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.