FRANCISCO ALBERTÍ

Spain 2021 | ECONOMY | VIP INTERVIEW

TBY talks to Francisco Albertí, Partner of KPMG Baleares, about Mallorca's economy, foreign investment, and European funding.

How does KPMG support the main economic sectors of the island of Mallorca?

This is the 50-year anniversary of KPMG's presence in Spain, and KPMG has been in the Balearic Islands for the last 30 years. Our main purpose has been to support the economic development of the islands and, in doing so, we have evolved as a company. Most of the services we have offered traditionally have been in the auditing area, which is one of the main businesses of the Big Four. However, for the past few years we have sought to give more relevance to other divisions through other professional services such as strategic consultancy, transformation, and innovation. Additionally, KPMG Baleares has been providing tax and legal services over the last years. It has all been part of a strategy to boost the presence of KMPG on the islands with more local team and specialized professionals in the main economic sectors. One of these sectors is tourism, which accounts for 35% of the GDP of the Balearic Islands, and indirectly GDP can represent up to 70% of the economy. However, there are other important sectors such as the energy industry. There are some leading companies in the energy sector that are present in Mallorca, as well as manufacturing companies that we are very happy to have among our clients.

In your opinion, which sectors are most attractive for foreign investment on the island of Mallorca?

At a global level, the pandemic has become a turning point. It has had the positive effect of showing that society is very flexible and resilient to change. This is very interesting for a touristic destination such as the Balearics in the sense of the new habits of people, who have realized that they can work from their homes for long-term periods. This new world is opening the opportunity for tourism destinations to offer the possibility of showing a huge demand of foreigners who would be interested in spending long periods in these places. People can spend two months in a hotel or in an apartment working. They spend more time in a tourist destination, which opens an opportunity for build-to-rent buildings. This, at the same time, brings an opportunity to the Balearics to revamp old hotels into apartment buildings to rent for long or short stays for people who want to spend their time on the island. We have seen a lot of interest in Mallorca from US citizens, as well as Asians and people from the Middle East. Other sectors are drawing a lot of attention, as it is the case of the audiovisual industry. A British TV series being aired on international channels was shot in Mallorca. Audiovisual productions have a great spillover effect for the economy, bringing more jobs and helping diversify away from tourism. The content production industry is attractive for foreign investors to create content in Mallorca. Some world-famous actors such as Michael Douglas and Catherine Zeta-Jones are frequent visitors of the island, for example. These celebrities are great brand ambassadors for Mallorca.

European funds will be used to finance investments in new projects. What role can a consultancy firm such as KPMG play in this?

In my opinion, the EU recovery funds represent a huge opportunity to invest in Mallorca. Spain is going to receive EUR140 billion from the European Union, and half of that amount is in direct investment, while the other half is provided via loans. The funds will be focused on strategic areas, such as sustainable mobility. We see opportunities for investment in infrastructures for mobility in the Balearic Islands. Within sustainability, there are two important factors to be considered: “circular economy" and energy efficiency. Being an island, the circular economy is paramount for us. This is a very touristic destination. Before the pandemic we were receiving 16 million tourists per year. This opens the door for investments in recycling, for instance. Currently, there is no recycling operations for glass and plastics in Mallorca. In any investment being made, we need to bear in mind that Mallorca is very close by air to the main European cities. It takes two hours of flight to reach out to many important European cities, such as Frankfurt or London. This connectivity is a strategic advantage for Balearics. The Balearic Islands are probably the best connected islands in the Mediterranean. The connectivity with European cities is great, but I see that in the near future we are going to see direct flights to the US or to the Middle East. Regarding the role of KPMG, we are positioned as a strategic partner to help investors navigate their investment journey in the Balearic Islands. First, because of our capacity of analysis and market knowledge to provide consultancy services. KPMG Balearics assist local governments in the process to access the European funds. In this area, we are supporting the government of the Balearic Islands, but also at a national level KPMG is working with public administrations of Madrid, Andalucía, Catalonia, and Valencia. We are in constant touch with the ministries involved and already supporting organizations to access EU funds. The EU has already approved the plan presented by Spain. As for companies, we can support them in identifying the funds that they can apply for and make them eligible for them. Our goal is to ensure that their proposals are adjusted to the grants that are going to be awarded through 2026. We are already doing that with some of our clients in the tourism sector, for example. KPMG has a wide experience in many relevant areas, including sustainability, innovation, education, and digitalization, which are strategic pillars of the EU funds.