GRTU Awards Badge for Dedicated Entrepreneurial Success

 GRTU President Paul Abela and Director General Vince Farrugia have yesterday evening paid an official visit to Mr Alfred Fenech, Managing Director of Sterling Jewelers, and awarded Mr Fenech with the GRTU Badge for 113 years of Dedicated Entrepreneurial Success.

This Badge is on GRTU's 60th Anniversary being awarded to exceptional entrepreneurs, members of the GRTU. The entrepreneurs have been chosen with great care and embody the hardworking enterprise who after years of service as small sole-traders have today reached the status of a full-fledged corporate business employing a large number of employees.

Sterling Jewelers is a long standing GRTU member. From a humble business beginning in 1896, Sterling Group has today expanded in three divisions: Sterling Jewelers, Sterling Diamonds and e-Jewels by Sterling. Sterling Jewelers today employs 120 employees.

Alfred Fenech explained to the media the secrets behind the success of Sterling Jewelers and introduced the Media to the wide variety of exclusive lines and world high fashion brands and superbly trained staff of Sterling Jewelers.

Alfred Fenech thanked GRTU President and Director General for this award and he thanked GRTU for the excellent service they give to their members and to the business community as a whole. In GRTU he has found the unity and strength needed to solve the problems he did not manage to solve on his own.

Waste Management Compliance Schemes

It's high time Government Decided

By Vince Farrugia Director General GRTU, Chairman Green MT

"We cannot allow Government on the basis of fiscal losses of any nature to interfere with environmental legislation" I said this when I committed GRTU into a preferred strategic partnership with government to get moving on an agreed waste management scheme for Malta. GRTU members also committed themselves to seek an agreed solution that, while liberating them from current taxation burdens would simultaneously lead to private business financing of waste collection, management and recycling in a national effort to meet our obligations as a country within the EU Waste Management guidelines.

I really believe that if we work together we may be on the verge of a Green Revolution. Families in many localities have grown to care more for their waste and the way they dispose of it.  It would be a real pithy were we to allow the notorious inaptitude of state bureaucrats to listen and design appropriate environmental legislation and promote half baked measures to break people's hopes by furthering a state of delays and frustrations.

A few years back, private businesses, SMEs and manufacturing firms were heavily criticized for not adhering to the "polluter pays principle". Government, without any prior consultation with the private sector, established the Eco-Contribution revenue regime with the sole aim of resolving the financial mess-up in which the state-owned company WasteServ landed itself when it was loaded with the whole waste management project. The Eco-Contribution regime is based on the product and not on its environmental accreditations. A very wrong basis on which to build an eco-tax regime.

When the Eco-Contribution system was enacted, Government had outlined that where private industry took up their Producer Responsibilities through the establishment of Waste Management Schemes, then those companies or traders who were members of an Authorized Scheme would be exempted from further payment of Eco-Contribution.

This statement was repeated over and over again. As GRTU we were the first to take related action. We took up the responsibility. We would have preferred that all constituted bodies were on the same boat in this respect, however we could not come to terms on a number of cardinal issues. We had however gone as far as establishing a company.

With this behind us, GRTU, who had led on this issue from many months back, set up its own fully owned subsidiary, GreenMt Limited with the aim of operating a not for profit Waste Packaging Compliance Scheme and also a Waste of Electrical and Electronic Equipment Management Scheme. After a lengthy process, which included the submission of very detailed and extensive working plans to MEPA as the Competent Authority, the company obtained the relative permits to operate both Schemes.

Our next step was now to make sure that Government holds on to its public commitment and issues the Eco-Contribution Exemption Mechanism so that these Schemes could kick-start on their own merits and fiscal sustainability.  However, despite agreeing on a mechanism way back in February 2008, a year ago, through Legal Notice 84 of the same year, Government still continues to drag its feet over the matter. The frustration this delay is causing is terrible for businesses who continue to pay a high price while others, in spite of the polluter pays principle and due to the incompetence of the Eco-Contribution system, effectively pay nothing. Frustration is also increasing among Local Councils who had contributed willingly to all consultations and negotiations hoping that the new regime will be in place in a short time. Frustration is also among all operators of systems related to waste management together with the general public who is enticed to do more while at the same time seeing government dragging its own feet on the matter.

This begs the question of why all the delay when we all want to move forward to give the country a better waste management framework. The answer, as you can imagine, is money. When the Exemptions are put into place the Treasury will stop receiving the income of something around € 14 million of Eco-Taxation (2008 estimate) on those products that would become exempt from Eco-Contribution. However, placing cards on the table, Government on its side rightfully says that it will not exempt anyone from Eco-Contribution unless it has proof that a Scheme is functioning in reality. Government is not going to accept paper work exercises that aim to defraud the tax authorities. GRTU has in fact presented proposals to ensure that while the honest trader receives his due no funny deals go on to besmirch the schemes.

We are at a stalemate. Whilst Private Industry through GRTU is ready to move on, Government does not want to let go of its fiscal income. We need to overcome this hurdle. We need to find the solution to move out of this impasse. Industry, trade and SMEs cannot take the burden of paying twice for the same service. Government wants those producers that have registered with MEPA, as Waste Packaging Producers and also Waste Electrical and Electronic Producers, to pay both Eco-Contribution and an approved Scheme. Enterprise owners will be refunded at a later date after all documents have been filed and assessed. To GRTU this is sheer nonsense. No businessman can be forced to pay twice and then await government to give him back his own money.

Surely this is not the way forward. I have taken a personal unending interest in this subject matter. The CEO GreenMt, Joe Attard, and the team of volunteers we brought together at GRTU as Board Directors and team leaders cannot take it any more. I Chair the Board of GreenMt and feel the frustration of our members. Erstwhile calm businessmen are starting to become really irate. We have over the last year and a half studied the market to such detail that we believe we are not only forerunners but also on the forefront of developments in this sector. We know this subject thoroughly. We know where the hurt is and we know what the solutions are.  We need Government to listen…move on…and to let us work.

We have waited enough now. It is time to move on. Schemes need to be allowed to work. Schemes need a breath of fresh air. Schemes need to obtain finance from their members whilst their members are exempted from Eco-Contribution.

Some sectors are bleeding through excessive payments of Eco Contribution. They need the Government to not only listen to their hurts, but take immediate action. Paying a Scheme would approximately reduce costs to traders and companies by 40% and more in some instances.

To add insult to injury, while accepting Eco-Contribution, we are being told by government representatives that as Waste Packaging Producers, business owners must continue to carry the legal liability for households waste packaging. No businessman will accept this nonsense and no one will accept to pay twice! It is a shameful proposal and said now under current adverse economic pressures, when enterprise is bending backwards to sustain their current level of employment, it really verges on the irresponsible.

GRTU has made decent proposals to government to help resolve this issue. The present eco-tax regime must be replaced. It does not exist any were else in the EU. What we are proposing is a best practice exercise that will not only do waste management and the environment good but it places Government on a sound footing in Malta and in the eyes of EU observers. With a little more trust we can do it.

Vince Farrugia is a Candidate to the European Parliament Elections on June 6th 2009 for the PN/EPP-ED.

 

 

                                                                                                                       

Competitiveness: The Common Language

Measuring The Maltese Economies Performance against our competitors is very important. The world Economic Forum Global Competitiveness Index provides the instrument to enable us to make this comparison. There are other forms of comparisons as all global and regional economic fora provide some form or other of comparative statistics. But the World Economic Forum Index has wide acceptance. The important thing is that our economic managers, especially those at higher government level, but also in the line Ministries, read these figures. More important is that they schedule their programmes and strategies so that we can move up in the Index as this is what investors see and on which their estimates and their evaluations are made when businessmen and their advisors come to assess the competitiveness of our country.

 

Unfortunately, we in Malta tend to compare our own performance against our own performance in a previous period. This is not good enough as very often we may find that though on paper against our own performance a year before we appear to be moving forward, we might in practice be moving backwards when compared with our competitors. I know many businesses who make this great error. They buy more, they sell more, they believe they are bigger, but once they compare, they find that their market share is smaller as they have grown less than the whole market has grown. Worst still, they find that they have fallen back in comparison with their competitors.

 

Competition and competitiveness is a though game. Most people in business know that it is the toughest game of all. They can never rest. Even when successful the threat is always there. Your success means that others out there now want to target you and they want to beat you. So you can never rest. The successful business is the one that is sure that everyone in his team is conscious all the time of this fact. Even the one with the most comfortable product or service and who is dominant, will sooner or later learn this.

 

Only state bureaucrats running monopolies believe that all they have to do is add-up the costs of their service, add a profit mark-up and impose the price on costumers by Legal Notice. The Electricity Tariffs issue is all about this. No private owned company in a competitive market would have acted the way Enemalta did. Last time we had something like this from the private sector was the old Telecell. They came here to give us the first mobile phones, they obtained a fantastic monopoly, then they made us pay whatever they wanted. Luckily one sector that liberalized fast and now offers competitive rate is precisely the mobile telephony.

 

But competitiveness is something we have to work for all the time. Government must have this as it's basic philosophy. Public sector administration must look at the Competitiveness index and make sure that we move up in the eyes of the world even if its one notch at a time. But we must move up. People who fail must not be sustained and rewarded.

 

It is not acceptable that the Competitive Index of the World Economic Forum pushes Malta down to 52nd from 131 economies and that when the list of the most problematic factors for doing business in Malta is published, we continue to find on the list of most problematic issues areas that are within the capabilities of the public service to resolve. Top most on the list of issues that are hampering Malta's global competitiveness as listed by world economic forum is the inefficient Government bureaucracy. Access to Finance is a high second. Tax rates, restrictive labour regulations, inadequate educated workforce, tax regulations, inflation, are other prime issues. The public service must wake up. These are not issues for which we do not have the financial resources or for which there is no political commitment. These are issues that we must resolve. We must stop the talking and we must act on a clear measurable scheme. It's time someone starts using the hard stick. We must break through on these issues. Small steps forward are not enough.

 

In the private sector, the people who really create the wealth never sit pretty. They are always striving to become more competitive. The arm-chair critic thinks that they are simply striving to become richer. It is however an urge in business people that is necessitated by a higher motive: that of being successful. People don't go in business to be failures. They go in business because their entrepreneurial zeal wants them to be successful. To be successful they must compete.  To compete they watch themselves, the systems they use, the product or services they provide, the quality and training of the people they employ, sales techniques, marketing technique, and all that it takes to make a successful business. Above all they watch the competition. They don't want to fall back. They want to move forward.

 

In 2006-2007 Malta scored 1st on the World Forum Competitiveness Index in a league of 122 economies. In 2007-2008 Malta scored 56th out of 131 economies. In 2008-2009 Malta scored 52nd out of 131 economies. We moved forward. This really means that as the others pulled back, we moved forward even though since August 2008 the best economies started grinding to negative growth. But 52nd is not a comfortable place to be. We must all work harder.

 

It is of great interest that our economy is classified by World Economic Forum as an economy that is Innovative-driven. Economies are placed in three stages of competitiveness development. The first stage economies are Factor-Driven. The topmost stage reached by economies after competitiveness scores in a combination of pillars of competitiveness are taken into consideration. These pillars include market size, business sophistication, innovation, efficiency of institutions, the infrastructure, the standards of health and primary education, the levels and penetration of higher education and training, the financial market sophistication, the labour market efficiency, the technological readiness, the goods market efficiency and  last but not least, macroeconomic stability.

 

It's a tall order. But using a measurable approach used by others helps us to move on, area by area. It helps policy makers to know what to aim for and how to measure performance. The second stage of development puts together the economies that are considered to be Efficiency-Driven. The third stage of development puts together countries that like MMalta are considered to be Innovation-Driven. The countries that are moving from one stage of development to the other are placed in transitory stages. Each economy is assessed according to the same set of competitiveness pillars. Within each pillar there are a number of criteria on which scores are made so that each country can be assessed by the same measuring rod.

 

Today it's essential we manage our economy in a measured way. This is my gospel. We need to have more people up there who know that performance, efficiency, competitiveness, is the only language that matters.

 

When the winds blow, as they are doing now from all angles of the globe and economies are being squeezed down, it is the fittest that survive. Not only during the bad times, but always, the fittest move forward as they are lean and fit. During hard times the competitive invest more and win more not less as markets pull towards the fittest. It is not just a question of being resilient. Many confused resilient with competitive. Many in Aquila in Abruzzo Central Italy were resilient, but only those that were earthquake proof survived.

 

We will survive and grow more if we become more competitive. This is the gospel we need to preach. Here, in all our work, in the public administration, in the national parliament, in the European Parliament the language our representative need to speak in one: competitiveness.

 

…Safety and health at work of pregnant workers

 A majority of Member States support the extension of maternity leave entitlement from 14 to 18 weeks. However, some called for opening up the leave also for fathers and to take into account the outcome of the social partners' negotiations on other types of family leave.

A number of Member States wished to keep the right to decide within their national legislation whether a part of maternity leave should be taken before childbirth. Some Member States expressed concern that a further extension of maternity leave might be at the expense of broader rights to parental leave and might adversely effect the situation of women on the labour market.

The aim of the Commission's proposal is to improve the protection offered to pregnant workers and workers who have recently given birth or are breastfeeding by extending the minimum length of maternity leave from 14 to 18 weeks of which at least six weeks shall be taken after childbirth. Other elements of the proposal include the principle of full pay during the 18 weeks, with a possibility for Member States to introduce a ceiling that must not be below sickness pay; the right for women coming back from maternity leave or already during maternity leave to ask their employer to adapt their working patterns and hours; the right to return to the same job or an equivalent post.

The proposal forms part of the Commission's work-life balance package which aims to contribute to a better conciliation of professional, private and family life. The other parts of the package are a proposal for a Directive on the equal treatment of the self-employed and their assisting spouses, a policy document explaining the background and context and a report on progress made by EU countries towards the so-called 'Barcelona targets' for children provision.

In general, the Maltese Government feels that certain elements of the Proposal are best dealt with at a national level in order to appropriately address the workforce realities in each Member State.

Source: MEUSAC Employment, Social Policy & Health Sectoral Committee

ECOFIN Council Meeting

 COM (2009) 79 – Communication: Five years of an enlarged EU – Economic achievements and challenges –

This Communication focuses on the economic aspects of the largest EU enlargement (2004) exercise carried out. It indicates that despite fears of possible disruptions the situation has been smoother.

It lists achievements reached – significant improvements in the living standards of new Member States, rapid trade integration, rapid modernisation of new MS economies, a key driver of new MS growth has been investments from older MS, restructuring through cohesion policy funds, new product market regulations (including competition and state aid), workers' opportunities have improved (although new MS may have been faced with various problems due to this) among others. Concerns of massive labour migration in older Member States have also not materialised to the degree feared.

The global crisis presents the EU with a number of challenges. To address the Communication lists the need for sound fiscal policy, structural reforms in line with the Lisbon Strategy, enhanced country surveillance both by the Commission and the Council to foster the right policies, the implementation of the cohesion and rural development policies, and the use of EU policy and financial institutions for support.

Looking ahead the Commission states that full integration of national economies and income convergence is still to be achieved. Thus Cohesion Policy shall continue to play a key role. The EU's agenda shall see that the benefits offered will extend well beyond the economics.

Source: MEUSAC Economic and Financial Affairs Sectoral Committee

Success of EU Sugar Reform

 The 2006-2009 scheme for the restructuring of the European sugar industry resulted in the renunciation of 5.8 million tonnes of quota.

At the end of this 4-year process, a key element of the 2006 sugar reform, EU quota for sugar and isoglucose has been lowered to 14 million tonnes. EU sugar production is now concentrated in 18 Member States (as opposed to 23 before the reform) which enjoy favourable agronomic conditions and nearly 70 percent of production is in 7 Member States with the highest sugar yields. Domestic prices are showing a downward trend consistent with the objective of the reform to achieve a sustainable and competitive EU sugar sector.

The key to the reform was a 36 percent cut in the guaranteed minimum sugar price (from €631.9/tonne in 2006/2007 to €404.4/tonne from 2009/2010), compensation for farmers and a Restructuring Fund, financed by sugar producers, to encourage uncompetitive sugar producers to leave the industry. In the context of the financial and economic crisis, the Commission decided on 13 February to allow Member States to advance the payment of 100 percent of the 2008/2009 restructuring aid to June 2009. Several Member States already announced that they will use this possibility to alleviate the financial strain encountered by sugar companies.

Last March and October, the Commission concluded that there was no need to impose an obligatory withdrawal of sugar for the current marketing year 2008/09 since EU sugar market was healthy. An early assessment for 2009/10, leads Commissioner Boel to the conclusion that a preventive withdrawal is not necessary on this occasion either. In February 2010, the situation will again be reviewed to see whether there is a need for "preventive withdrawal" for the marketing year 2010/2011 or a "final cut" i.e. a further reduction of quota.

Source: MEUSAC Competitiveness and Consumer Affairs Committee Sectoral Committee

Good News on MIF restrictions

The European Commission and the European Central Bank have just released a joint statement on SEPA direct debits.

In the framework of Regulation 2560/2001, the French presidency, pushed by French and German banks, had tabled an amendment to introduce maximum MIFs on cross-border direct debits for a 3 year period.

GRTU in line with the position adopted by EuroCommerce had made an intense lobbying to ensure that, after these 3 years, any MIF on direct debit would be subject to competition law (article 81).

We are therefore very pleased that the Commission goes a step further and already explains why it will be very difficult for banks to establish that MIFs are justified and necessary for efficiency reasons and that they can fulfil the other conditions required by Article 81(3)EC.

Needless to say we are very pleased with this result!

Below is the Press Release:

The European Commission and the European Central Bank (ECB) have issued a joint statement providing further clarification so as to encourage the European Payments Council (EPC) to launch the SEPA Direct Debit scheme (SDD) on 1 November 2009.  The Commission and the ECB also noted that the forthcoming approval of the revised Regulation on cross-border payments will provide a three-year transitional regime for the SDD business model.

Competition Commissioner Neelie Kroes stated "The Commission will ensure that SEPA will be subject to effective competition so that a fair share of the benefits resulting from the creation of SEPA's direct debit scheme, both on a cross border and domestic level, are passed on to consumers and companies".

Internal Market Commissioner Charlie McCreevy stated "The benefits for companies and consumers of the Single Euro Payments Area are tremendous; with this hurdle crossed, banks and creditor companies can start preparing for migration."

ECB´s Executive Board member Gertrude Tumpel-Gugerell stated "We acknowledge, after having provided clarity on the applicability of MIF during an interim period, this further clarifying position of the Commission now provides a clear scenario also for the long term."

The European Commission considers that a general per transaction MIF does not seem necessary for direct debit transactions. Such MIFs paid by creditor banks to debtor banks for direct debits cannot, in general, be justified for efficiency reasons, and it appears unlikely that they would be compatible with EU antitrust rules, either for national or for cross-border transactions. After 1 November 2012 they should therefore have been replaced by other mechanisms, at the national and at the cross border level, for both SEPA Direct Debits and for national 'legacy' Direct Debits.

Direct debit payments are typically used by consumers to pay for recurring payments, such as rent, mortgage, energy bills, telephone bills and magazine subscriptions. Under the SEPA Direct Debit scheme, bank customers would, for the first time, be able to arrange to pay their bills by direct debit to and from bank accounts in any of the 31 European countries participating in SEPA.

The direct debit market is a two-sided market in which creditors have a clear interest to attract debtors to engage in a direct debit relationship. Creditor companies have effective means to encourage customers directly to make use of direct debit, in particular by granting rebates to them.

Shoulder to shoulder

We can get out of it sooner

There's a lot of bad news on the business front. But it is not really all that bad. An interesting set of statistics came out of the G20 meeting held in London last week. It shows who's faring most badly and who's feeling that things are changing.

 

The Japanese appear to be in the worst shape of all. Japan's gross domestic product will this year go down by 6.6%, below zero, and by 2010 it will remain at -0.5%. Germany is also faring badly. It looks like 2009 will be closing at -5.3%, however it is believed that the green shoots of growth will appear in 2010, albeit at a meager 0.2%.

Italy will also do badly this year. They are moving to close the year at a GDP of -4.0% and will remain under the water in 2010 at -0.4%. The US will also suffer a -4.0% drop in GDP this year but is looking forward to at least a 0% growth rate in 2010. Britain, who before the G20 was considered to be the sick man of Europe, will end the year at -3.7% GDP and will still not see any green shoots in 2010, staying at a growth of -0.1%. France does slightly better with -3.3% GDP for this year and -0.4% in 2010. Canada will be another lucky country that will see the beginning of positive growth with -3.0% for this year and a positive 0.3% growth in 2010.

Depending on how one sees the world, these figures may be taken as positive for next year and dismal for this year. Those of us who were reading the right (as it turned out) economic books, are not so shocked at the figures for 2009. The indications of those who last year were called the professors of doom were that the leading economies would be in an even worse shape and they surely were not projecting that 2010 may, for the USA, Britain, Germany and Japan, close to something near 0% growth rather than further a down-slide. So overall this is not a bad scenario compared to expectations.

In the European Union, many economists where caught on the wrong foot. I listened, attentively last October and again in November last year, to the leading economists of the Maltese Government and was shocked to learn that the figures they were working on in the Economic and Financial Committee (EcoFin), the EU Commission's economic top brass, were still based on growth prospect for 2009. I was even more shocked however when the Budget 2009 was announced in the first week of November 2008 and heard the Minister of Finance Tonio Fenech say that he's basing his work on a 2.5% GDP growth for 2009.

First of all one should note that the Maltese Economy, in spite of all our efforts, has over the last 10 years grown at an average rate of 1.9%, which is more or less the same rate (2%) of the 15 leading EU economies during the same period. For this reason, no economist could have predicted that as the EU economies go down Malta could really get the chance to out pace them. Secondly, I believe that at EcoFin they had more down to earth facts and figures to know already, in November 2008, that things were pretty bad. Even if the EU economists did not take head of stern warnings and econometric scenarios, presented by leading star economists like Profs Roubini of New York State University, but the indications emerging from what was happening in the financial markets were already very close to home in Britian, Brussels, Frankfurt, Amsterdam and in Paris.

The U.S.A as usual sprang quickly and took action. The E.U Commission, and now what we are calling the G20, bringing together leading economies from all over the globe, are also taking action.

Practicing economists know that more is needed, but the first strong interventions by the USA, Britain, EU Commission and Japan are already having an impact. The worst may not be past though. A US $5 trillion fiscal stimulus as announced at the end of the G20 is a lot of money, nearly a tenth of global GDP. None of it is really new and most is coming from the so called ‘automatic stabilizers', that is the natural way that government financing works, where governments receive a lot of revenue when the economy is growing so they effectively mop up the extra moneys that may cause inflation and the resulting problems, and for state revenue to go down when the economy is down and therefore governments appear to be funding the economy exceptionally.

More impressive, however is the G20's success in building a $1.1 trillion package which is independent of the fiscal stimulus. The international monetary fund is trebling its available resources from $250 billion to $750 billion, with $250 billion additional reserves in the form of special drawing rights. All this means that the world emerging economies will be assisted not to fall under during the worst and most damaging phase of the recession.

The figures go along to prove that America and the leading economies are not ready to let the world economy sink and then expect it to rise again some years forward into the future. If that were to happen many economies would have gone under and the effect on employment in all countries would have been disastrous. One wouldn't have been able to imagine what political upheavals this would have brought about.

The world has now been used to years of non-stop growth and political and economy stability in most of the leading countries. We in Europe have enjoyed the longest period of economic growth and stability ever known. We in Malta have enjoyed 20 years of unparalleled growth. The stability made us all take so many things for granted. We hardly realized how much in fact did change. The Maltese economy up to some years back depended on textiles, the dockyard, British tourists, certain leading industries, large state corporations and government employment. Today what sustains the economy are private enterprises. Malta's economy is essentially an enterprise-driven economy with the private sector responsible for practically all economic activity. The drydocks is a small part of the economy, textiles are gone, new private investment in new areas like electronics and pharmaceutical dominate the export scene. Tourism is a completely different package from what was constant up to 10 years ago and most of the hotels and accommodation facilities are new. New and privatized are the airport, the Freeport, telecommunications, the Banks and the port. Retailing and trading has been transformed with larger and more intensive investments. Even Government's approach to the economy has changed completely.

The impact of the world economy remains strong. Indeed we still have to restructure more, so that we can become less susceptible to world events. New business keeps flowing in the form of finance, gambling and insurance companies, but above all Smart City. The general picture is one of constant transformation.

We have learnt also how to react to world events. The task force which is currently working behind the scene to help enterprise face the world turmoil is doing excellent. Everyone involved is trying to hold the danger away from our shores. This is in the right spirit.

The recession is not over. The world job market remains weak. In Malta the job market is holding on. It is important government and state bureaucrats understand that enterprise – large, small and medium – is facing problems and that we together can force the economy to grow again and sustain each other as other economies fall back.

The indications are that if we all put our head to it, we can win. We can foment division among ourselves, and argue on silly issues that have nothing to do with the real national challenge, but that of beating the recession, so that in 2010 our economy will be one of those that will start growing again, is the real, top-most urgent issue. Those who are not seeing this so clearly, have their head examined. When the storm is over those who now seek to divide will be left as bitter losers.

When the economy starts growing again we will all recognize those who when the going was though, they shouldered the burden. Yes shoulder to shoulder we can get out of it sooner.

Shoulder to shoulder to face the storm and win.

Internal gas and electricity market

 COM (2009) 115– The liberalisation of the EU's electricity and gas markets, which began several years ago, has contributed to the rejuvenation of the energy sector. It has helped to develop entrepreneurial potential in this sector, with beneficial effects on a variety of energy-related activities.

This report shows that significant improvements have taken place in the EU electricity and gas market. Nevertheless, the full potential of liberalisation has not yet been realised. There are still a number of areas and Member States where the existing legislation (second internal market package) has not yet been properly implemented or where the need for new legislation has become apparent. The Commission is taking action to ensure the correct implementation of EU legislation at national level through the application of infringement procedures and complementing the internal market legislation with the third internal energy market package. The 3rd internal market package is meant to complement the existing EU legislation and must not be used as an excuse for the inadequate implementation of the existing 2nd internal market package.

The Commission's conclusions on this report are that in 2007 and 2008 a great deal of effort was put into enhancing competition on the wholesale market; significant progress was made through the regional initiatives. There also seems to be a new trend towards building new energy infrastructure, which is crucial to overcoming the longstanding fragmentation of EU energy markets.

The Commission's finding with respect to market concentration is that progress has generally been slow. A number of wholesale markets, in particular, still suffer from limited competition and the lack of liquidity. There are signs that the situation on the retail market is about to improve. Member States should put even more effort into providing comprehensive data for supplier switching. A major issue in the reporting period was the increase in energy prices, in part due to the rising price of oil on the international market. This triggered major increases in energy end prices.

While short-term solutions, such as regulated prices, might appear to be advantageous in the light of rapidly increasing energy prices, the report stresses the likely consequences of such measures: investor confidence is undermined, market entry is deterred and the full benefits of the internal energy market are placed at risk. Over the coming two decades, the EU – like other parts of the world – has to address the need for major investments in infrastructure. In the long term only a properly functioning internal electricity and gas market can send the right price signals to encourage investment.

Source: MEUSAC Competitiveness and Consumer Affairs Sectoral Committee