta illegally – as no VAT or eco tax is paid – to the detriment of law abiding companies.

He believes the government needs to consider other ways of boosting tourism and points out that some way must be found to start bringing tourists over from the Far East such as from China.

“These visitors seem to have no problems with visas from other Schengen states,” he says, with reference to the problem encountered by Chinese tourists in obtaining a visa from the Maltese authorities.

“In a scenario where our traditional tourism markets are likely to suffer we need to take a more global outlook and I firmly believe that conference traffic from China can do the job. We need the Chinese to boost our tourism.”

What is his vision for the M. Demajo Group?

“We have been around long enough to know that calm follows every storm. We are strong enough to survive most storms and we have to take a long term view. I see the group as continuing to be an important Maltese business entity.

“Throughout, our core values of integrity, competence and value for money have seen us through thick and thin. We may change all our business models but we shall not change these core values.

“Our motto: ‘Together We Achieve Because We Care’ is not something we hang up on the wall but something we live up to every day,” he says proudly.