The first three months of the year have sped by, and a great deal has been happening. We entered the New Year with a “ground breaking” new 10% corporate tax rate for all businesses; a level playing field for Gibraltar.
This offers great financial benefit to local businesses who have in the past been paying a 22% rate and who will now pay just 10%.
Our new proposition is competitive in the European market place, and should give Gibraltar an edge. Thankfully there has been no sign of an “exodus” in the on-line gaming sector, which we have built up so successfully, and there is more interest than ever from new corporate and private entities alike.
New developments
We now need to address our ability to take advantage of this new business; providing new purpose built and modern  office accommodation is crucial. The World Trade Centre, is said to be gaining speed with a successful launch at MIPIM, and with outline planning in place, building is said to be starting “soon”.
Although Government figures show declining hotel occupancy, there seems to be no shortage of guests at town centre locations, with some weekdays being fully booked. Being able to add another key “piece” to the Gibraltar jigsaw is vital, it is therefore pleasing to hear that both the Lester Hotel project and the Hilton Hotel and office project are both progressing.
The new airport terminal is rapidly taking shape, and looking all the more impressive. Having gained a new easyJet route from Liverpool, Paul Simmons, easyJet’s regional head told  B2B “I really believe that the new terminal will be a great help to our operations and aviation in Gibraltar.”
There are also rumours abounding, that new carriers, using smaller more efficient aircraft, are looking at the viability of the Madrid route again. This service  if timetabled correctly could be pivotal to Gibraltar, and would enable us to expand our market.
The Devil’s Tower Road redevelopment is now beginning to take impressive shape and, together with the new car parks and tunnel, should go a long way to improving the traffic infrastructure.
Power
Thankfully we have suffered few power cuts since the arrival of the temporary generators, and Government must be commended on the commitment to build a new power station; no mean feat in this tough financial climate. But one still wonders about the merits of the huge costs, when there is a European grid on our doorstep.
Housing
The initial two blocks of new rental housing  at Mid Harbours, the first to be built since the seventies, have been delivered. This development is also an attractive addition to skyline and  adds an extra 500 new flats to our housing stock, which is welcome.
Election
2011 will also bring a General Election to Gibraltar – the popular bet is on October , and as a result all Chamber members are encouraged to submit ideas for a “manifesto wish list” which they would like  the Board to put forward to the various political parties.
Christmas
Looking a little further forward, the Chamber would like the Christmas decorations and lights to be enhanced, not only in Main Street but also throughout Gibraltar in order to create a better festive feel for the Christmas season. In this, the most important time of the retail year, there is a need to create an atmosphere comparative to other main European cities not only with lights, but also with a festive  programme in which the whole community can participate. For this to be organized properly, the planning needs to start now by Government and cultural organisations.

The Advocate General of the European Court of Justice [ECJ], Niils Jääskinen, has advised the court that it should uphold an earlier ruling which found that Gibraltar’s tax regime did not breach EU rules on state aid.
The opinion by the Advocate General is not binding but the court’s final rulings generally reflect the advice.
Europe’s Court of First Instance had already ruled in Gibraltar’s favour on the crucial issues of regional and material selectivity.
One key question was whether Gibraltar could maintain its independence as a jurisdiction with the ability to set its own taxation rates.
The rulings were appealed by the European Commission and the Spanish Government and this is the case that is currently before the ECJ, and on which the Advocate General is advising.
His opinion supports Gibraltar’s position on the issues of both material and regional selectivity.
The latest development means that Gibraltar continues to edge closer to a final resolution that will lift any lingering doubts about the viability of its new taxation regime.
The new tax framework is seen as vital to the economy and a key element of Gibraltar’s current and future success as an international finance centre within the EU.
An adverse judgement could have crippling consequences for the Rock.
“The Government has throughout asserted its confidence in the legality under EU law of everything that it has proposed and done, and this has previously been confirmed by the lower court and now by the Advocate General in the higher appeal court,” the Gibraltar Government told B2B.
“The Government thus remains confident of the final outcome of the appeal in Gibraltar’s favour.”
Gibraltar continues to attract new and significant business, largely on the back of its new tax regime.
Among the newest entrants is Betfair, which describes itself as “the world’s largest betting community”.
In March, the company said it would move part its operations from the UK to Gibraltar in a bid to cut its tax bill.
Its Betting Exchange is now operating under a Gibraltar licence.
The company is following in the footsteps of rivals Ladbrokes and William Hill, both of which have announced millions of pounds in cost savings since their departure from the UK two years ago.
Betfair said its operational costs would rise in the short term due to running both new and existing data centres, but that this would reduce as its systems consolidation programme is finalised at the end of next year.
It would then see significant tax savings of as much as £20m a year and £10m of underlying earnings.
“As a global, technology-led betting operator, our new operational base in Ireland and the change to our licensing structure provides us with increased flexibility,” said Betfair chief executive David Yu.
“It allows us to locate key technical equipment in more efficient locations, to serve our customers better and to compete on the same basis as the majority of operators in the UK online betting market.

A string of power cuts earlier this year laid bare the strain that Gibraltar’s outdated power generation network is under, focusing attention on the need for a long-term solution to the crucial issue of electricity supply.
The cuts drew accusations of bad planning, although the Gibraltar Electrical Authority argued they were down to unforeseeable circumstances.
Temporary generators were brought in to cover demand in the short term and avoid a similar situation, but the question of long term supply remained.
That long-term solution, in the form of a new power station, is finally becoming reality after two years of delay arising from technical and legal issues.
In March, the Gibraltar Government announced that it had awarded a £122.8m contract for the construction of a diesel power station and related distribution infrastructure.
It is the largest single contract ever awarded by the Gibraltar Government.
Once complete, the new power station will replace Gibraltar’s three existing facilities and ensure sustainable power supply for decades to come.
Getting here has been a tortuous process that started in 2007 and involved major technical work to assess the site and properly evaluate the scheme’s environmental impact.
It was further complicated by a legal challenge by nearby residents concerned about noise, a case that was settled out of court and resulted in further design tweaks.
Chief Minister Peter Caruana, in announcing the contract, made no bones about the difficulties encountered.
“It has been a hugely complex process to get to this stage, but the new power station will ensure a modern and resilient electricity supply to Gibraltar well into the future in the most environmental friendly way that is practical and realistic,” he told B2B.
“It represents a very large investment for our future prosperity as a community both in social and economic terms.”
The contract was awarded to a joint venture between ETDE SA – major power station contractor company subsidiary of French multi- national company Bouygues – and Dutch Civil Engineering Company Volker Stevin Construction Europe B.V.
The new Power Station will initially contain eight Caterpillar Diesel Generating sets each of approximately 7.8 Mega Watts, providing a total installed capacity in 2013 of 62.4 Mega Watts. The scheme will provide room to add further engines in the future should Gibraltar’s power needs expand further.
Central to the project are environmental considerations. The new power station will comply with EU regulations and use best available technology to minimise emissions and pollution.
This includes selection of engines with high efficiency and thus minimised consumption of fossil fuel and thus production of carbon dioxide, use of low sulphur and low ash fuel to minimise levels of particulate emissions and Sulphur Dioxide, use of selective catalytic reduction equipment and engines with fuel injection and valve timing optimised to minimise Nitrogen dioxide emissions.
“The use of leading equipment and best available technology makes an important statement about our commitment as a community to the environment,” Mr Caruana said.
“The closure of Gibraltar’s three existing and ageing power stations will, by itself represent a major environmental gain.”
The Environmental Safety Group, which has long campaigned for cleaner air in Gibraltar and has been highly critical of emissions from existing plants, welcomed the announcement, if with some reservations.
Replacing Gibraltar’s three “ageing and heavily polluting” power stations – Waterport, OESCO and the Ministry of Defence facility – is, for the group, a positive step.
But the fact that the new plant will rely on diesel engines is a source of concern for the ESG.
“The new power station is a critical and important step for immediate environmental and health benefits for the community,” the group said following announcement of the contract.
“Clearly fossil fuel reliance for Gibraltar’s’ energy needs on a long-term basis is not a position supported by the ESG.”
“Once in place, the focus should move towards the sourcing of biofuel such as biodiesel – waste vegetable oil, or natural gas from anaerobic breakdown of sewage and domestic waste – as fuel for the new power station, with which it could operate with little or no changes to its engines depending on the biofuel used.” Other environmental campaigners were less accommodating.
The Gibraltar Ornithological and Natural History Society was among those who objected to the project on a number of fronts.
It was concerned, for example, that construction of the plant would have a huge adverse impact on wildlife and ecology in the south of Gibraltar, one of the last relatively-untouched areas on the Rock.
According to GONHS, the Gibraltar Government’s energy strategy “requires more vision” and focus on renewable sources of power.
Construction of a new fossil fuel power station will leave a damning future legacy for Gibraltar, the group said.
“It has to be assumed that once the power station is built it will be here for decades, with the environmental deterioration of the South District continuing for generations,” GONHS said in a statement last year.
“And generations will regret the decision.”
“Gibraltar is sealing its options and will be anchored firmly in the past at a time when fuel costs will spiral and stocks run out.”
But was there really an alternative?
At a symposium late last year organized by the Gibraltar Group of Professional Engineers, international energy experts suggested that renewable sources of energy were not adequate for Gibraltar’s needs, at least at this stage.
The Rock’s size meant there was insufficient space to use established sources such as wind and solar energy, while others including tidal energy were still in the early stages of development and could not be relied on to meet local demand.
Dr Nigel Burton, president of the Institution of Engineering and Technology in the UK and a veteran of the energy sector, offered a sobering assessment on the scope for green energy in Gibraltar.
For Dr Burton, the future lay in diesel generators powered by renewable sources of bio-diesel, a view in line with that offered by the ESG.
“To my mind, you already have the way forward,” he said.
“If some of the other renewable things help you around the edges, then so much the better.”
“If the target is to introduce renewables in Gibraltar, then it’s going to be a little bit of this, a little bit of that and a little bit of the other,” Dr Burton added.
“It’s not going to be a big bang solution, with the sole exception of perhaps bio fuels.”
There is, of course, another option, but one that few dare mutter openly, let alone support as a viable alternative: buying electricity from Spain.
When the Chamber of Commerce explored this idea in an editorial in this magazine last year, the reaction from many sectors of Gibraltar was sharp.
The widespread view was that, against the background of decades of hostility by Spain, Gibraltar needed to remain energy independent.
But the high cost of the new power station, coupled to concerns about environmental sustainability, prompted the Chamber to ask the difficult question.
“In these days of pan European markets in energy supplies, could we not plug in to the European ‘grid’ and contract with some European Electricity Authority or Energy Company for the supply of power?” the Chamber asked in the editorial.
“Is the price of ‘independence’ on energy terms worth paying, now and for many years to come, particularly in an era when cross border energy supply is a common occurrence?”
As for reducing demand, there is little realistic prospect of progress here either, particularly given Gibraltar’s sustained economic growth. New business, property and infrastructure developments will translate into increased appetite for electricity.
While energy efficiency measures – low consumption light bulbs and the like – will help, Dr Burton made clear at the energy symposium that genuine gains would be hard-earned in this context.
Ultimately, it was down to price.
“It’s only when people have to pay for things that they change their behaviour.” he told B2B.

Shipowners continue to face difficult times and weak freight markets in many trades, prompting concern in the maritime industry about a surge in the number of banks foreclosing on overdue mortgage deals. For Gibraltar though, this means good business.
The Rock is widely regarded as a leading jurisdiction for admiralty arrests, mainly because its UK-based legal system can handle cases swiftly and efficiently.
Resolving ship arrests quickly helps to protect the asset – in this case a ship – and get it back to work.
While a reputation as an arrest port is not something many would wish to flaunt, there is also a general recognition that arrests are a fact of life in the maritime industry.
Lawyers say that resolving the legalities swiftly and with minimum fuss protects the equity in a vessel and enable a speedy return to business or, in the case of older ships, to the scrap beaches of Turkey and Asia.
When the global economic downturn kicked in during 2009, the number of arrests here rose sharply, only to ease off again last year.
Banks in Europe were generally showing patience with loss-making shipowner clients during periods of low rates, agreeing to interest-only payments and other moratoriums to help them through the trough in the shipping cycle.
Increasingly however, banks are getting tough with some owners, encouraged in part because they can obtain healthy prices in the second hand market when seized ships are auctioned.
ICAP Shipping sale and purchase broker Nigel Hollyer, who is the broker for the Admiralty Marshall here, estimated that 14 ships had been arrested or repossessed in 2011, compared to around 14-15 for all of 2009 and 2010.
“I can’t recall seeing so many ships being reported as arrested for quite a long time,” Mr Hollyer told B2B.
“Really the last batch that was of mass arrests was back in the 1998-2002 period.”
“Arrests are on the increase but I’ve not really seen anything terribly sexy, such as the high capital ships. It’s mostly smaller, older ships.”
Bunkering and designation
Recent changes to the EU nature designation of a large swathe of Gibraltar waters are unlikely to impact on plans to open up the east side anchorage to bunkering activity.
Allowing refuelling in this area is seen by the industry as a crucial step to bolster Gibraltar’s position at a time of increased competition from nearby rival ports.
Gibraltar remains the busiest port for this business in the western Mediterranean but is constrained by the limited number of anchorage slots in the Bay of Gibraltar.
The biggest cap on suppliers here is physical space. By allowing refuelling on the east side, the port will radically increase the number of ships that suppliers can handle.
The new nature designation strengthens environmental protection and requires government agencies to coordinate their activities in order to guarantee a holistic approach to the site’s management.
The protected zone stretches from the Bay of Gibraltar, around Europa Point to the East Side and includes an area currently used as an anchorage for merchant ships.
The plan to open up the east side is still undergoing an environmental impact assessment, which will take into account new designations that, in practice, raise the level of environmental protection in these waters.
Port Minister Joe Holliday told reporters recently that the new designations did not preclude commercial activity.
“It just sets a higher standard and whatever we do will have to be within the context of this new scenario,” he said.
In any event, only a small area of the zone where bunkering could take place is within the protected site.
Environmental campaigners are concerned, however.
The Gibraltar Ornithological and Natural History Society, which was closely involved in the process of preparing the scientific studies needed to raise the EU designation of the waters, made public its concern last month in the clearest of terms.
The group questioned whether the refuelling of ships was compatible with the new designation and urged the Gibraltar Government to rethink its plans.
It said a detailed impact assessment was needed in order to evaluate the risk to the site’s ecology.
“Only after these requirements have been met can a decision be taken as to whether or not an activity – commercial or otherwise – can be allowed to occur within the protected area,” GONHS said.

Imagine you’re at 3000 feet, sitting in the front seat of one of the best high performance piston aircraft in the world, you give a thumbs up, and suddenly the G Force indents your cheeks as you fly into a gravity defying, 360 degree ‘loop the loop’ over Gibraltar. Well imagine no more!
The Aerobatic Airline Display Team, THE BLADES, have confirmed that they will be bringing their unique experience to Gibraltar this May, in a weekend set to deliver excitement and unique thrills to the Rock, and for a select few the ultimate in Corporate experiences.
With two spectacular public air displays, the events sponsored by Barclays Wealth, Party Gaming and Ocean Village, will be held over the weekend of 21st May 2011, and will bring some of the world’s best aerobatic pilots to the Rock.
Speaking after approval for the visit was given by the Government of Gibraltar, ‘Blade 1’ Myles Garland said “As a team sponsored by RAFA, the charity dedicated to supporting serving and former RAF personnel and their families, we are really excited about coming to Gibraltar due to its special relationship with the armed forces and strong links to the UK. This event is going to kick off our sixth display season, and we’re looking forward to bringing our little bit of excitement to the people of Gibraltar.” he told B2B.