Monday, 29 October 2001

All is not dark

Maltastar

All is not dark!

Investors in the Malta Stock Exchange equities, particular those that entered the market after 1999 are quite unhappy. They have seen considerable loss in the value of their investments quite beyond what could be explained by international fluctuations in equity prices.

This applies as for investors who hold direct equity positions as much as to those who placed their investments via Collective Investment Schemes (Funds) that include local equities in their asset allocation policy.

I have said it before and I say again that the reason why the market has turned so negative is a combination of these four factors:

The market had over-priced itself in the first half of the year 2000 and therefore a market correction was not only appropriate but indeed healthy. Some new issues in the year 2000 were very aggressively priced and sold more on the basis of effective advertising than real intrinsic value. The subsequent adjustment of such equities down to their real values has added to the sombre environment on the market.` Results so pathetically different form those envisaged in the Prospectus cannot simply be explained by deterioration in the business environment. Some explanations are needed by those who took responsibility for the Prospectus.

Tax on Collective Investment Schemes has shut off, indeed reversed, an important source of demand for equities on the Exchange rendering the market highly illiquid and highly susceptible to fluctuations on the basis of small transactions.` The TWAMP mechanism on the Exchange is too complicated and psychologically the market still looks at the last price as a guide for` market value.

The economic environment in general has turned bad and the quoted companies are reporting inferior results to those that` had under-pinned the higher valuations.` This is particular applicable for the financial sector.

But it is not all dark. The low valuations provide good buying opportunities for those who can perceive them and who have the staying power to wait for the fundamental value of a stock to realize itself in the market price.

There is a particularly one stock whose market price has gone far below its fundamental value creating a` rare opportunity to buy value at a discount.

Maltacom at Lm1.20 is trading at only 13 times historical earnings. The dip in Maltacom`s earnings announced at the mid-year is clearly explained to the initial losses of their mobile operation launched only last December and building aggressively market share beyond reasonable expectations.

For those who can read beyond the superficiality of the figures Maltacom presents a bright spot among the darkness surrounding the exchange.

In circumstances like these it becomes almost an obligation of the Board of Maltacom, if they believe in the true value of the organisation they are in charge of, to launch share buy-back programmes.` Most countries have responded to the downturn in equity prices by facilitating the procedures for share buy-back programmes. Typically in Malta authorities just sit and do nothing almost happy seeing value being destroyed on the exchange forgetting that government is still 60% shareholder of Maltacom.

Note:

Sunday, 28 October 2001

Min hu perikoluz

Il-Kullhadd Min Hu Perikoluz`

Il-Ministru tal-Finanzi John Dalli qabez kull limitu tad-dicenza politika meta nhar il-Hadd li ghadda go forum imhallas minn flus il-poplu iddeskriva` lil kull min ma jaqbilx mieghu bhala stupidu imbecilli u perikoluz.

Bl-akbar responsabbilta` filwaqt li nichad li jien stupidu, imbecilli u wisq anqas perikoluz, nsostni li l-Ministru Dalli lanqas m`huwa stupidu jew imbecilli izda certament huwa perikoluz.

Perikoluz daqs kemm hu perikoluz tabib li quddiem sinjali cari u sintomi indiskutibbli ta` mard serju fil-pazjent, jibqa` jsostni li l-pazjent mhux marid u ma ghandu bzonn l-ebda kura.

John Dalli qal li jien u hafna bhali perikoluzi meta nghidu li l-pajjiz qed f`ricessjoni. Qal li jien stupidu meta nghid li l-Gvern ser ikollu jipprivatezza u jbiegh kollox b`irhis` ghax it-taxxi li jigbor m`humiex ilahhqu ma l-infieq tal-gvern.` Sahaq li l-gvern ser jipprivatezza biex ma jkomplix jikber id-dejn.

Jien id-diskors vojt idejjaqni u ghahekk se nhalli il-figuri ufficjali tal-Gvern stess jitkellmu wahedhom. Fit-tabella qed ingib l-infiq u dhul tal-Gvern ghall `ewwel disa xhur tas-sena tas-snin 1998, 1999, 2000 u 2001.

Comparative Government Finance Data: January-September 1998 - 2001















Description Jan - Sept Jan-Sept` 1999 Jan-Sept` 2000 Jan-Sept` 2001 Jan-Sept 2001/Jan-Sept 2000 1998 Absolute Change % Change





Lm thousands

















Ordinary Revenue 353,744 400,928 441,445 466,436 24,991` 5.66 of which:













Customs and Excise 35,342 40,921 41,714 38,937 -2,777` -6.66

VAT & Replacement 52,437 63,623 77,539 83,315 5,776` 7.45

Income Tax 76,778 90,327 104,463 113,447 8,984` 8.60

Social Security 93,768 99,025 112,017 120,554 8,537` 7.62

Others 95,349 107,034 105,712 110,182 4,470` 4.23















` Total Expenditure 441,775 492,467 510,567 554,543 43,976` 8.61 consisting of:











Recurrent Expenditure 356,674 382,078 402,765 433,601 30,836` 7.66 Public Debt Servicing 40,822 46,090 49,547 51,722 2,176` 4.39 Capital Programme 44,278 64,299 58,255 69,219 10,964` 18.82

















Deficit 88,031 91,539 69,122 88,107



















































Gross Government Debt [1] [2] 726,272 858,403 900,238 1,003,175 102,937` 11.43































[1] Made up of Treasury Bills issued and outstanding (at nominal prices), Government Stock and Foreign Borrowing.

Data source: Central Bank of Malta.







[2] At end of



























Source : Central Office of Statistics













Id-deficit fl-ahhar ta` Settembru 1998,` meta l-Ministru John Dalli kien ghadu kif rega dahal fil-kariga izda ma kienx ghadu gerfex il-figuri kif ghamel aktar tard meta hareg il-budget ghas-sena 1999, kien Lm88,031,000.` Fl-ewwel disa xhur ta` din is-sena id-deficit ghadu Lm88,107,000 jigifieri zdied ftit fuq il-livell ta` tlett snin ilu.

U dan minkejja li fil-frattemp id-dhul tal-gvern minn diversi forom ta` taxxi, dazji, licenzji ecc zdied minn Lm441,775,000 ghal Lm554,543,000 jigifieri zieda fid-dhul ordinarju ta` Lm112,768,000. Kif taraw il-poplu Malti hallas lil Gvern Lm 113 il-miljun aktar f`disa xhur aktar` milli ghamel tlett snin ilu. Jekk testendi dan fuq sena jigi zieda ta` Lm150 miljun aktar f`taxxi` flok il-Lm100 miljun li suppost gew mill-UE.

Mela huwa fatt indiskuttibbli li t-taxxi li ghasar minn butna il-gvern f`dawn l-ahhar tlett snin gew sparpaljati f`infiq bla sens b`mod li deficit ghadu fejn kien tlett snin ilu. Dan iffisser li dejn ghadu qed jizdied b`mod insostenibbli u li dan qed iwassal lil Ministru Dalli biex jibqa` ghaddej bi programmi ta` privatizzazzjoni mgezwer fil-habi u fit-tbazwir.` U dan meta l-pajjizi tad-dinja mic-Cina sa l-Awstralja iritiraw il-programmi ta` privatizzazzjoni biex ma jbieghux meta hawn instabbilita internazzjonali li ddghajjef il-prezzijiet li jistghu jinkisbu.

Izda min hu dahru mal-hajt dan ma jistax jaghmlu.` Min ga biegh il-Mid-Med b`nofs prezz ma tantx jimpurtah li jerga` jaghmel xi opra ohra simili meta bil-fors irid idahhal flus straordinarji tal-privatizzazzjoni biex id-dejn ma johrog mil-limiti li ffissa il-parlament.` Jien bhali Malti li nhobb lil pajjizi ntih parir wiehed.` Titkabbarx. Hammar wiccek u mur il-parlament u itlob li zzid id-dejn. Hafna ahjar hekk milli tbiegh hwejigna b`irhis biex ma thammarx wiccek quddiem il-paralment.

Mela nsostni b`mod qawwi li l-privatizzazzjoni se ssir b`mod mghaggel ghax il-gvern flok uza t-taxxi biex naqqas id-deficit, sparpalja dawn il-flus f`infieq laxk u investiment bla sens. U nsostni li jien la jien stupidu, la jien imecilli u lanqas jien perikoluz. Nsostni wkoll li perikoluz huwa l-Ministru John Dalli li b`nuqqas ta` ghaqal wassal il-pajjiz f`xifer ta` falliment tant li se jkollu jbiegh l-assi tal-pajjiz taht pressjoni li se twassal biex jingiebu prezzijiet hafna anqas milli huma gusti.

Friday, 26 October 2001

A nation of idiots

The Malta Independent

A nation of idiots

Taking a leaf from the Prime Minister disgusting performance on May 1st at Ta` Qali, the Minister of Finance has used his precious Sunday time and our more precious `tax money to tell us that we are idiots and that he is a lone shining star in this firmament of economic darkness.

It was a crescendo which had started a week earlier when he accompanied the Prime Minister to` witness` the worst` share trading performance in 2 years` at the new Exchange building.

Whilst we lesser mortals down here are feeling the scorching heat of Rome as it burns, our leaders from their safe place on the hills re-assure that we are mistaking the warmth of their benign sun for destructive arson.

So we have been re-assured that prices on the Exchange have fallen because only now they are reflecting their true value after manipulating minds like yours truly engineered an artificial increase in their stock prices to politically embarrass the government. Who cares that my criticism was focussed at the ridiculous price at which the Minister sold a controlling interest over Mid-Med Bank to HSBC` Who cares that even at current depressed prices the HSBC market price is still 65% more than the price negotiated by the Minister`

What matters is that the Minister is pleased that the price of Bank of Valletta and Maltacom shares have now fallen to their true value so that when this country privatises its remaining holding in these companies we will repeat the Mid-Med Bank fiasco all over again!

And we are all stupid` and imbecile to think that the government is embarking on a crisis privatisation programme, when countries from China to Australia have postponed their privatisation to better times, purely to fund recurrent expenditure which it is unable to control.` The Minister authoritatively asserts that privatisation is necessary to save government the need to borrow much further. What matters that the underlying need to borrow further is firmly underpinned by the government`s incompetence to control its expenditure` Who cares that tax revenues increases at a rate far superior to economic growth and thus causing a stifling shift of resources from the private to the public sector are simply financing more expenditure rather that controlling the real deficit And who cares that the deficit is not simply that which is window dressed in the Consolidated Account but has to include the dead expenditure irresponsibly funded through the Treasury Clearance Fund`

We are all stupid and imbecile to think that this country is sliding to a recession. What matters that exports, imports and investments are falling, GDP growth has effectively turned negative, tourism is at best not growing and the Central Bank is worried about the country living beyond its means` We are all stupid to be worried that whilst other countries are re-discovering Keynes to stimulate economic growth, our cash-strapped government has no room for similar manoeuvring having irresponsibly engineered` a horrendous budget deficit under the dextrous fingers of the present Minister of Finance.

What matters is that we are re-assured by this sole shining light in this firmament of` economic darkness that all is well and working and that we are stupid to feel the pain.

Sunday, 21 October 2001

FLEXIBILITY differentiation and leverage

The Malta Independent on Sunday Flexxibility, Differentiation and Leverage

What have these got to do with Malta` future relations with the EU` Quite a lot , really!

If like me you are fed up` hearing stale, rhetoric and totally unconvincing arguments why Malta should decide one way and not another, we need more searching analysis to build a solid base for a more judicious choice.

And it is imperative to start from stating the` objective clearly. For someone whose objective is joining the EU as a matter of principle then there is not much to argue about. Unfortunately this is the case with many in the pro EU lobbies . They start from the foregone conclusion that Malta should join the EU as a full member and then work back to exaggerate the positives and down-size the negatives.

Foremost amongst these is the Malta `EU Information Centre that obstinately refuses to give information about the other options which Malta may follow in its quest for beneficial bilateral relations with the EU. It also avoids giving realistic information about likely future developments of EU institutions and decision making processes and provides factual information as if the future would be a straight linear extension of the present, which of course is rarely the case.

A more serious objective would be the achievement of long term sustainable peace and prosperity for this country and its people.` This objective is clear, simple and incontestable. So what we should be arguing is whether long term sustainable peace and prosperity is best achieved through EU membership or through the special relationship advocated by Labour under the motto of Switzerland in the Med.

To be able to choose the better of the two options they need to be tested against a set of relevant criteria which may be considered as indispensable tests for achieving the final objective.

Flexibility, Differentiation and Leverage are the three criteria which I consider the most suitable. Flexibility because as a small island nation one on the advantages we have for competing successfully` in a` globalised world is that we ought to be much more flexible than bigger countries. Flexibility is one of the few advantages of our small size and giving it up could likely mean that we are left with the disadvantages of smallness without the corresponding benefits.

Differentiation means that we have to present ourselves differently from` other competing suppliers on world markets. Take tourism. We should not promote our tourist product on the basis of our beaches. We just would not start competing with` countries much better endowed.



Differentiation means focussing on our strengths and presenting ourselves to that market segment which appreciates our strengths. In terms of tourism we would sell Malta as a place for 2nd or 3rd holiday for a few days because what a European tourist can see in Malta in 3 or 4 days cannot be seen anywhere else. So near, so European and yet so different ought to be our message.

Leveraging means obtaining maximum benefits for the natural advantages which mother` nature has endowed us with. Not many of them really. But the few we have are quite valuable.` Especially our strategic location, our chequered history, our deep harbours, our industrious work-force and our easy command of foreign cultures and languages. In dealings with foreign countries or Unions these assets have all to be leveraged in the negotiating package to ensure that we get best value from the deal. I have learned from experience that nothing is given away free. Whatever one needs first has to be demanded and then one has to explain to the giver why it is in his interest to comply with one`s request. Then with patience, skill and luck one hopes to achieve the minimum objectives through responsible, tough and unrelenting negotiations.` Without leverages negotiations get one sided and unproductive.

Seen this way there is no doubt in my mind that on the basis of current EU rules and structures ( so one must keep a reserve to reconsider when and if the EU evolves into a more flexible organisation) flexibility, differentiation and leverage are` much more possible under the Labour`s special relationship model rather than through EU membership.

Also because the special relationship keeps the door open for future revision and if circumstances change to make it advisable, then also to proceed to full EU membership. This is the essence of flexibility. On the contrary` EU membership does not leave any opening for any possible revision as this becomes a once in a lifetime irreversible decision..

When seen from this rationale the argument becomes more logical and convincing. Convincing enough to leave little room for sensible counter-` argument except from those who irresponsibly consider` that we are not capable of leveraging our flexibility and differentiation and thus should just get on a one way road to` EU membership as an objective in itself to save us from ourselves!

FLEXIBILITY differentiation and leverage

The Malta Independent on Sunday Flexxibility, Differentiation and Leverage

What have these got to do with Malta` future relations with the EU` Quite a lot , really!

If like me you are fed up` hearing stale, rhetoric and totally unconvincing arguments why Malta should decide one way and not another, we need more searching analysis to build a solid base for a more judicious choice.

And it is imperative to start from stating the` objective clearly. For someone whose objective is joining the EU as a matter of principle then there is not much to argue about. Unfortunately this is the case with many in the pro EU lobbies . They start from the foregone conclusion that Malta should join the EU as a full member and then work back to exaggerate the positives and down-size the negatives.

Foremost amongst these is the Malta `EU Information Centre that obstinately refuses to give information about the other options which Malta may follow in its quest for beneficial bilateral relations with the EU. It also avoids giving realistic information about likely future developments of EU institutions and decision making processes and provides factual information as if the future would be a straight linear extension of the present, which of course is rarely the case.

A more serious objective would be the achievement of long term sustainable peace and prosperity for this country and its people.` This objective is clear, simple and incontestable. So what we should be arguing is whether long term sustainable peace and prosperity is best achieved through EU membership or through the special relationship advocated by Labour under the motto of Switzerland in the Med.

To be able to choose the better of the two options they need to be tested against a set of relevant criteria which may be considered as indispensable tests for achieving the final objective.

Flexibility, Differentiation and Leverage are the three criteria which I consider the most suitable. Flexibility because as a small island nation one on the advantages we have for competing successfully` in a` globalised world is that we ought to be much more flexible than bigger countries. Flexibility is one of the few advantages of our small size and giving it up could likely mean that we are left with the disadvantages of smallness without the corresponding benefits.

Differentiation means that we have to present ourselves differently from` other competing suppliers on world markets. Take tourism. We should not promote our tourist product on the basis of our beaches. We just would not start competing with` countries much better endowed.



Differentiation means focussing on our strengths and presenting ourselves to that market segment which appreciates our strengths. In terms of tourism we would sell Malta as a place for 2nd or 3rd holiday for a few days because what a European tourist can see in Malta in 3 or 4 days cannot be seen anywhere else. So near, so European and yet so different ought to be our message.

Leveraging means obtaining maximum benefits for the natural advantages which mother` nature has endowed us with. Not many of them really. But the few we have are quite valuable.` Especially our strategic location, our chequered history, our deep harbours, our industrious work-force and our easy command of foreign cultures and languages. In dealings with foreign countries or Unions these assets have all to be leveraged in the negotiating package to ensure that we get best value from the deal. I have learned from experience that nothing is given away free. Whatever one needs first has to be demanded and then one has to explain to the giver why it is in his interest to comply with one`s request. Then with patience, skill and luck one hopes to achieve the minimum objectives through responsible, tough and unrelenting negotiations.` Without leverages negotiations get one sided and unproductive.

Seen this way there is no doubt in my mind that on the basis of current EU rules and structures ( so one must keep a reserve to reconsider when and if the EU evolves into a more flexible organisation) flexibility, differentiation and leverage are` much more possible under the Labour`s special relationship model rather than through EU membership.

Also because the special relationship keeps the door open for future revision and if circumstances change to make it advisable, then also to proceed to full EU membership. This is the essence of flexibility. On the contrary` EU membership does not leave any opening for any possible revision as this becomes a once in a lifetime irreversible decision..

When seen from this rationale the argument becomes more logical and convincing. Convincing enough to leave little room for sensible counter-` argument except from those who irresponsibly consider` that we are not capable of leveraging our flexibility and differentiation and thus should just get on a one way road to` EU membership as an objective in itself to save us from ourselves!

Ergajt

Il-Kullhadd Ergajt

Wara waqfa ta` xahar u nofs ergajt maghkom. Kelli nieqaf ghax ma stajtx inlahhaq ma kollox specjalment biex giet varata l-Iskeda ta` Super One TV ghal harifa. Nirrangrazzja lil dawk li hadi l-inkarigu jinkoragguni biex nerga nikteb mill-aktar fis possibbli.

Ottubru daqt jahrab u b`hekk nergghu nibdew bl-aspettattiva tal-budget. Nghid ghalija mil-budget li gej ma qed nistenna xejn hlief aktar paroli fil-vojt, loghob bil-figuri,` habi tal-qaghda ekonomika mweghra tal-pajjiz u aktar hela ta` flus, hin u rizorsi.

Ghax il-pajjiz mhux budget ghandu bzonn. Budget ta` sena wahda ma jistax joffri soluzzjoni rejali ghal bzonnijiet li ghandu il-pajjiz. Il-pajjiz ghandu bzonn soluzzjonijiet godda. Soluzzjonijiet li gvern li qed jittiekel min gewwa ma jistax joffri izjed. Dan il-gvern tant ilu fil-poter li issa tant rabba inertia li lanqas bomba ma tqajmu.

U jekk ma din in-naghsa jasal xi survey li jaghtihom il-prosit allura tibda tasal biex temmen li dan il-pajjiz tilef rasu u sar jifrah bit-taxxi u t-telqa li hawn bhalissa. Tippreswadi ruhek li dal-gvern li se jwassal ghar-rovina u telf tas-sovranita` qed jigi nkoraggit` biex ikompli ghaddej fit-triq tad-direzzjoni t-`tajba`.

Izda r-rejalta` hija mod iehor.` Ir-rejalta hija dik li nahbat wicci kuljum maghha nara nies ifttxu soluzzjoni li mhix tasal u qalbhom maqtugha minn dak li gej ghada. Nies li jhossu li dan il-pajjiz mixi ghal rihu bla dixxiplina , bla gwida u bla direzzjoni. U dawn in-nies il-veru decizjoni elettorali taghhom biex jiddeciedu f`idejn min iridu jafdaw il-futur taghhom` jehduha mhux fis-survey izda fil-kaxxa tal-vot.

Il-pajjiz mhux budget ghandu bzonn.` Il-pajjiz ghandu bzonn elezzjoni u jekk il-gvern lest jistrieh fuq ir-rizultati ta-survey ejja ma nhallux lil dal-pajjiz jistenna izjed;` jistenna soluzzjonijiet li ma jistghux jaslu.

Il-Partit Laburista irid ikun iffukat fuq l-elezzjoni li gejja. Fuq il-partita veru` mhux fuq it-training sessions. U biex nirbhu l-partita jehtieg zewg ingredjenti krucjali.` L-ewwel li nuru li ahna maghqudin ponn wiehed anke jekk nittoleraw opinijoniet diversi dwar xi dettalji. U t-tieni ahna kapaci noffru soluzzjonijiet veru, rejali u effettivi ghal problemi li rikbu lil dan il-pajjiz.

Ejja nizguraw li dan il-messagg johrog car mil-Konferenza Generali Straordinarja ta` din il-Gimgha.

Issa ormaj drajt lin-nazzjonalisti jaqbdu ma` l-icken kelma li nghid jew nikteb` biex jippruvaw idahhlu feles bejni u bejn il-leader. `Bhallikieku relazzjoni ta` fiducja li nbniet fuq medda ta` 20 sena tista` titharbat minn ftit gideb u tigbid tal-fatti.

In-nazzjonalisti ahjar jikkoncentraw fuq il-problemi li ghandu il-pajjiz. Dawn holquhom huma u f`gieh is-sewwa ghandhom id-dover isewwu qabel ma jkun tard wisq.

Rigward

Sunday, 7 October 2001

Post-it Privatise it

The Malta Independent on Sunday Post-it! Privatise it`

Does privatisation follow the trends of fashion` It seems so as we seem to be going in a senseless direction where anything that works should be privatised. Worse is that the fashion seems to be moving along the lines of being dictated by a` perceived need to sell out to foreign technical partners .

The latest to hit this fashion trend is Maltapost plc, holder of a monopoly licence for universal postal services for several more years.` Maltapost will have a special mention if Iwere ever to write my memoirs.

I was involved in its setting up when Mid-Med Group bought 45% of its equity upon its formation in 1998.` I chose the name, I negotiated the terms and text of the license, I brokered Maltacom`s 15% equity take-up, I approved the company`s corporate colours and logo, and I spent many a session negotiating an agreement with both the UHM and the GWU in order to negotiate flexible work-practices.

When Posta Ltd went financially belly up and postal services were heading back to complete integration within central government services I saw merit in devising a solution whereby postal services would be retained within the ambit of a commercial organisation.` From the point of view of the bank I was representing I perceived the possibility of getting access to a branch network which could offer extensive synergy benefits with the bank`s own branch network.

When a new administration decided to sell the government`s 70% controlling interest in Mid-Med Bank to HSBC, the bank`s 45% holding in Maltapost was transferred to the government before the transfer of government`s` ownership in Mid-Med to HSBC.` This was sensible. It was inconceivable that a foreign bank would not only be given direct access to 50% plus of the entire banking market, but would also be given a substantial holding in Malta`s monopoly organisation in charge of universal postal services.

The sale back to the government which was effected in May 1999, just 12 months after the company started operations.` It` was made at a substantial profit to Mid-Med Bank. Clearly since new management was put in place and work practices were being gradually changed to promote efficiency the improvement was showing already in the bottom line.` Why would the government pay a premium over par value for such a young company if this were not so`

Since then Maltapost is reported as having continued to prosper. Though management was changed following the change of administration in Sept 98 the foundations so painstakingly laid by my colleagues were solid enough to build upon.` Quality of service has continued to improve both within the Post Offices as well as through the delivery service.

It has not moved as fast and as much as we had anticipated at its conception. But it has progressed and advanced.

So why is it necessary to privatise Maltapost` Is it because government needs to privatise whatever is saleable in order to get hold of special funds to hold back the worrying` growth of the national debt If so must it sell an effective controlling interest to technical partners from foreign countries`

All necessary technical inputs could be bought from many eager and highly qualified suppliers. Giving equity positions in monopoly suppliers of essential services in order to acquire technical inputs is risky and unnecessary.

Local investors will gladly invest in Maltapost if they are ever given the opportunity to do so through an IPO.` They would do so` even if maximum holding is limited to a few percentage points to ensure that Government will continue to have a substantial say` in the running of this monopoly service though` it reduces its holding to a minority one.

Maltapost will soon gather the` three full years trading records necessary for a full IPO. It is a company which is looked upon favourably by the Maltese public at large. Further efficiency improvements can be obtained through serious management and understanding unions who accept that jobs are not only protected but indeed created through effective management and efficient work practices.

Necessary technical inputs can be sourced from the most competent and economical international sources and changed from time to time as would be necessary by changing circumstances.

Privatisation should not be subject to the trends of fashion. Essential monopolies` if partly privatised should give first priority to local investors and should continue to be substantially under the control of the public sector. Which is not the same as saying that these should be managed to anybody`s political advantage.

If on the other hand` the chronic problem in deficit finance is such that it is constraining the government to negotiate a sale to foreign bidders which can be wrapped up in HSBC haste style, than it is time to stop playing games with public assets.

Post-it Privatise it

The Malta Independent on Sunday Post-it! Privatise it`

Does privatisation follow the trends of fashion` It seems so as we seem to be going in a senseless direction where anything that works should be privatised. Worse is that the fashion seems to be moving along the lines of being dictated by a` perceived need to sell out to foreign technical partners .

The latest to hit this fashion trend is Maltapost plc, holder of a monopoly licence for universal postal services for several more years.` Maltapost will have a special mention if Iwere ever to write my memoirs.

I was involved in its setting up when Mid-Med Group bought 45% of its equity upon its formation in 1998.` I chose the name, I negotiated the terms and text of the license, I brokered Maltacom`s 15% equity take-up, I approved the company`s corporate colours and logo, and I spent many a session negotiating an agreement with both the UHM and the GWU in order to negotiate flexible work-practices.

When Posta Ltd went financially belly up and postal services were heading back to complete integration within central government services I saw merit in devising a solution whereby postal services would be retained within the ambit of a commercial organisation.` From the point of view of the bank I was representing I perceived the possibility of getting access to a branch network which could offer extensive synergy benefits with the bank`s own branch network.

When a new administration decided to sell the government`s 70% controlling interest in Mid-Med Bank to HSBC, the bank`s 45% holding in Maltapost was transferred to the government before the transfer of government`s` ownership in Mid-Med to HSBC.` This was sensible. It was inconceivable that a foreign bank would not only be given direct access to 50% plus of the entire banking market, but would also be given a substantial holding in Malta`s monopoly organisation in charge of universal postal services.

The sale back to the government which was effected in May 1999, just 12 months after the company started operations.` It` was made at a substantial profit to Mid-Med Bank. Clearly since new management was put in place and work practices were being gradually changed to promote efficiency the improvement was showing already in the bottom line.` Why would the government pay a premium over par value for such a young company if this were not so`

Since then Maltapost is reported as having continued to prosper. Though management was changed following the change of administration in Sept 98 the foundations so painstakingly laid by my colleagues were solid enough to build upon.` Quality of service has continued to improve both within the Post Offices as well as through the delivery service.

It has not moved as fast and as much as we had anticipated at its conception. But it has progressed and advanced.

So why is it necessary to privatise Maltapost` Is it because government needs to privatise whatever is saleable in order to get hold of special funds to hold back the worrying` growth of the national debt If so must it sell an effective controlling interest to technical partners from foreign countries`

All necessary technical inputs could be bought from many eager and highly qualified suppliers. Giving equity positions in monopoly suppliers of essential services in order to acquire technical inputs is risky and unnecessary.

Local investors will gladly invest in Maltapost if they are ever given the opportunity to do so through an IPO.` They would do so` even if maximum holding is limited to a few percentage points to ensure that Government will continue to have a substantial say` in the running of this monopoly service though` it reduces its holding to a minority one.

Maltapost will soon gather the` three full years trading records necessary for a full IPO. It is a company which is looked upon favourably by the Maltese public at large. Further efficiency improvements can be obtained through serious management and understanding unions who accept that jobs are not only protected but indeed created through effective management and efficient work practices.

Necessary technical inputs can be sourced from the most competent and economical international sources and changed from time to time as would be necessary by changing circumstances.

Privatisation should not be subject to the trends of fashion. Essential monopolies` if partly privatised should give first priority to local investors and should continue to be substantially under the control of the public sector. Which is not the same as saying that these should be managed to anybody`s political advantage.

If on the other hand` the chronic problem in deficit finance is such that it is constraining the government to negotiate a sale to foreign bidders which can be wrapped up in HSBC haste style, than it is time to stop playing games with public assets.

Friday, 5 October 2001

National debt solutions

The Malta Independent

National debt solutions

This week, whilst celebrating my first half century, I was accused by none less than the Hon. Minister of Finance that I use my position as Head of the Labour Party owned media company to harm a locally licensed credit institution in order advantage my position as an operator in financial services.

How` people who are so busy trying to stop the worrying growth of our national debt find time to stoop so low amazes me. The newsroom at Super One operates autonomously from its chairman and if anything` receives the editorial line policy from the Labour Party.` But I can`t see where politics come into this news item where the newsroom were quoting sources as influential as CNN reporting proceedings in the US Senate. Can any newsroom neglect that it was reported in the US Senate that a Maltese licensed credit institution is one of a list of international banks having agency arrangements with a Sudanese bank reportedly owned by Bin Laden and used to finance his despicable initiatives`

Who cares that in the Super One News feature it was specifically stated that this should` in no way` be implied to mean that the Maltese licensed bank was in any way involved in any wrong-doing`

How times change!` I remember that when in 1991 a Belgian gossip newspaper reported that a Belgian company which had a manufacturing subsidiary in Malta had exported from Malta arms to Iran against US embargo which Belgium was respecting, the PN media published the report without the slightest reservation about the veracity of the underlying facts. The issue was also used by the PN in a political broadcast under the Broadcasting Authority auspices and I had to threaten to take the case to the EBU in order to earn a few lines disclaimer as a right of reply.

But in this country anything seems to go for the administration to earn some sort of a face saver. Flying back from Tunisia and eating my heart out on how this supposedly `inferior` country is successfully attracting foreign direct investment which is clearly escaping I could not decide whether to laugh or to cry when I read the Nazzjon headlines.

It proclaimed that the Government is taking the national debt problem very seriously .` To prove the point it reported that Lm47000 have been detracted from the Drydocks subsidy, being the financial equivalent` of the damages caused by the hot-heads so roundly and unhesitatingly condemned by both the GWU and the Leader of the Opposition.

It sounds as if President Bush were to proclaim he is solving the Twin Tower disaster by deducting the clean up bill from the humanitarian aid he sends to the pitiful Afghans impoverished by the Talibans.

Indeed the national debt problem needs addressing. It can only be addressed by reining back the fiscal deficit, by promoting economic growth and by sensible privatisation. A tall order which cannot by executed by a fatigued 14 year in office administration a mere 2 years away from the next election.

May be readers are entitled to argue that every drop counts. If that is so then brother Tarcisio you may take consolation that the compensation you so richly deserve as a victim of political violence was not denied to you on grounds of political discrimination but because the country needs your drop to solve its national debt. A problem so expertly built-up by Minister of Finance who has even the audacity to think that I would use any official position to take personal advantage.` He should know better!