Category: Archive – 2010

GRTU has written to VGT following complaints we received by Burdnara cargo haulers, members of GRTU, who reported excessive delays at the VGT payment office. These delays, particularly now in summer in addition to other problems, is causing terrible losses of time for these operators. We explained that VGT also cannot afford to have this congestion. We asked for immediate action to tackle the problem.

 

 

 

 

 

 

 

 

 

 

In their reply, VGT explained that are currently in the process of implementing a new computerized documentation system and that unfortunately, as it always happens in such cases, teething problems arise and inevitably delays are experienced. They assured the GRTU that VGT is doing its utmost to overcome these unnecessary delays and to reinstate a smooth flow of processing of documentation for all esteemed clients in the least possible time. They also apologized for any inconvenience this has caused to our members and assured us further that a remedial measure is being implemented.

Our town centres are not only places where people just go for shopping or entertain themselves or reside. They are places which have the opportunity of offering an experience. Town centres have the potential of becoming vibrant areas but this needs management of existing activities, co-ordination between the various stakeholders both private and public as well as the injection of new and innovative ideas. The concept of Town Centre Management has been extensively developed particularly in the UK and the USA and is now taking a prominent place in the management of town centres on mainland Europe – Italy, France and Germany.

The Town Centre Management project in Malta was launched last October, through the collaboration between the Parliamentary Secretary for Tourism, the Environment and Culture and the Parliamentary Secretary for Consumers, Fair Competition, Local Councils and Public Dialogue, under the guidance of the Association of Town Centre Management. The three pilot localities chosen for the project are Valletta, Paceville and Marsalforn (Gozo).

The third and final workshop was held during the first week of August. During the three workshops the main stakeholders for the three localities were provided with the appropriate training for Town Centre Management. The stakeholders for the three localities included representatives of the three local councils, the GRTU, MHRA, MTA, FELTOM, GTA, representatives of the business community in the areas as well as representatives of the resident community.

The first step in the process was the Health Check. This provided information on the existing state of the locality to understand, through a questionnaire filled by stakeholders for each locality, how the locality is performing with regard to various aspects – parking, level of entertainment, cleanliness, safety, public facilities and other aspects. It is important that health checks are carried out regularly to assess the performance of the locality and identify gaps where action needs to be taken.

Another important stage in this process has been the formulation of an Action Plan for each locality. This Action Plan outlines the objectives of the Town Centre Management for the first year (2010 – 2011) in achieving the vision for the locality. To achieve each objective a number of actions have been identified. The Action Plans are currently being finalized and their implementation is targeted to commence this September.

The Town Centre Management team for each locality will also be formulating a strategy for the locality for the next five years and also aims to expand its stakeholder base bringing in other partners in the process with the aim of establishing a formal structure which would take forward the Action Plan in the future and besides being the catalyst for specific initiatives would also be co-ordinating initiatives with other public and private entities.

The Action Plans aim to address various issues relevant to each locality e.g. increasing evening activity in Valletta, transport and safety in Paceville, the seasonality in Marsalforn.

Town Centre Management is a new concept for our islands and seeks to instill a new mentality and culture towards the management of our localities. This can, however, only be achieved through the collaboration and close working relationship amongst the various stakeholders seeking to build on their common interests and objectives as well as resolving conflicts for the benefit of the locality and its users, the business community, the visitors and the residents.

"One thing that stuns foreigners visiting Malta is the success we, the smallest state in the EU, have achieved on the plastic bags issue. Foreigners do not believe what they see: we in Malta have practically abolished the use of plastic bags in retail. GRTU suffered a lot of flak from many who ought to know better for the courageous stand we took on this issue. We defended our people but we also sought to achieve what is good for the country. An environmental commitment is not just marching in the streets holding green banners. We must put action in process in spite of criticism.

That's what GRTU did. But once again the work we put in is being jeopardised by bureaucrats playing the nasty game of procrastination leading to stagnation. And of course, as usual we get the blame!" Says Vince Farrugia Director General GRTU on the plastic bags issue.

The plastic bags issue was started off when in the 2009 pre-Budget document Government said that it "intends to revise its policy on plastic bags. Various options are being assessed to reduce the need for plastic bags… Either, for the bag to be sold across the counter; or for Government to impose a ban on the use of plastic bags other than those that are made from either degradable or a biodegradable material".

Following talks with the GRTU the only amicable solution that could be found was for retailers to be paid for the stock they still had and deliver them for recycling at the appropriate facility. Then, following a claim for refund, the VAT department would analyse claim by claim and clear for refund by the Ministry for Resources and Rural Affairs. This claim mechanism started some 17 months ago and the first refunds were issued just before last Christmas, 8 months after placing the claim. From then onwards a very slow continuation of clearances of claims were issued but the issue has now stagnated.

GRTU has been trying to get through the responsible persons at the VAT department by emailing them and phoning them but still the issue is kept pending week after week. 88 claims are still pending and they are growing impatient of calling us and receiving the same answer over and over again, that we are awaiting a meeting or a clearance from the VAT department.

GRTU has now written to the Commissioner for VAT Mr. Joe Sammut and the Permanent Secretary Mr. Alfred Camilleri at the Ministry for Finance in the hope to unblock the issue at the earliest. GRTU will be taking further steps next week.

GRTU has this week held a press conference and issued the details of a survey conducted by the GRTU Research Unit randomly amongst the GRTU members on the state of their business between January and June 2010 as compared to the same period in 2009. A total of 250 members from different sectors participated. As reported by The Malta Independent:

 

A new question included this year in the survey showed that the majority of those interviewed (54.44 per cent) sell products directly to consumers, so they are well in touch with consumers' problems and difficulties. 40.8 per cent also employ between three and 10 employees, 15.20 per cent employ over 30 employees.

Comparing their turnover from January to June this year as compared with the same period last year, 24.80 per cent said it had remained the same while on the negative side, 20 per cent said it was up to 10 per cent less than last year, another 19.2 per cent said it was 20 per cent worse than last year and a further 14 per cent said it was over 20 per cent less than last year. In short, 53.20 per cent said their turnover was worse than last year.
On the other side, 14.40 per cent said this year was up to 10 per cent better than last year, a further 4.80 per cent said it was up to 20 per cent more better than last year and a further 2.80 per cent said it was more than 20 per cent better. In all, 22 per cent said this year has been better than last year.

More people said that profits were worse than last year (61.20 per cent) while fewer people from the optimists reported better profits (14.40 per cent).

The SMEs were prolific in the reasons they gave for experiencing lower profits:

The effects of the financial crisis;

High prices of utilities which have reduced consumer spending power;

Taxation which has also reduced consumer spending power;

Costs to run a business are always increasing;

There is far too much competition and too many businesses are seeking the same consumers;

There is strong competition from the Internet (this factor has greatly increased from a similar survey held a year ago);

There is new competition from foreign businesses setting up in Malta;

The government is not guaranteeing a level playing field for SMEs;

Clients are not paying on time, there are big cash flow problems;

The quality of tourists is on the low side – students do not have the financial capacities of tourists;

Valletta has lost many car parking spaces; and

There are too many construction works ongoing in Valletta.

On the other hand, the SMEs who registered growth identified the following as among the measures they have taken:

Cost cutting;

Increased range of services/products;

Invested more;

The economy seems to be recovering;

They advertised more; or

They changed the line of business.

When asked what they intend to do in the near future, only 6.80 per cent said they would close down. 44.4 per cent would remain the same while 11.20 per cent will cut down the size of the business.

Asked what they intend to do with their employees, 20.40 per cent said they intend to increase the number of employees while only 16.80 per cent said they intended to cut down the number of employees.

While only 22 per cent reported better business than last year, 33.20 per cent said they think the coming period will be a better one for business, as against a pessimistic 25.60 per cent.

While 58.40 per cent admitted they did not even try to raise finance for a new project, 23.60 per cent said they did and were successful, but 18 per cent said they tried but were not successful. Mostly, it would seem, tried through the banks.

As to the quality of service they get from the government, 68.40 per cent said it is of poor quality, 26.40 per cent said it was satisfactory, 4.80 per cent said it was good and only 0.40 per cent were found to say it is excellent.

As to ideas about what the government should do to help business, the respondents came up with the following ideas:

Cut bureaucracy;

Cut taxes on business;

Cut the cost of energy for business;

Help business by providing low interest loans such as the Micro-Credit Scheme rather than tax credit schemes;

Control unfair competition and provide a level playing field for business;

Increase efficiency and cut costs in government departments;

Remove taxes such as the eco contribution that gives illegal traders an unfair advantage;

Be more lenient when applying fines to businesses, at least in the current situation;

Find a solution to the parking problems in Valletta; and

Foster an environment where it is a pleasure to do business.

Following concern expressed by UHM on the high percentage of respondents who indicated Government services were Poor, GRTU would like to indicate in more detail what were the replies:

Too much bureaucracy

Some employees are helpful whereas others are just there to fill the position

Government departments should be more centralized-A one stop shop-Having to spend days going from one dept to another discourages new businessmen who do not know where it starts and where it finishes

Lack of communication between Government departments

Government starts charging interest from first day of dues while they take ages to pay

Larger enterprises are helped directly while the smaller ones have to find their way

Frozen or inactive schemes are hampering business

Zero efficiency. MEPA especially are taking too long to issue permits

GRTU has this week met Prof Thales Castro who has been shortlisted for the post of Honorary Consul of Malta in Brazil. Thales Cavalcanti Castro, who is 35 years old, holds a BA cum laude in International Studies and an MA in Public Affairs from Indiana University where he was an honours graduate and featured on the Dean's list.

 

 

 

 

 

 

 

 

 

 

He also holds a PhD in Political Science from the University of Pernambuco, in Recife, Brazil. He is a Professor at the Catholic University of  Pernambuco ( 11,000 students)  where he holds the positions of Coordinator of the economics degree programme and of Dean for International and Inter-institutional  Affairs. He is also involved in the University's Latin American Studies Institute, of which he was President for some time. He has lectured both locally and internationally and has  written three books and a number of articles on his major areas of expertise, namely  international relations theory, . international security, and Brazilian foreign policy.

Since 1990 Prof Castro has been active in business consultancy. Last year he set up his own consultancy company , by the name of Ultrade, which operates internationally in the areas of international trade and investment strategies.

Recife is the largest city in the north-eastern State of Pernambuco, with an urban centre  of around 3 million persons. It plays host to the largest number of consulates, both career and honorary, in that State. Some 60 kms away lies Suape, one of Brazil's largest ports which has been attracting significant investments in shipyards, oil refineries and petrochemical industries.

GRTU was pleased to notice he is a specialists in Trade Relations which is a strong point when working as a Consul from a Country outside the EU. Prof Castro sees Malta as a Geo-Political Focal Point. He mentioned that he visited the Free Port and noticed no South African lines were present and he said he would start work in this area in addition to establish direct a direct maritime connection.

 

GRTU Director General Vince Farrugia attended this week for the first time, the newly established Enterprise Consultative Council. GRTU supports this initiative and looks forward for a more coordinated action programme in favour of enterprise, resulting from the activities of this consultative Council. During this council meeting enterprise representatives were given information on Government's action programme on the Small Business Act (SBA), the setting up of the business support centre by Malta Enterprise and the work being done on the review of the trade licencing Act.

 

Vince Farrugia emphasised on the need to better assess the performance of Government vis-à-vis the small business act principles. GRTU participates in the UEAPME SBA Implementation Scoreboard – the level in percentage terms to which national institutions have already implemented the policy priorities of the SBA as compared to the previous years. The scoreboard measures among others the work of the commission and Parliament on what is called the think small first index. This index measures how far the legislation, administration, and  business support action is effective on the performance of small businesses. Vince Farrugia stated that he wishes the Ministry and the people responsible for Micro and Small business in Malta to work out similar indices. He continued saying that the SBA scoreboard is based on a set of questions for each of the 10 pillars of the SBA which follow to a large extend the priority areas within the SBA communication from the commission. With this set of questions,  we analyse from an SME point of view the degree to which the commitments in the SBA are realised and whether over an annual period new measures would have been implemented to improve further SME performance.

"Without this check list effect, it is very difficult for Government and for GRTU to measure precisely what happens, and Government should then not complain if too many conflicting comments appear in the media. GRTU strongly believes in this measured approach. The UEAPME measure produces also a Radar on implementation of SBA commitments. The Radar compares the situation in any one member state in comparison to the EU average. Today (June 2010) Malta is not even considered in this Radar as it is not part of the EU 18 average. Malta does not as yet feature as a Member State where the SBA has already been implemented" concluded Vince Farrugia.

So much has been said lately about the European Economic and Social Committee (EESC) by people who, though they ought to know better, fail however to give the public a true and correct dimension of what is the EESC. More especially what the Employers Group (Group I) exactly is. Group I President – Mr Hanri Malosse, is in the best position to explain what is the Employers Group at EESC.

 

"The members of the Employers Group (Group I) come from private and public industrial sectors, small businesses, chambers of commerce, the wholesale and retail trades, banking and insurance, transport and agriculture.

Group I keeps in regular contact with BUSINESSEUROPE (Union of Industrial and Employers' Confederations of Europe), CEEP (European Centre of Enterprises with Public Participation), EUROCHAMBRES (Association of European Chambers of Commerce and Industry), and           EUROCOMMERCE (Retail, Wholesale and International Trade Representation), as well as on an ad hoc basis with the numerous sectoral industry organisations at European level" – EESC Bridge Publication –  Mr Farrugia is in fact a Board member of EuroCommerce.

As from next September GRTU's Director General Vince Farrugia will be representing Maltese enterprise owners at EESC as member of Group I. Vince Farrugia will also continue with his duties as Director General at GRTU.

In addition to this we would also like to clarify that "Members are not paid for their work with the EESC (though their travel and accommodation costs are covered when they attend), and they normally carry on with their regular activities in their home country" – EESC Discover Publication.

GRTU Council members yesterday met the Hon Prime Minister Lawrence Gonzi and were given the opportunity to explain individually the concerns that affect the groups of enterprise owners they each represent among the 7,439 entrepreneurs registered with GRTU.

 

GRTU president Paul Abela thanked the Prime Minister for the many opportunities he gives GRTU to express its views and present its proposals and analysis directly to him, and the other members of the cabinet. The GRTU president said that GRTU never fails to grab all opportunities for consultation and GRTU leaders do their utmost to represent enterprise owners to the best of their abilities. GRTU President thanked the Prime Minister and the cabinet of Ministers for approving the nomination of GRTU Director General Vince Farrugia to represent Maltese enterprise owners at the European Economic and Social Committee (EESC). Paul Abela said that he has worked closely with Mr Farrugia over these last 8 yrs and he, like most enterprise owners in Malta, is more than convinced that Vince Farrugia is a superb candidate to represent us all on this important economic social and civil society forum.

Vince Farrugia appealed to the Prime Minister to ensure a better measurement of micro and small business performance within the economy of Malta. He said that the micro and small enterprise sector in Malta represents 99.2% of the total 34,127 firms registered in Malta, 32,671 being micro firms. GRTU is well established as the national organisation that represents micro and small enterprises who together account for 67,394 employees, representing 58.5% of total Maltese employment in enterprises. Micro and small firms are responsible for 47% of the value added of the total economy. Today at EU level, the performance of this sector is measured according to 10 criteria established by the European Small Business Act (SBA), namely: entrepreneurship, internationalisation, environment, skills and innovation, Single market, think small first, responsive administration, public procurement, state aid, and finance. The EU established the formula for the measurement of the impact of these 10 criteria on SME performance and it is time now that Malta follows the same criteria.

"One important area that GRTU would like to see the Government devote more action to resolve is the question of state aid going to SMEs and more particularly to micro and small firms. In Malta only 1% of state finds go to this sector. This figure is considerably below the EU average of 10%" emphasised Vince Farrugia.

Marcel Mizzi, one of the GRTU Vice presidents, gave a Power Point Presentation of the results of the GRTU Business Performance Survey – the state of Small businesses in Malta from January-June 10 as compared to January-June 09. GRTU will be publishing these results on Tuesday.

Click here for the Survey Results

The members of the GRTU Council than raised the issues most relevant to their areas of business.

As part of its work creating a safer and sounder financial system, preventing a future crisis and restoring consumer confidence, the European Commission has proposed changes to existing European rules to further improve protection for bank account holders and retail investors. Furthermore, the Commission has launched a public consultation on options to improve protection for insurance policy holders, including the possibility of setting up Insurance Guarantee Schemes in all Member States.

 

Protecting your savings

The recent financial crisis illustrated once more how banks are susceptible to the risk of "bank runs" – i.e. when bank account holders believe that their savings are not safe and try to withdraw them all at the same time. Since 1994, a Directive (94/19/EC) ensures that all Member States have in place a safety net for bank account holders. If a bank is closed down, national Deposit Guarantee Schemes are to reimburse account holders of the bank up to a certain coverage level.

When the financial crisis hit in 2008, some quick-fix amendments were made, notably to increase the coverage level to € 100 000 (in two steps) and to abandon the possibility to have co-insurance in place (i.e. that bank account holders are not fully repaid, but are to bear a certain percentage of their lost sum – even when the lost amount would be lower than the coverage limit). However, as other shortcomings were detected in existing schemes, the Commission now comes forward with a proposal to fully amend the 1994 Directive and ensure that all lessons are learned from the crisis.

The key elements of the proposal are as follows:

Better Coverage: the upgrade to € 100 000 by the end of this year means that 95% of all bank account holders in the EU will get all their savings back if their bank fails. Coverage now includes small, medium and large companies as well as all currencies. Excluded are all deposits of financial institutions and public authorities, structured investment products and debt certificates.

Faster payouts: bank account holders will be reimbursed within seven days. This will be a major improvement as today many account holders wait weeks, even months, before getting their money back. In order to facilitate such a short payout, managers of Deposit Guarantee Schemes will have to be informed early about problems at banks by supervisory authorities. Banks will have to specify in their books whether deposits are protected or not.

Less red tape: for example, if you live in Portugal and have your account at a bank in Sweden, the Portuguese scheme would repay you on its own initiative and act as your contact point. The Swedish scheme would then reimburse the Portuguese scheme. This would be a strong improvement over the current situation, where all correspondence has to be done via the scheme of the country where the bank's headquarters are located. The new approach will mean less bureaucracy and faster payouts.

Better information: bank account holders will be better informed on the coverage and functioning of their scheme by a new easy to understand standard template and on their account statements.

Long-term and responsible financing: concerns have been expressed that existing Deposit Guarantee Schemes are not well funded. The proposals will ensure that they are now more soundly financed following a four-step approach. First, solid ex-ante financing provides for a solid reserve. Second, if necessary, this can be supplemented by additional ex-post contributions. Third, if this is still insufficient, schemes can borrow a limited amount from other schemes ("mutual borrowing"). Fourth, as the last resort, other funding arrangements would have to be made as a contingency. Contributions will, as is currently the case, be borne by banks. However, they will be calculated in a fairer way since they will be adjusted to the risks posed by individual banks.

Not only will Europeans have better protection for their savings, but they can now also choose the best savings product in any EU country without worrying about differences in protection. Banks will benefit from the proposal since they could offer competitive products throughout the EU without being hampered by such differences. Moreover, taxpayers benefit from a better financing of schemes – rendering state intervention much less likely. Most improvements could already come in effect by 2012 and 2013 and would apply in all EU Member States as well as in Norway, Iceland and Liechtenstein, once incorporated in the European Economic Area Agreement.

Protecting your investments

Since 1997, the Investor Compensation Scheme Directive (97/9/EC) has protected investors who use investment services in Europe by providing compensation in cases where an investment firm is unable to return assets belonging to an investor. This might occur for example where there is fraud or negligence at a firm or where there are errors or problems in the firm's systems. It is not a protection against investment risks at such. There are now 39 investor compensation schemes in place in the EU's 27 Member States.

The proposal is intended to ensure that the rules on investor protection are more efficient, that there is a level playing field concerning the type of financial instruments that are protected and that there is appropriate funding and the necessary arrangements to make sure that investors are compensated.

The key elements of the proposal are as follows:

Better coverage: the current minimum level of compensation for investors is € 20 000. Under the Commission's proposal, this will be increased to € 50 000 per investor.

Faster payouts: under the current legislation, it can sometimes take up to several years for investors to receive any compensation. This is to change under the Commission's proposal, where investors will receive compensation at the latest 9 months after the investment firm's failure. Such a timeframe is however necessary in order to allow competent authorities to investigate the case and determine the positions of individual investors.

Improved information: investors are to receive clearer and more extensive information about the extent to which their assets are covered. For example: investment risk – an investment losing value due to a declining stock market or bankruptcy of an issuer – is not covered under the Directive.

Long-term and responsible financing: since 1997, there have been a number of cases in Member States where schemes have had inadequate funding to compensate lost assets of investors. Under the Commission's proposal, a minimum target fund level will be introduced which needs to be fully pre-funded. If necessary, schemes can borrow a limited amount from other schemes and other funding arrangements as a last resort ("mutual borrowing"). Contributions are to be borne by investment firms.

Wider protection: currently, investors are not necessarily protected if the investment firm uses a third party custodian to hold the client's assets and the third party defaults without returning the invested assets. Similarly, unit holders in investment funds can suffer loss if there is a failure of a depositary or a sub-custodian of the fund. The Madoff investment fraud case in 2008 is a recent example. The Commission now proposes to also cover such situations.

Most improvements could already come in effect by end 2012 and would apply to all EU Member States as well as Norway, Iceland and Liechtenstein, once incorporated in the European Economic Area Agreement.

Improving protection for insurance policy holders

Insurance Guarantee Schemes (IGS) provide last-resort protection to consumers when insurers are unable to fulfill their contract commitment, offering protection against the risk that claims will not be met if an insurance company is closed down.

IGS can offer protection by paying compensation to consumers, or by securing the continuation of their insurance contract through, for example, facilitating the transfer of policies to a solvent insurer or the guarantee scheme itself. There is no European legislation on guarantee schemes in the insurance sector today. Currently, 12 Member States operate one or more IGS which cover life and/or non-life insurance policies. They not only vary in terms of protection and eligibility, but also on when they are to intervene or how they are to be funded for example.

In the White Paper that was adopted today, the Commission sets out different options to ensure a fair and comprehensive level of consumer protection in the EU as well as to guard against the need for taxpayers to foot the bill in case an insurance company is to collapse. In particular, it proposes introducing a directive to ensure insurance guarantee schemes exist in all Member States and comply with a minimum set of requirements. The White Paper on Insurance Guarantee Schemes is up for consultation and all interested parties are invited to submit their comments and further input by 30 November 2010.