Interview | Wednesday, 02 December 2009

A difficult year for the EFL industry

Charlot Zahra spoke to FELTOM President Andrew Mangion about what has been a difficult year for the English as a Foreign Language (EFL) industry in Malta with a drop of 20 per cent from 2008 figures, the problems facing the EFL industry locally and its efforts to tap new markets once the recession is over.

What is the state of the TEFL industry in Malta?
Well, if we’re looking at 2009, it’s definitely been a difficult year. We’ve seen drops in student arrivals right across all markets – some markets more markedly than others. Hence I would define 2009 as having been a very difficult year for Malta in the EFL market.

Which were those markets that had particular problems this year?
The drops have really come across the board. Some key markets that have seen the biggest reductions include places like South Korea, Russia, which saw a strong reduction this year, France, Germany, Turkey and Japan.
All of these countries are top ten countries for Malta in the EFL market. Obviously, if your strongest markets have taken hits, it will impact your overall numbers.
Having said that, there have been reductions across the board. We obviously have still not seen the NSO statistics for 2009, because those will come out in around Quarter 2 of 2010, but we’re quite sure that we’ll see strong drops across the board.

Can you quantify the drops?
I can’t quantify them – while FELTOM does collect quarterly statistics from the entire EFL industry, the statistics that we collect do not quantify numbers but they quantify percentages – percentage increasing percentage decreasing, and percentage staying the same.
We can’t quantify those figures yet, but we have a sense of what those figures are going to be.

And what are going to be those figures?
In terms of how far this could go, we feel that the EFL market could end up with minus 20 per cent at the end of this year, therefore this is going to be a significant drop in 2009.
The EFL Malta market hit its real peak in 2007, levelled off in 2008 and now has seen a sharp decline in 2009.

What are the main challenges facing the local TEFL industry at the moment?
The key challenges facing the EFL industry are all related to volume, or mostly related to volume. If we look at the reasoning behind the drops, one would see that one of the key reasons behind the drop has certainly been as a result of the global financial crisis.
Despite the fact that there’s been a global financial crisis, some markets out there have actually performed well.
I was in contact on Monday with my colleague in Australia, who was saying that year-to-date the Australian EFL market is up by nine per cent! Malta is going down by 20 per cent!
Another market that will be witnessing a very significant decrease this year will be Ireland. While the financial crisis has hit the EFL markets negatively, others are performing well. On the other hand, Malta has gone down!
What has affected both the Maltese market and the Irish EFL market is that Malta and Ireland are both in the euro.
Now the euro has become a very strong currency against currencies like the Pound Sterling and the US Dollar, which have both weakened against the euro, making Malta slightly less attractive for people, both those coming from the eurozone as well as those coming from outside.
Another area which has impacted Malta’s EFL market negatively in 2009 has been the entry of Malta into the Schengen area. Since Malta entered Schengen in 2008, we have certainly seen problems with visas from a number of countries. This has impacted the number of nationalities coming into the Island.
Moreover, there have also been some negative sensational international coverage about Malta, primarily in 2008, which has affected Malta badly in markets like France and Germany.
So some of the main challenges facing Malta at this moment is strengthening its product, strengthening its quality, focusing on quality through initiatives such as accreditation, on which FELTOM is now the only body issuing accreditation to schools on the island.
We now hope to extend that nationwide through the monitoring board, which is being further strengthened.
In a nutshell, our key challenges are raising our numbers again and watching throughout for our quality.

How much has the economic recession affected the local TEFL industry? Which were those markets and segments that have been affected most badly by the economic recession?
As I said earlier on, it’s hit us across the board! The key countries I have mentioned before were South Korea, Russia, Germany, France, Turkey and Japan. Those have been the key markets hit.

What effective action has FELTOM taken in order to address the problem areas as a result of the recession? Through specific marketing drives, through lower-priced packaging, or both? Could you kindly elaborate more in this respect?
First of all, for the first time ever, FELTOM organised a workshop and fair to organise and attract foreign agents to Malta to showcase Malta.
We opened this up not only to FELTOM schools but to all schools on the Islands. 27 schools attended the workshops, and a total of sixty agents visited Malta over a short span of time.
This was one of the first things that FELTOM did to attract prospective agents to Malta.
Secondly, FELTOM has worked very closely with the MTA in the past few months to help it to formulate a strategic plan on how to drive sales in 2010.
This is something that we have closely worked with the MTA on and we are now hoping and praying that the MTA will assign the budget that has been requested by its own EFL division so that we can really start getting Malta back on track again.
A number of FELTOM schools have also been applying for EU funds to try and target new areas where they can market into, and I know of a number of initiatives which have already been awarded funds and initiatives that have already taken place now…

Such as?
For instance, one school in particular has managed to obtain a significant amount of funds which was then used to put up billboards in the Berlin underground.
There are schools that have gone ahead with new website developments, while others are working on projects to enhance the environmental aspects within their schools. Therefore schools are being pro-active in this respect.

What further action has FELTOM taken to address the economic recession?
Furthermore, FELTOM has made appeals to the Government to assist it at a political level to open up the lucrative Saudi market for scholarship. We have made appeals to the very top of Government to try and help us in this respect, and you know, we have received positive replies.

What potential has this market got?
The Saudi market has got huge potential for Malta! Just to put you in the picture, some years ago, Saudi Arabia initiated a process of new scholarships called the King Abdullah Scholarship Programme (KASP).
They have been sending tens of thousands of Saudi-Arabian students abroad, primarily to the UK and the USA but now they are opening up in a big way to places like Canada and Australia, which has been a main recipient of Saudi scholarships.
Obviously these students are not just staying for two-three weeks that the average student that comes to Malta stays, for they stay an average of 40 to 150 weeks.
They then go to University in the country where they are studying English. Therefore they are very lucrative as they are fully paid by their Government.
If one had to tap into these markets, we could be bringing in millions of euros in revenue to the Islands.
Should EFL schools cut their rates in order to be competitive or not? Why?
We have seen a strong element of panic discounting, certainly during the past six to nine months.
Something that I have been advocating as FELTOM President is to dissuade schools from discounting.
I strongly believe that this damages the local EFL market, it damages schools’ profitability and puts them in potentially dangerous cash flow situations.
I also appeal to schools not to discount because it does not really attract new business to the Island.
Certainly, when this happens, it has a very long-term impact on schools as they try to recover and come back to their previous price levels, which is very difficult.
Fourthly, and probably most importantly, today, when you look at where students come from, some 80 to 90 per cent of students coming to Malta are coming through agents, and actually agents don’t like it when prices are chopped because it affects their commission fee.
It might be a knee-jerk reaction to drop prices, but we strongly feel that this damages the market.

When do you expect the local TEFL industry to start growing again after the economic recession has subsided, or has it already started growing again? In which markets?
The forecasts for 2010 are that it will be another weak year for the EFL industry as this year, although there might be a slight recovery in some markets.

How many EFL students have been brought to Malta this year and what is the total contribution of the EFL sector to this year’s tourism figures?
Is early to speak about this year’s EFL figures, but assuming a drop of 20 per cent in 2009 we can expect student numbers in 2009 to come in at approximately 173,000 student weeks or 1.21 million nights. In 2008 the EFL industry contributed approximately 13 per cent of all bed-nights spent in Malta by tourists.

Which are those sectors and countries that are forecast to be performing better in 2010 when compared to 2009, and which are those sectors that are performing worse than 2009? Why?
As I have already said, 2010 is going to be another bad year for the Maltese EFL industry, and we expect the economic recession to persist till at least the second quarter of 2010.

One of the major issues facing the local TEFL industry is the problem of excessive delays or non-issue of temporary visas by the Maltese Foreign Ministry for those countries which are not part of the Schengen area. How serious is this problem affecting the local EFL market?
When Malta joined the Schengen area in 2008 this put pressure on Visa issuing and effected a number of key student Visa countries such as Turkey, Ukraine, Uzbekistan and Columbia
This led to significant problems with these markets, as visas were issued very late or not at all.

Have you made any representations with the Maltese Foreign Affairs Ministry about this problem? To what extent have you been successful in this respect?
A number of representations have been made with the Maltese Foreign Affairs Ministry and Foreign Affairs Minister Tonio Borg, and with the Tourism Parliamentary Secretary Mario de Marco.
A FELTOM delegation also discussed this matter directly with Prime Minister Lawrence Gonzi. We had a sympathetic message and there has been some improvements in certain areas.
A number of consulate offices have been set up in some of these countries to speed up the issuing of visas, but some of the problems remain.

The fact that student workers cannot work in Malta at the moment, unlike in other competing EFL destinations, how much is it hindering the growth of local EFL market beyond the 16-24 market and short-term students?
When Malta joined the Schenghen area in 2008, non-Schengen citizens are first given a three-month visa. When this expires, then a six-month temporary residence permit is issued, but is only valid for Malta.
Other countries, such as the UK and Australia, allow students to work up to a maximum of 20 hours.

Have there been any discussions with the Maltese Foreign Affairs Ministry on this request? How much receptive has the MFA been to your request?
Realistically, when do you see Malta introducing the student visa?
The idea has been floated around for the past two years. However it might be difficult for the Government to introduce it at the moment in view of the economic recession that has hit Malta with possible job losses.

If Malta had to introduce working student visas to bona-fide students, what would be the impact on the local EFL market?
If these students are allowed to work for 15 to 20 hours, they would be able to help finances their studies and generate a lot of income in the economy.

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02 December 2009


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