June 26, 2013
MONTE CARLO – From this Shea butter and “emulsifier” storage room on the sixth floor of a building, there is view on a real prince’s palace.
We are far from the usual clichés about Monaco. It is here, in this industrial building in Fontvielle – a neighborhood built on reclaimed land – that the Aspeta laboratories have decided to set up their operations.
The small company employs 120 workers, all of whom work in this six-story building, inventing and creating its moisturizers and anti-aging creams. Inside “the Hive” as it is called here, white coats and hygiene caps are mandatory for employees – safety measures are very strict.
This is not what you think of when you think of Monaco, its billionaires, yachts and casinos. Asepta’s neighbors are just as unglamorous: the Foundry of Monaco and professional coffee machine manufacturer Conti, and others.
This is a new concept: the principality is proud to show that industrial companies are sprouting on its territory, like suncare company Lancaster and aerospace sub contractor Atoms. “One hundred and one in total,” says François-Xavier Le Clerc, assistant head of the Monaco Business Office. Most of these companies are old, family-owned firms.
Since Monaco – a two-square-kilometers jewel on the French Riviera – suffers from lack of space to accommodate new manufacturing companies, its goal is to attract “smart” companies: research and development centers, engineering offices.
A lot has been achieved during Monaco’s “normalization process.” Until 2010, the principality was on the OECD’s “non-cooperative” tax havens list, and it is having a hard time getting rid of this image, despite its efforts to win the respect of the big international institutions.
But the new image of Monaco, which was for a long time considered a black sheep because of its lack of transparency, is still clouded by its very attractive financial legislation. It is a haven for its inhabitants, who don’t pay income tax or inheritance tax. That is, with the notable exception of U.S. and also French nationals, as per a convention signed 50 years ago signed by General de Gaulle.
Yet, Monaco lives off its taxes. “Our budget is financed by the VAT (sales tax), corporate tax and property transfer tax,” explains Michel Roger, Monaco’s State Minister, the equivalent of a prime minister. Today, the principality is neither on the OECD’s list nor on the list of the Financial Action Task Force (FATF) – an inter-governmental body that combats money laundering and terrorism financing. However, it is still listed as a tax haven by organizations like the Tax Justice Network (TJN), a coalition of researchers and activists fighting the negative impact of tax avoidance and tax havens.
A panoramic view of Monte Carlo - Photo: Scott Anderson
In 2009, right after the financial crisis, when the world powers launched their global fight against tax havens, Monaco sought to adapt to international standards. To exit the “black list” of tax havens, it multiplied agreements on exchange of information for tax purposes. It promptly signed the 12 Tax Information Exchange Agreements (TIEAs) required by the OECD, and today that number has increased to 27. But Monaco is still facing a lot of criticism. Its first TIEAS were signed with countries that share an equally dubious image – such as Andorra, the Bahamas, Liechtenstein, San Marino and Samoa. “Until 2010, the principality did not behave properly. But since then, it has been making a lot of progress,” says Pascal Saint-Amans, director of the OECD’s Center or Tax Policy and Administration. “It takes time to sign agreements with the big countries,” says Roger, who adds that Monaco has agreements with the U.S., Germany, Argentina and India.
A golden ghetto for the rich and famous
The principality has also been trying to erase its image as a golden ghetto for rich tax evaders by promoting its real industries. In Monaco, there are no “mailbox” companies. Each new company has to go through a rigourous process to be authorized. Most companies are from the service sector, with financial services taking up the biggest share. They represent 16% of the GDP, even though this proportion has decreased over the years. Thirty-nine international banks and 51 trust corporations manage about 100 million euros in deposits and investments.
Even though it is pampered and protected, the industrial sector only represents 6.2% of the GDP. The state tries to give the sector little bit of help here and there – for instance to compensate for the high prices of real estate. “The government rents this building to us at a preferential rate,” says Anne-Marie Noir, daughter of one of Asepta’s cofounders and current CEO.
A total of 301 companies were created in Monaco last year, 15% more than in 2011. Attractive tax rates play a central role here as well. Companies do not pay business or property tax. Those who make more than 75% of their revenue in Monaco do not pay corporate tax. A boon for hoteliers, restaurateurs and retailers.
Working in Monaco has its perks for employees as well. The minimum wage is 5% higher than in France. Add to that a 5% “prince’s bonus.” For Monaco it’s essential to stay attractive for employees so as to maintain employment growth.
Although the principality aspires to become more transparent, it is still keeping some things hidden away in the shadows. For instance, it has still not signed TIEAs with the UK or Italy. Since there are about 6,500 Italians residing in Monaco, that represents a loss in tax revenues of up to one billion euros a year for Italy.
The principality has also negotiated exemptions that let foreign nationals with accounts in Monaco to remain anonymous if they wish.
But today pressure is mounting on Monaco. The world powers have launched a new war on tax evasion. During their recent Northern Ireland meeting, the members of the G8 agreed to an automatic exchange of information for tax purposes. The exact terms of this will need to be defined by the powers that be, warn NGOs like Transparency International. Monaco will be forced to abide by these new rules. “Of course we are not opposed to these decisions if they represent the new international standard in terms of information exchange,” says Jean Castelleni, Monaco’s Minister of Finance.
The principality’s situation has become slightly more awkward. In May, Austria and Luxemburg announced that they would abandon bank secrecy if Switzerland, San Marino, Liechtenstein, Andorra… and Monaco did the same. “For now, nothing indicates that Monaco will abide with the automatic exchange of information,” says Saint-Amans.
But ultimately, if it wants its name erased from the “black list” for good, the tiny nation will have to adapt to the new standards.
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Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.
October 17, 2021
It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.
More than a year later today, experts believe that air traffic won't return to normal levels until 2024.
But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:
Cleaner aviation fuel
The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.
While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.
Fees imposed on the airline industry should be funneled into a climate fund.
In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.
Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.
High-flying ambitions for the sector
Hydrogen and electrification
Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.
One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.
Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.
New aircraft designs
Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.
International first class will be very nearly a thing of the past.
The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.
Aerial view of Rome's Fiumicino airportcommons.wikimedia.org
Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.
The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.
Data privacy issues
However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.
Auckland Airport, New Zealand
The billion-dollar question: Will we fly less?
At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.
Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.
40% of Swedes intend to travel less
According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.
But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.
At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.
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SOUTH CHINA MORNING POST
South China Morning Post (SCMP) is an English-language daily published in Hong Kong. Co-founded in 1903 by the British journalist Alfred Cunningham, the newspaper has an estimated circulation of 104.000. It is currently owned by Alibaba group.
La Repubblica is a daily newspaper published in Rome, Italy, and is positioned on the center-left. Founded in 1976, it is owned by Gruppo Editoriale L'Espresso.
E24 NÃ¦ringsliv is a Norwegian, online business newspaper launched on 18 April 2006. In the course of the first week of operations it became the largest business web site in Norway. In week 46, 2008, it had 575,000 unique users per week.
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