Author: George Mangion
Published on Malta Independent 20 July 2020

It is not every day that we hear of landmark decisions that go in favour of taxpayers. The EU’s general court in Luxembourg decided this week that the Commission did not prove that the Irish government had given Apple, a tax advantage. This follows an appeal from a tax penalty of €13bn plus interest charged by the Commission on Apple Inc. for its trading activities in Ireland.

The case is highly sensitive for Ireland, a global hub for hundreds of multinationals attracted by its low 12.5% corporate tax rate and EU market access. In a similar tax case in 2019, the Luxembourg court annulled a decision by the Commission ordering the Netherlands to recover up to €30m in back taxes relating to tax affairs of Starbucks but, it upheld a decision that Fiat had received tax advantages that broke European state aid laws.

This time, the Commission alleged that Apple was given state-aid when it signed so-called “sweetheart deals” for its two companies headquartered in Cork, Ireland. The Commission charged that a selective treatment allowed Apple to pay an effective corporate tax rate of 1% on its European profits in 2003, down to 0.005% in 2014.

The EU’s “state-aid” investigation concluded that almost all Apple profits recorded by the company’s Irish incorporated entities were internally transferred to a so-called head office that existed only on paper. The profit transfer to the “head office” had no “factual or economic justification”. The tax scheme worked out that a small fraction of the profits of Apple Sales International were allocated to its Irish branch and subject to tax in Ireland.

The remaining majority of profits generated in various European sales offices were allocated to the “head office” where they were considered non-resident and therefore remained untaxed. The Commission accused Ireland of striking deals with Apple in 1991 and 2007 that amounted to state aid, which is illegal under EU regulations.

The Irish government and Apple decided to appeal the commission’s decision, with the company arguing the order to repay taxes “defies reality and common sense”.  The Commission now has two months to decide if they want to appeal the latest ruling and potentially take it to the EU’s highest tribunal.

The Irish government said it has always been clear “that there was no special treatment provided to the two Apple companies” and that “the correct amount of Irish tax was charged in line with normal Irish taxation rules”.

How does this landmark ruling affect us in Malta as we are constantly under the microscope of the Commission over domestic tax concessions that have been in place and approved ever since we joined the EU in 2004. Such tax rules help us to attract FDI over the years which sustain thousands of jobs in bona-fide business activities. The country, located in the periphery of the Med., does not have natural resources such as oil, minerals, etc. to sustain its growing population. It cannot sustain any large manufacturing bases run by multi-national companies due to its size limitation.

Ever since the base erosion and profit shifting rules started to probe various small jurisdictions, Malta started to attract attention even though we have never availed ourselves of aggressive tax schemes to attract multi-national companies.

Our manufacturing base is not expanding due to COVID-19 restrictions and we face heavy competition from non-EU countries which offer lower wage costs and suffer no state-aid rules. Another aspect is the passport scheme. This was criticised at the European level where media sources reported on the adverse comments by the chairman of the PANA Committee who claimed that the IIP should be stopped. Alex Muscat, the parliamentary secretary responsible for MIIP, has announced that the original version is being “scrapped”.

Malta tries in many ways to attract niche markets. It promoted new initiatives to attract business from Europe. For example, two years ago it risked funds in building a comprehensive legislation and hosted international mega conferences to label itself as a “Blockchain island” but alas the vim seems to have died down.

Due to heavy scrutiny by the European Central Bank (in the shadow of the disgraced Iranian Pilatus bank) no local bank dares open an account for such crypto business. This has resulted in entrepreneurs seeking other shelters such as in Estonia, which has a friendly touch to the sector. The post-COVID-19 recession makes it paramount that as an EU member it is given a light touch regulation especially now that, starting from 1 October, all FDI from outside the EU (including Britain) falling under certain protected category will be screened and possibly excluded from investing locally.

More pressure came from Jeep Kofod, a PANA Report rapporteur. He recently called for the introduction of a minimum corporate tax rate, in his words to stop “the sick race to the bottom on taxation and regulation”.  In his opinion, countries that exploit tax inequalities for their own profit may be adversely affected by a law which aims to close this loophole.

 

Author: George Mangion
Published on Malta Independent 20 July 2020
Get in touch: info@pkfmalta.com

Author: George Mangion
Published on Malta Independent 15 July 2020

Reading through the weekend press, one notes how critics wax lyrical on the drop in business both retail and otherwise notwithstanding a lot of hype by the government saying it saved 90,000 jobs.

Statistics are cheap nowadays; for example, one wonders how 90,000 jobs were saved when around €20m a month was paid in job supplements. Each job supplement reaches €800 (10% FSS) and therefore this equates to a smaller number of jobs saved each month. A new gimmick is an issue, this week, of the €100 cash vouchers with an expiry date of three months that are distributed free to 440,000 residents.

This was a brainchild of Malta Enterprise, partly to compensate that it shall scale down on the wage supplements for the next three months. The populist idea to give plebs “bread and circuses” carries a short fuse. Some of the cash may temporarily quench the thirst of low domestic demand while other vouchers may be frittered away on non-essentials. Shops may fall into the temptation to raise their prices, accelerating inflation.

The alternative solution would have been a drop in VAT, so as to reduce the cost of living. Both the German and the UK governments recently took the plunge and reduced VAT on hospitality and food services to 5%. Obviously, reducing VAT without taking adequate measures to ensure shop and food prices are reduced is penny wise, pound foolish. Studies in Ireland have discovered that when VAT was reduced; most of the benefits were not passed to consumers. In Hungary, last year they tightened on VAT evasion by making each and every cash register linked electronically to a central system. This will facilitate remote monitoring of daily transactions and with careful analysis throw out the tax evaders.

In Malta, tax evasion on VAT (including hotels and restaurants) is high so if better supervision is introduced the drop in revenue following a rate cut can be partially recouped by better compliance. The following schedule shows how Malta’s COVID rate of 18% on food services is the highest in Europe.

The Chamber of SMEs has been very active, pleading with the government to introduce a recovery plan. There has been a number of suggestions such as subsidised rents but a one-time offer of €2,500 was considered too late and too little. Another suggestion was a revision of income tax brackets so small traders reporting income not exceeding €100,000 in profits are taxed up to 20% (the current rate is 35%). This was rejected.

The conversion of the existing Microinvest tax credits into cash grants to inject liquidity into businesses was a step in the right direction. This long introduction needs to be read in the light of Malta running an economy, which prior to the onset of the pandemic, was the envy of all EU states.

The IMF’s latest report on Malta was mildly optimistic saying that this year the economy will shrink by 2.8% before rebounding into a strong 7% growth next year. Unemployment is also expected to rise to 5% this year, the IMF said, before falling slightly to 4.4% in 2021. In reality, the actual number of jobless is closer to 20,000 and will probably increase after September, when the job supplement scheme is stopped. Upon reflection, we seem to have forgotten the golden pre-COVID days when living was easy and workers were hard to find. Reminiscent of such days, one can attribute the bonanza to a multi-million euro property market that flourished under Joseph Muscat’s baton.

The GDP growth doubled in seven years as the island had never seen such grandiose building projects and full employment (major building sites were recruiting Turkish workers). No feathers were ruffled at Miles End, when public land worth millions, was granted to selected hoteliers at fire-sale prices to encourage the promotion of upmarket tourism. Such affluence came with wanton greed for the erection of soulless concrete structures that sent the average rents sky-high.

During the so-styled L-Aqwa Zmien, money was no problem and the economy flourished resulting in an acute shortage of workers which was partly solved by engaging third-country migrants. In fact, thanks to Muscat’s populist administration, the economy turned the corner unleashing a feel-good factor that saw the nation throwing caution to the wind. Vices were camouflaged as virtues and state propaganda hailed the economic breakthroughs of VGH’s billion-dollar hospital deal, the Zonqor Point plan to host an American University, the India mega ITC project signed with Enemalta of €85m, a wind farm in Montenegro and the wonderful conversion of electricity generation to LNG. This was achieved by partnering with Socar – the opaque financial arm of the Azeri. Accolades were showered on the Muscat administration which turned a chronic deficit budget into a surplus.

Party apologists and other cronies, with snouts deep in the trough, previously told us to celebrate our fortune while migrants clean our streets and foreigners serve us in hotels and restaurants. An artificial sense of profligate living made us believe the party will never stop, but unfortunately, it did with the detection last December of a lethal virus in Hubei, China. So, one may ask what is the fly in the ointment of the proverbial isle of milk and honey? Do we deserve such misfortune?

Perhaps history repeats itself and human nature tends to score its own auto goals. The Bible story of the seven years of bounty to be followed by another seven years of famine rings familiar. Notice, how during the three months of lockdown, all schools, university, hotels, restaurants, gyms, shops, cinemas, bars, and places of worship were shut as if the Martians had landed and scared everyone to stay indoors. International business, so crucial to an open economy mainly based on services, is temporary on the rocks.

In conclusion, apart from internal problems mentioned above, one is conscious of the Damocles sword over our heads as the constituted bodies and banks fear that a negative conclusion of the Moneyval inspection will rank the island into a grey list.

 

Author: George Mangion
Published on Malta Independent 15 July 2020
Get in touch: info@pkfmalta.com

Author: George Mangion
Published on Malta BusinessToday 18 June 2020

The spectre of rising rents and licenses makes one doubt if the landlord is earning more than the catering operator who risks so much time and energy to meet all the health and safety requirements.

Author: Lauma Lubane – Economist Intern

Blockchain is a fast-growing technology that is believed to change the everyday life of many industries starting from cryptocurrencies and gaming to banking systems and even curbing shadow economies. Although the concept of blockchain was first used in 1991 by Stuart Haber and W. Scott Stornetta, it was conceptualized only 17 years later by Satoshi Nakamoto, the developer of bitcoin.

The use of blockchain started to grow rapidly after 2016 expanding in new industries like gaming and banking. Blockchain is described as a distributed ledger transaction or more simply a transparent, secure, and incontestable log of transactions that can be accessed by downloading the ledger. Although blockchain technologies are mainly linked to cryptocurrencies (especially bitcoin), they can be widely used in other industries as well.

Today, in 2020, Baltics are one of the leading countries in the development of blockchain. Although Estonia and Lithuania outstand remarkably from the rest of the countries in the Eastern European region, Latvia does not fall far behind its neighbors and has invested an immense amount of resources to develop blockchain technology. And it seems that the hard work has finally been starting to pay off.

In 2017 all three Baltic countries signed a Memorandum of Understanding to support blockchain initiatives. As a part of the memorandum, in the same year, Latvia’s parliament passed a one of a kind startup law with a special flat tax regime for startups. Another government’s initiative is a startup visa to encourage the creation of startups that in turn would trigger blockchain and crypto-based projects. The Financial and Capital Market Commission (FKTK) helps new investors and businessmen by consulting them on the needed licenses in the blockchain industry.

It seems that the attractive tax regulation and support from the government has been successful because in the first five months of 2018 Latvian startups had raised over 28 million euros in organizing ICOs (initial coin offering) which was a huge improvement when compared to 37 million euros raised throughout all of 2017. The biggest contributors were a digital bank “Forty Seven Bank” (10.84M EUR), a global bitcoin exchange platform “Globitex” (9.7M EUR), and a platform allowing to invest in scientists’ intellectual property rights “Aeternum” (3.05M EUR).

Another Latvian based company using blockchain technology is Latvia’s national airline company “airBaltic”. In July 2014 the company announced that it would accept bitcoin payments for flight bookings. “airBaltic” was the first airline in the world to take such a step. Although in the beginning, the initiative did not get much interest, later the company’s representatives revealed that the number of payments in the cryptocurrency has increased.

Latvia is also known in the blockchain industry by hosting the largest blockchain event in the Baltics in November 2017– the “Baltic HoneyBadger” Bitcoin Conference. The conference was one of the most important events on blockchain in the industry as it hosted numerous well known and respected speakers as Elizabeth Stark, the leader of the “Lightning Network” initiative and Pavol Rusnak, the creator of “Trezor”. The conference was well received and earned a great deal of popularity across the industry. The event was continued by another “Baltic HoneyBadger” conference two years later in 2019, again in Riga.

The blockchain industry has evolved in Latvia not only in the private sector but in the public sector as well. At the beginning of 2019 Economic Ministry of Latvia introduced two pilot projects to boost the efficiency of the services offered by the state.

The first one would ease the process of acquiring the status of a limited liability company (SIA) in Enterprise Register (UR). Currently, the Commercial Law stipulates that the board of Ltd is obliged to keep the register of participants with each owner or other changes in relation to the owners, as well as the board must submit the current version of the register of participants to the ER within three days of the change. The use of blockchain technology would reduce the information flow time between the entrepreneur and the ER and ease the process of registering changes for both sides.

The second pilot project involves the implementation of the cash register reform that would strengthen the supervisory capacity of the State Revenue Service (VID) and provide a proportionate financial and administrative burden for businesses to ensure compliance with the requirements set for them, thus reducing shadow economy. One possible solution would be to create a system or use blockchain to transfer trade data to the SRS online. A special 48-hour tax blockchain hackathon was set up to find a technical solution in April 2019. Just in two days, a winner team called “Z Book” created a solution by using QR code as a signature-based on blockchain technology.

Although Latvia cannot be considered as one of the leading countries in blockchain technology, it has achieved immense progress in the last three years by creating an attractive law system and fertile ground for startups based on blockchain. Moreover, Latvia’s government has also shown its 21st-century side by initiating the use of blockchain in the public sector as well. And the fruits of such actions can already be enjoyed: more and more startups are created every year and blockchain technology is becoming more known and used in Latvia. Hopefully, this trend will go up and create more and more success stories in the coming years.

Author: Lauma Lubane – Economist Intern

Author: Lauma Lubane – Economist Intern

Cannabis and marijuana made from it are one of the most famous and widely used intoxicating substances. Although it is common to link the use of cannabis and marijuana to intoxication for entertainment purposes, medical cannabis is widely administered in medicine to relieve pain and alleviate symptoms of serious illnesses like cancer. However, Latvia’s legislation does not authorize the use, cultivation, or distribution of cannabis punishing the offenders with a several hundred euro fine.

Despite these restrictions, appeals of cannabis decriminalization or legalization appear from time to time in local media, creating a great fuss among experts and society. These appeals are in line with practices existing in other European countries e.g. Georgia and Luxembourg and their actions. The latest commotion was observed in 2019 when Latvia’s neighbor country Lithuania decided to allow the use of medicine containing medical cannabis for treatment purposes. In response to the decisions taken by Lithuania, some Latvian activists prepared a petition for decriminalization and legalization of medical cannabis.

The former received around 500 signatures, while the latter gathered twice that number of signatures. In the past 10 years, several similar campaigns were initiated to advocate the use of cannabis, the biggest of them being a petition in March 2015 for the decriminalization of cannabis which was signed by more than 10 000 members of society and submitted to the Parliament. Despite the effort, the proposal was rejected in September using the old and worn-out argument of drug damage. To smooth things out, some officials appealed (and still do) that it is necessary to continue discussions about this matter, but the initiative should come from the doctors and experts.

However, it seems that there is a certain disagreement between the ‘experts’ themselves. While oncologists and pain doctors see benefits of allowing administration of cannabis in the treatment of patients, other doctors are more cautious and scrutinize the decriminalization or legalization of cannabis claiming that after all cannabis and marijuana are and will remain a narcotic substance. A small group of experts point the fingers to society and argue that society is not ready for such a dubious and controversial step.

It may as well be true because the society is quite divided (although not that much as doctors) in regard to the use of cannabis in medicine. 2018 survey carried out by the research center SKDS revealed the negative sentiment of the society on the subject. Around 78% of respondents think that cannabis should not be legalized, while only 15% supported the idea. Although the proportion of those advocating the use of cannabis has grown in the past 10 years, fluctuating from 7% to 15%, this group is still relatively small and weak to make a bigger change.

The society’s negative attitude towards cannabis might be a result of Soviet heritage. The USSR prohibited the use of cannabis in 1974. After the collapse of the USSR, less than 2% of the population used cannabis, though in a short time the use of cannabis and marijuana skyrocketed to the levels of Western Europe, although these substances were acquired illegally. This might be the reason why Latvians almost 30 years later still look at the use of medical cannabis with suspicion and doubt.

Even though the use of cannabis and marijuana is illegal in Latvia, it is the most widely used narcotic drug. EMCDDA data suggests that in 2017, around 10% of adults in age from 15 to 34 used cannabis while cannabis resin and herbal cannabis were top 2 seized substances. In the same year state police seized 50 marijuana farms while in 2016 this number reached 49 farms.

Although the illegal acquisition of cannabis and marijuana is mostly for entertainment purposes, some use it as a medical treatment and face legal consequences. Therefore, legalizing the use of cannabis for medical purposes might take off some patient’s pressure and decrease the acquisition of illegal cannabis. On the other hand, officials fear that such a decision might alleviate getting cannabis and marijuana for the use of non-medical purposes.

Despite all the drawbacks and critiques, the cultivation of cannabis could become a fast-growing, million-euro industry in Latvia’s economy. Although it is not legal to grow cannabis, several local farmers and food companies have considered the benefits of such business. Food producing company “Getliņi Eco” assumes that with the right investments, the cultivation of cannabis would be more profitable than the cultivation of tomatoes and cucumbers which are the company’s current main two products.

Exporting cannabis would bring millions of euro back to the country with added value and would also improve research and development on medical cannabis in local universities, institutes, and companies producing medicinal products.

In spite of persisting commotions and the potential of it becoming a million-euro worth industry, the use of medical cannabis is still quite controversial in Latvia and it seems that it will not change any way soon. However, everyone can agree on one thing: this is a discussion worth having.

Author: Lauma Lubane – Economist Intern

Author: George Mangion
Published on Malta BusinessToday 28th May 2020

Taking a break from the ravages of the economic devastation by the Corona pandemic that is shaking the global economies, one may at least thank heavens for the blessing that humanity will reap from the benign qualities of AI.

How can this help humanity fight the scourges of the latest pandemic? The answer is that its ability to analyse large volumes of scientific data involved in the research by medical staff in their quest to combat the COVID-19 strain is vastly improved by using AI facilities. This resource can be of great value, especially in biotech, molecular experiments, and its accessory components of ubiquitous data, high-speed connections, and autonomous robots.

Undoubtedly, AI is fast becoming a major technological tool for prescriptive analytics, the step beyond predictive analytics that helps us determine how to implement and/or optimise optimal decisions.  In business applications, it can assess future risks, quantify probabilities and in so doing, give us insights how to improve market penetration, customer satisfaction, security analysis, trade execution, fraud detection, and prevention, while proving indispensable in land and air traffic control, national security and medical health.

This is not to mention a host of healthcare applications such as patient-specific treatments for infectious diseases and illnesses.  To mention a few examples of the rapid progress made by research and development co-funded by multi-national firms, one may start by mentioning Google.

The giant search engine firm is a pioneer in the field of artificial intelligence, developing self-driving automobiles, smartphone assistants, and other examples of machine learning. Equally important was the prediction five years ago by the late Prof Hawking who said the primitive forms of artificial intelligence developed so far have already proved very useful, but he fears the consequences of creating something that can match or surpass humans.

Large supercomputers are forging paths into natural language learning, realtime surgical procedures, climate change, molecular dynamics, cures for disease, and astrophysical simulation.  Take the example of Microsoft.  It has constructed a supercomputer designed for machine learning applications as part of its Azure cloud infrastructure service.  It should be one of the most powerful computers on the planet and it goes without saying that supercomputing may slowly migrate entirely to the cloud.

The supercomputer was developed for OpenAI, the organization working to build “safe artificial general intelligence” assuming such a thing is possible. The new, OpenAI-co-designed machine is massive.  It contains over 285,000 processor cores, 10,000 graphics cards, and 400 gigabits per second of connectivity for each graphics card server.

It was designed to train single massive AI models, which are models that learn from ingesting billions of pages of text from self-published books, instruction manuals, history lessons, human resources guidelines, and other publicly available sources.

The infrastructure hosted by the Microsoft-OpenAI supercomputer places it within the top five super computers in the world.  However, even more, remarkable is the fact that this super computer is optimized for AI workloads.  When it comes to the use of artificial intelligence in powering complex robotics, one cannot ignore the worst fears of prominent technologists and scientists like Elon Musk, the late Stephen Hawking, and Bill Gates.  Solemnly, they have all voiced alarm over the possible emergence of self-aware machines which unless harnessed, may in the future, be out to do harm to the human race.

A cohort of venture capitalists are funding this expensive research in the private sector and they are constantly poised to look out for talented persons in their ongoing recruiting outreach. Masayoshi Son is a Japanese investor who created Softbank (now with version 2) which he wants to mimic a “virtual Silicon Valley”, meaning a platform on which unicorns (start-ups that turned to become a billion-dollar marvel) can offer each other contacts and advice, buy goods and services from each other, and even join forces.

Son told CNBC that people should brace themselves for the proliferation of artificial intelligence as it will change the way we live within three decades. Son, who founded SoftBank in the 1980s, has grand visions of what technological advancements the future holds.

SoftBank’s subsidiaries are pushing the frontiers of technology in areas such as the “Internet of Things”, artificial intelligence and deep learning.  It hatched the unique “Vision Fund“ with an initial $100 billion war chest looking to invest in start-ups with operational experience, and technical background.  For this purpose, in the US, the Vision Fund is aggressively competing with traditional technology investors in Silicon Valley in a no-holds-barred fight for talent.

Son believes he has a unique ability to predict future technology trends, and gallantly states he is ready for the gamble.  SoftBank is synonymous with its charismatic founder that is reshaping global tech with its colossal treasure box.  It is shaking up the cosy world of Silicon Valley venture capital.

Enter the start-up Behavox, a US data operating platform that enables companies to aggregate, analyse, and act on their entire organization’s data, which was funded $100m by SoftBank Vision Fund 2.  This start-up company leverages machine learning and advanced analytics in a quest to provide a Data Operating Platform that enables organizations to aggregate, analyse and act on their internal data enable organizations to mitigate compliance, cyber and conduct risk while identifying revenue opportunities in large volumes of communications data.

In passing, one may feel that the disruptive path of this new technology constantly needs more champions armed with an aggressive investment appetite to nurture innovative ventures. Readers appreciate this disruptive technology has a benign purpose and is helping in many ways such as: to link various civilizations, improve crop yields, scan persons for the trace of infection in airports, schools, etc, accelerate COVID-19 vaccine research.

Artificial intelligence in machines is designed to carry medical assessments during epidemics when over-worked doctors are busy tending the sick. Imagine how in modern times, there are robots that are efficient and devoid of emotions as they quietly supervise hundreds of complex factory operations possibly during the temporary absence of workers cordoned off under an extended quarantine mandated during COVID-19 pandemic.

Again, one lauds the collective drive of Unicorns employing top scientists and researchers in their noble quest to discover an effective vaccine fit to eradicate the COVID-19 curse.

 

Author: George Mangion
Published on Malta BusinessToday 28th May 2020
Get in touch: info@pkfmalta.com

Author: George Mangion
Published on Malta Independent 28th April 2020

Governments are understandably desperate for anything that would forestall the deaths, closures, and quarantines resulting from COVID-19. Hope for a speedy resolution for discovering and manufacturing a vaccine for millions of users were quashed when experts were warned that a vaccine could be more than a year away. The waiting time is usually attributed to extensive clinical trials needed to ensure it is safe on human test subjects before distributing it to the wider public. Hot on the heels of such a topic comes World Health Organisation Chief Tedros Adhanom Ghebreyesus. Last month he cautioned that the struggle is far from over. Quoting his words “make no mistake: we have a long way to go”.

In Malta, the number of infected persons seems to go down to single figures on a daily basis but the health authorities warn us not to relax and keep maintaining social distancing. Elderly people over 65 years and other vulnerable persons are strongly advised to stay at home. It is now almost seven weeks that a partial lockdown has paralysed the economy as all hotels, bars, gyms, shops, schools, university, the international airport, and the central court are closed. One speculates that the apex of jobless totals will be reached by October this year unless some relaxation of the lockdown is ordered by the health authorities.

The bleak situation hits aggressively a number of sectors (not on Annex A), which are not covered by an €800 monthly grant by Malta Enterprise. In fact, all professionals like accountants, auditors, consultants, lawyers, notaries, engineers, fund advisers, and estate agents are branded as persons with deep pockets and consequently need no subsidy. One hopes a reality check hits the political team in Castille. The truth is that soon there will be multiple redundancies if the partial lockdown is not lifted by the end of next month.

Still, it is not all doom and gloom since Malta succeeded to persuade the Commission to grant €5.3m to help kickstart local research into a vaccine against COVID-19. How effective this sum is, is somewhat doubtful, since Malta is one of the countries with the lowest amount invested in innovation and applied research. Ideally, a sum not less than €200m annually is the extra amount urgently needed to reach the standard rate of 2% of GDP as recommended by the EU.

The more good news follows announcements that as infections in Europe gradually decline, countries are slowly lifting restrictions. Principally we notice how Germany has permitted small retail spaces to open while Poland has made parks and forests accessible to the public again. Lucky for children in Norway, they can now return to kindergarten, while it is encouraging to hear that open markets in the Czech Republic will be permitted to trade.

The race for a vaccine has been triggered and the president of the European Commission, Ursula von der Leyen, suggested that regulatory approval for an eventual vaccine might be expedited. The question follows that as the world is gripped in this pandemic and close to two million persons are infected, many ask: what is hindering laboratories in their quest to launch a successful vaccine? Let us talk a bit about what it takes to produce an effective vaccine that can be produced in sufficient numbers to be distributed globally. Normally, a vaccine is developed in the lab before being tested on animals. If it proves safe and generates a promising immune response in this pre-clinical phase, it enters human or clinical trials. These are divided into three phases, each of which takes longer and involves more people than the previous one. Phase 1 establishes the vaccine’s safety in a small group of healthy individuals, with the goal of ruling out debilitating side effects. Phases 2 and 3 test efficacy, and in an outbreak like the present one, they are conducted in places where the disease is prevalent. The mystery thickens when various medical experts caution us to be patient since there is no scope in rushing to produce a defective cure.

Governments, who fund such expensive research ask… Can people who have recovered from the disease catch it again? Still, there have been encouraging signs coming from different countries. The beginning of March saw a major news item about Israel’s major technology breakthrough. Enter Teva, one of the mega medical and drug companies in Israel. One of its recent discoveries is the hydroxychloroquine sulphate tablet drug. For readers with a medical background, one can add that according to Professor Didier Raoult, director of France’s Institut Hospitalo-Universitaire, the hydroxychloroquine molecule could indeed have an effect on the elimination of the Coronavirus. The tablet was originally approved by the US Food and Drug Administration (FDA) for the treatment of malaria, lupus erythematosus, and rheumatoid arthritis but not in the use for the treatment of COVID-19. Only this month, we received more good news that the FDA approved the use of chloroquine phosphate and hydroxychloroquine for emergency treatment of COVID-19 patients. The FDA is recommending only controlled clinical trials to test the drugs’ effectiveness in treating COVID-19 but is allowing doctors to give to patients in cases in which they cannot participate in such a trial.

Equally promising are other giant research firms that joined in the race. A typical contender is the British pharma giant GlaxoSmithKline currently in collaboration with Vir Biotechnology. It hopes this antibody testing will be completed within the next three to five months. Another strong contender is Modena Therapeutics, a company based in Cambridge, Boston, which has successfully developed a potential shortcut to a laborious process that could shorten the time it takes to develop vaccines against the current Coronavirus. Last, but not least is Inovio, a company funded by Bill Gates. Inovio claims it has been well ahead of other pharmaceutical companies with regard to getting a Coronavirus vaccine into worldwide circulation.

In conclusion, as many persons are cooped up at home, trying to maintain their sanity and work offline, one appreciates that our health authorities are doing a sterling job by controlling the spread of the infection. On the other hand, as warm weather is approaching there is a natural drive for islanders to go out and enjoy a long-awaited moment of liberation. Pray that the butterfly of deliverance will soon grace our balconies and windows.

 

Author: George Mangion
Published on Malta Independent 28th April 2020
Get in touch: info@pkfmalta.com