Monday, 25 February 2002

Air Malta`s Olympic route


Air Malta`s Olympic route

May I share with you this quote I found in Bloomberg Financial News on 18th February spelling the problems with Olympic, the Greek National Airline.


Greece is renewing its attempt to sell Olympic after Sabena SA and Swissair stopped flying as losses worsened after passenger traffic dropped following Sept. 11 attacks on the US. The Greek government plans to eliminate jobs and implement other cost cutting measures to help attract a buyer.

The sole bidder, a venture between Greek millionaire Vardinayiannis and Olympic`s pilots association, that had offered to buy 51% of the airline after previous efforts to sell stake to British Airways` and Axon Airlines collapsed, failed to finance its 102 million euro offer by the set deadline.

Greece has tried several times over the past decade to turnaround Olympic as it spent more than $2 billion to keep the airline afloat. Each time it backtracked because of union opposition to cuts in staff and employee benefits. EU regulations prohibit further subsidies.

To become profitable the airline must eliminate many of its unprofitable routes and discharge half its staff. A succession of Greek governments has contributed to Olympic`s losses by forcing it to hire workers to win votes and giving labour unions a veto over some management decisions. It also mandated the opening and maintenance of unprofitable routes to Australia, South Africa and the US to serve the Greek communities in those countries, even though there aren`t enough passengers to make the routes profitable. Flights to smaller Greek islands and some European destinations are also unprofitable.


This is a warning signal of what Air Malta will have to go through unless management pulls its act together and is allowed to the do so by government in the national interest irrespective of the blushes that may be suffered by the party in government.

Air Malta is a monument to the successful re-structuring carried out by Labour`s two governments of the seventies. People of my age well remember how we raised eyebrows in incredulity when Mintoff announced plans to launch a national airline to be manned by Maltese even in the cockpit.

Over the years Air Malta achieved its dual purpose to become a pillar of growth for Malta`s tourist industry and also to be profitable in its own right.

All this happened and was sustained with gradual healthy growth until the nationalist dreamt of a new role for Air Malta, that of becoming a regional operator with Malta as a hub for the region. It was a pipe dream project which loaded Air Malta with a equipment configurations based on the RJ`s totally unsuitable for Air Malta`s plain vanilla mission to sustain tourism. It also forced Air Malta to make a massive investment in an Italian regional airline` AZZURRA which has absorbed a lot of time, money and human resources but still have to discover what profitable operations are all about.

Add to this the political privileges which Air Malta has to dish out to please its political masters and inflexible union practices and you have an Olympic in the making.

With similar problems at Drydocks,` well known and publicised, and other much less known but still very serious problems at Gozo Channel / Gozo Ferries, Freeport , and` Water Services Corporation, we definitely can do without Air Malta becoming another` burden on the national coffer.

But this cannot happen purely by luck or prayer.` It needs an action plan.` It needs vision.` Above all it needs determination to stop playing games with the country`s prized assets which will force us` to privatise on the cheap when crisis eventually hits.

Air Malta needs to re-discover its mission of becoming an integral and structural part of Malta`s tourist industry and must shed off and cut losses in ventures which made it wander and lose focus under the nationalist administration.

And the tourist industry must re-invent itself to favour Air Malta`s development by re-positioning our product to attract short stay value added tourism. With short stay tourism we can get a much better spend per bed-night and given our bed-stock Air Malta could almost double its passenger kilometres simply by having 2 guests sleeping 3 days each` in a hotel bed in a week rather than one guest staying the whole week.

Unless we act I can well` see Air Malta going the Olympic route and there will be no medals to award, just pain and misery to share.

Alfred Mifsud

Sunday, 24 February 2002

Filming for growth

The Malta Independent on Sunday

Filming for growth

My first brush with the film industry came nearly twenty years ago. The Rinella studio was having one of its cyclical troughs and had run out money. A new board sought` my consulting services to turn the place around from the financial mess it was slipping into.

It did not take long to discover what great potential Malta has to build economic growth around a film industry, or more specifically for turning our country into a favourite filming location for foreign productions.

In those days Malta`s major selling ticket was centred round the marine filming facilities offered by the Rinella tanks. Producers filming sea based sequences whose budget permitted the precision required from natural background scenery did not have much else to go other than Malta.

The problem was that marine action films suffer from bouts of fashion and quite often the local film facilities, dependent as they were on this particular niche, passed through lean period where business was scarce and losses accumulated. As the cycle turns and marine films come back in demand, the industry had to be raised back from rust and ashes to efficient operational levels.

This cycle should have been broken long time ago if my vision for making filming location facilities a pillar of growth for our economy. We have what it takes to make it. Not just marine filming facilities which in the meantime have been replicated in other countries.

The whole country is a ready set for filming. Its small size and the compactness and diversity of locations offer a strong economic argument for choosing Malta as a filming location. The possibility of filming in the antique and peaceful setting of Mdina in the morning and shifting to film a bustling night scene in Paceville in the same day offers strong economic arguments.

What I realised was needed to create a truly value adding film industry was investment, good, solid,` well planned investment.` We needed to create an industry where several operators offer facilities to producers to ensure that the industry runs on efficient commercial lines. The temptations to over charge the first film which comes to make up for the dry period of the troughs of the cycle had to be abandoned.

Secondly the industry had to be given a domestic base to ensure a minimum amount of continuity to smoothen out the cycles.` This needed an investment of a few million liri` in` a series of co-productions in small budget films which would back to back each other for two years.` This is normally the cash out lapse between investment in a co-production and commercial recovery from the revenue generated. Investment in a good sound stage was also needed to compliment location filming.

Thirdly we had to have a national effort to give the necessary fiscal incentives to attract foreign producers, to conclude film co-production agreements with an array of foreign countries and to organise a sensible national marketing effort of Malta as a prime foreign film location.

Within the limited time I had during my stay at Rinella I tried to put the plan into action within the constraints of the resources available. Helped by arrival of two major foreign productions which brought a peak to` the cycle I ensured that these production were given efficient, reliable reasonably priced services where they were aware and could track all their costs and be in good control of their budgets. Considering that major productions have to have an insurance completion bond it would help tremendously if the underwriters know that the location offers a good background for transparent and controlled cost inputs.

Then as soon as the productions were finished and there was nothing else in the pipeline we engineered what is probably the first and only Maltese co-production full feature 35mm film which was shot in 1984 starring no one less than the present Helena Dalli MP in` a leading role with Joe Don Baker and Rossano Brazzi and other Italian stars. It was titled FINAL JUSTICE. It was a positive learning experience though professional commitments elsewhere and my harsh financial controls which are not always appreciated dragged me elsewhere soon after the project was completed.

When I ponder the Lm200 million or so which since then were sent down the shipyards big black hole without effectively undergoing the re-structuring which is being attempted so belatedly, when we have wasted so much time and resources, and when I realise that even if we had devoted just 10% of this sum for investment in an indigenous film industry we could today have a bustling industry offering productive employment to more persons than are currently employed at our shipyards, my heart bleeds.

When I had the opportunity during my chairmanship of Mid-Med Bank during 1997/1998,` there again, in full profession of my belief in the potential that the film industry has for Malta`s economic development, I promoted the formation of a film funding company. We had just the time to pay up the share capital but not to execute any project although I had engaged the services of Malta`s most renowned film professional, director Mario Philip Azzopardi with an excellent reputation for performance in Canada.

Currently the film industry is again showing signs of life. It is a bright spot in an otherwise dull economic scenario. Following the success of the Malta shot Gladiator, both at the ratings as well as box office,` Julius Caesar is again a big ticket film attracted to Malta by our inherent advantages, competitive costs and trade skills.

It is never too late to make sensible investments but the industry must not be allowed to crumble again as soon as the big ticket Roman scenery films eventually go out of fashion. It could be an important chip in the much needed re-structuring programme.

Alfred Mifsud




Zewg ahbarijiet li hargu din il-gimgha it-tnejn jirrigwardaw lil Malta u lil Cipru rigward l-ambizzjonijiet rispettivi taghhom ghar-relazzjoni li jixitiequ ma l-Unjoni Ewropeja (UE).

Skond rapport ta` l-UE kif rapportat fil-fuljett Aggornat mahrug mil-MIC Malta tiehu 26 sena biex tilhaq il-livell ta ghixien medju li jezisti fl-UE filwaqt li Cipru diga qabez il-livell medju ta` l-ghixien tal-pajjizi membri fl-UE.

U min hawn nislet l-ewwel riflessjoni. Cipru mexa `l quddiem hafna aktar milli mxejna ahna. Sa nofs is-snin tmenin il-livell t`ghixien taz-zewg gzejjer kien komparabbli hafna. Fi zmien 15 il-sena ta` tmexxija nazzjonalista jidher li qabzuna u ghaddewna sew.

Dan huwa benchmarking interessanti. Juri kemm tmexxija nazzjonalista kienet ekonomikamnet zbaljata ghax mibnija fuq kuncetti insostenibbli ta` money no problem u fuq platform ta` konsum milli fuq platform ta` produzzjoni.

Benchmarking li juri il-falliment u l-inkomeptenza ta` gvern nazzjonalista.

Izda juri haga ohra wkoll. Juri li l-progress ekonomiku ma jiddependix mis-shubija fl-UE. Cipru ghamel progress ekonomiku kbir hafna akbar minn dak tal-Grecja li ilha 20 sena membru fl-UE u li maghha Cipru ghandu affiljazzjoni ta` lingwa, ta` kultura u ta` demm.

Din il-gimgha gie jzurna wkoll il-ministru ta` l-affarijiet barranin Ciprijott. Dan qal li jkun dizazstru ghal pajjizu jekk ma jirnexxilux jidhol bhala membru fl-UE.` Ovvjament hafna mil-Maltin iffissati f`membership qabzu fuq din il-frazi biex isostnu l-argument taghhom li anke ghal Malta jkun dizaztru jekk ma nissiehbux.

U hawn tohrog ir-riflessjoni `l ohra. Ghala jkun dizastru ghal Cipri li jibqa barra mill-UE meta ekonomikament tant ipprogressa fl-ahhar snin u meta jidher car li Cipru se jkollu jikkontribwixxi finanzjarjament u mhux jiehu minghand l-UE jekk u meta jidhol`

U biex wiehed jifhem din il-komplessita` irid jifhem l-istorja politika ricenti ta` Cipru.` Cipru pajjiz maqsum.` Il-parti ta` fuq tal-gzira, l-isbah parti mil-lat turistiku u ambjentali ilha mill-1974 `l hawn okkupata mil-forzi Torok li gabru hemm ic-Ciprijotti ta` dixxidenza Torka. Ghal zmien twil dawn riedu il-qasma ta` Cipru f`zewg stati sovrani. Il-ciprijotti grieki li jokkupaw il-kumplament tal-gzira dan ma riduhx u huma politikament kunsidrati mil-Gnus Maghquda bhala pajjz wiehed bi dritt poltiku anke fuq il-parti ta` fuq okkupata mil-forzi Torok.

Sforzi diplomatici biex tinstab soluzzjoni ilhom sejrin is-snin izda ma waslu mkien. Nicosia il-Belt kapitali ta` Cipru hija belt maqsuma qisha Berlin ta` qabel l-1990.

Hafna Ciprijotti grieki hallew propjeta` privata taghhom fil-parti ta`fuq u jridu jiksbuha lura. Fuq kollox hemm motivazzjoni poltika qawwija biex il-pajjiz jinghaqad u tispicca d-divizjoni artificjali li hija mharsa minn gwardja tal-Gnus Maghquda.

L-ostaklu principali hija t-Turkija, l-uniku pajjiz li jirrikonoxxi lil-gvern separate ta` Northern Cyprus.` It-Torok jibzghu li unifikazzjoni ta` Cipru ttellef l-influwenza taghhom biex jissalvagwardjaw l-interessi tal-minorita` ta` origini Torka ta` Cipru u twassal ghal diskriminazzjoni u oppressjoni ta` dawk li jqisu bhalha huthom.

L-uniku zbokk ghal soluzzjoni hija li Cipru jidhol membru fl-UE u mbaghad bl-ghajnuna ta` pajjizi hbieb bhal Grecja juzaw l-organi ta` l-UE halli jaghmlu pressjoni fuq it-Turkija, anke marbuta ma ghajnuna li l-UE taghti lit-Turkija, biex din ma tibqax tostakola l-unifikazzjoni ta` Cipru.

Ghalhekk ghal Cipru jkun dizastru li ma jidhlux membri. Ghax dan huwa l-uniku mezz ghal holma politika li jirkupraw it-territorju li ilu esproprijat mil-forzi Torok ghal 28 sena. Ghax il-kitba fuq il-muntanja tan-naha Torka ta` Nicosia ` ahna kburin li ahna Torok` hija gerha li tista` titfejjaq biss bis-shubija fl-UE.` Ghax jemmnu li anke ic-Ciprijotti Torok, jekk Cipru jidhol mebru fl-UE huma wkoll icedu u jaccettaw li jghaqqdu lill-pajjiz halli b`hekk jghlebu l-ostakoli ekonimici li ghandha t-Turkija.` U ghax jemmnu li l-ispejjez ta` l-unifikazzjoni tal-pajjiz ikunu kbar u f`dan il-kuntest Cipru maghqud jerga jinzel that il-livell ta` l-UE u jerga jikkwalifika ghal fondi.

Dan ir-ragunar ghalina ma japplikax. Ghal grazzja t`Alla ahna pajjiz wiehed. U ghalhekk nishaq li rridu nahsbu b`mohhna u nkejjlu b`kejlna u mhux b`kejl haddiehor.

Friday, 22 February 2002

A regional Policy for Gozo

The Malta Independent

A regional policy for Gozo

The EU and the aspired relations therewith do not have to come into this.` Gozo deserves to be treated as an autonomous region. Evidently this is what Gozo residents aspire for.

The isolation of being detached from the main island and the lack of economic viability of permanent hard connection give Gozitans good reason` to seek autonomous regional administration which would help them overcome inherent logistical disadvantages.

I believe that the regional policy should be built on a framework based on three` major pillars. The first is financial autonomy. Gozo would have the right to administer the taxes paid by Gozo residents for Gozo`s own needs.

The second results from the first.` Once Gozo would ring fence its own tax contributions for its own benefits Gozo would have the right to set its own tax systems.` So the regonial council for` Gozo would have the right to authorise a more favourable tax regime to overcome Gozo regional disadvantages. For example Gozo business could opt out of VAT system and pay input VAT as an expense without the need to charge output VAT on sales. Gozo could offer Gozo residents lower direct taxation to attract Maltese to settle in Gozo.

Obviously the Gozo regional council has to be careful to ensure that the fiscal advantages work to expand economic activity to ensure that the tax take not only does not diminish but augments sufficiently to ensure that any` regional borrowing would be within pre-set limits and for very specific productive infrastructure purposes.

Beyond the set borrowing limits capital expenditure inside Gozo would have to be funded by the local regional council whilst Central government would remain responsible for that part of the capital expenditure necessary to deliver the service up to Gozo`s shores.

The third pillar of Gozo regional policy concerns transport between the two islands. Central Government should make it its business to render this transport free for all users. If cars do not pay to travel from Marfa to Marsaxlokk why should they pay for going from Marfa to Mgarr. Inland transport will remain at public transport prices but ferry crossings ought to be` free.

This is fair for Gozitans to alleviate the disadvantages of having to spend much more travelling time to get to the island`s main commercial and political arteries, and would help to attract business to Gozo by making it easier and cheaper for Maltese and tourists to cross over.

One could argue that this is positive discrimination in favour of Gozo residents. Note that I have not said in favour of Gozitans as any Maltese who resides in Gozo ( and genuinely so and not simply` having convenience addresses) would enjoy the same positive discrimination.

This is purposely so. Only through positive discrimination can Gozo be given a fair chance to share in the economic wealth that we can create as one nation. Funding this policy should not be a great burden on the central exchequer. Giving Gozo financial autonomy would probably be cash flow positive for the central budget as Gozitans will be more willing to pay they own taxes knowing that they are directly helping themselves.

Wednesday, 20 February 2002

A Vision of Convenience

The Times of Malta

A vision of convenience

Parliamentary Secretary George Hyzler (Talking Point, February 15) brushes aside all criticism for the scandalous agreements reached with NZ Post regarding consulting service and equity investment in Maltapost.

He justifies the deal as a matter of a vision and accuses with lack of vision all critics, coming from as broad an opinion spectrum as yours truly to the editor of this paper.

On the excuse of vision one could justify anything. Even Milosevic could probably justify his ethnic cleansing on the vision of stability for the Balkan region. This vision argument is just escapism to answer the very specific hard-hitting criticism.

Dr Hyzler says that I am annoyed because the government is delivering. I am annoyed, it's true, but because I am seeing the country's assets being undersold and disposed of in such haphazard manner.

The problem is that the government incompetence in managing its business is forcing it to privatise under stress. Just consider this. Maltapost was formed in May 1998 after tough negotiations with the unions representing the employees to ensure that we get their support for change in work practices to bring about the necessary efficiency improvements. It was formed following Posta Ltd was sent into bankruptcy in record time by the nationalist administration prior to 1996.

By the end of December 1998, after just eight months trading, there was an accumulated profit of Lm250,000. Not a bad start for a new company without any postal rate increases and with 60 per cent rebate on government's postage business.

In the two years under Dr Hyzler's administration, this profit was turned into an accumulated loss of Lm180,000, indicating a loss for the period of over Lm400,000. And this in spite of the fact that during these two years the government, in accordance with the original agreement, started paying full normal rates and benefiting from international distribution of Maltese philately through a contract introduced by the Deutsche Post who were chosen as consultants to help in the necessary restructuring. My calculations indicate a growth in revenue from these sources of nearly Lm1 million liri which, in evidence of gross incompetence, were not enough to avoid turning the profit we left in 1998 into a loss in 2001.

Dr Hyzler makes a lot of questions at the beginning of his article but he fails to answer any. Really the answer to the first question he asks would be enough. Could we have achieved our goals without a foreign partner` The answer is absolutely yes. If foreign technical inputs are required they could have been procured on a short-term consultancy with very specific deliverables. No equity involvement is necessary. The equity route is a very expensive one.

In the end, a very effective minority equity shareholding giving absolute control over the company's operations has been sold for a mere half a million in cash and a further Lm700,000 bartered against a highly inflatedly priced two-year consultancy services.

Against this, the Kiwis got a very real possibility to continue charging for posterity annual technical services well beyond the first two years, making the payback of the initial cash layout very short and lucrative indeed.

No wonder the Kiwis never had the opportunity to make similar equity investments wherever they went to sell their technical expertise. Reality is that no serious self-respecting government would offer them what the Malta government offered on a silver platter.

In the first half of 1999, I myself had made a formal application for a group of investors, including an A1 international bank, to acquire 50 per cent equity of Maltapost with the other 50 per cent remaining in the public sector.

Payment offered was in cash and not bartered against very expensive technical services. All I got was a simple acknowledgement. I assure that had this lead been considered, along with others following formal bidding process, it would have beaten the NZ offer on price, on vision, and on strategic sense in keeping public sector control over such a strategic monopoly service.

I am annoyed, because I see the country being sold on the cheap with strategic natural monopoly services being regaled through direct arrangements to private interests, in the process exposing the consumer to monopoly abuse.

To make the pasticcio complete, the government did not even reserve the right to buy back the shares in case the Kiwis do not deliver on the management agreement even though they obliged the government to buy back these shares in case of such an event. A one-way agreement if ever there was one.

At a time when internationally the pressure is building, following the Enron debacle, to separate auditing from consulting, the Maltese government has confounded all business gurus by mixing consulting with equity, creating the perfect recipe for conflict of interest. This is the work of incompetent amateurs.

Some vision!

Monday, 18 February 2002

Sometimes I wonder


Sometimes I wonder!

Sometimes I wonder;` how could the Privatisation Union whom Parliamentary Secretary` Dr Hyzler is trying to involve in co- authorship of the Maltapost-Transend NZ deal in a clear blame sharing effort,` allow this one to go through`

The only logic that stands is that the Minister of Finance, to whom the Privatisation Unit reports, needed something as bad as this to shift away attention from his Mid-Med privatisation fiasco.` And if the blame bearer is Dr Hyzler, one of his competitors on the sixth district, so much the better.

Clearly Dr Hyzler is totally out of his depth in trying to defend the deal. Vision, he says explains it all. Vision can explain away anything. It is so intangible, so personal that one could just as well dismantle all bureaucracy, all checks, balances and controls and decide all on one`s convictions, based on the so called vision.

When critics bring down Dr Hyzler from his head in the cloud vision to hard realities and ask such simple questions as how the price per share of Lm1.25 was arrived at, Dr Hyzler`s reply amazes and dazzles.

Well, he says,` the book value was between 90c to 95c and so the government got a 30% premium over book value which must be something to be proud of according to Dr Hyzler`s amateurish knowledge of corporate finance and investment banking.

When I hear these sort of replies I am always caught between two opposed thoughts.` Should I laugh at their stupidity or should I cry for Malta`s sake` On reflection I opt for the latter and bring out my rage through public criticism in the hope that at least something is learned from our mistakes.

I tend to disregard the proverb of `where ignorance is bliss it`s folly to be wise` but the Maltapost deal, coming as the first privatisation following the Mid-Med Bank scandal,` proves` that proverbs exude more wisdom than fatigued ministers and parliamentary secretaries.

Is it possible that Dr Hyzler has used the book value as a basis of negotiation of the share price of Maltapost` The fact that the government has committed itself to increased local postage rates by 17%, the fact that Dr Hyzler has confirmed that government will bear the full social costs of relieving Maltapost from surplus employees not required for the Kiwis version of Maltapost, the fact that these will enhance the company`s profitability,` all this does not come into the equation for fixing the share price`

But then I should be the last one to wonder that these things do happen. John Dalli has negotiated single-handedly the sale` 70% of Mid-Med to HSBC. The buyer could fall a large reservoir of in-house investment banking expertise to conclude such an acquisition on favourable terms. You would have thought the this government , with` a penchant for employing useless consultants for the most trivial matters,` would have engaged some expert advice in negotiating such a complex multi-hundred million dollar deal. Yet Min. Dalli says he did it all by himself.

When the valuation documents were placed before the PAC I got corroborating evidence for what I had suspected all the way. From the beginning I had claimed that the valuations were made by the HSBC side and Min Dalli just swallowed them. He retorted with outright negation and claimed that those valuation were his own work. No one else was involved. So if the valuations were not coming from HSBC he was the only one who can claim their copyright.

But this puts John Dalli in an even more awkward position. Because the heftily discounted price at which the Mid-Med sale to HSBC was closed was arrived at by including a 6% risk premium in the` discount rate at which` expected future earnings of the Bank were brought down to present day values.

On top of the 6.25% risk free rate 6% risk premium was added so that the discount factor used in the valuations was 12.25%. Mathematics provide that the higher the discounting factor the lower the present day value and therefore the lower the price at which the bank was sold.

I have been asking the question now for almost three years.` How can Min Dalli explain his own inclusion of 6% risk premium in the sale of Mid-Med Bank when his job was to do exactly the opposite` i.e. to assert that Mid-Med Bank was a solid profitable bank commanding half the banking market in Malta and that no risk premium should be added to the risk free rate at which future earnings were to be discounted.

Min Dalli replies by deflection. He normally asks why did I advice the Labour government to sell the Maltacom shares to unknown bearer foreign shareholders. I explained for the nth time that this is not true and that in any case it is no answer to the question which Min Dalli keeps avoiding.

Sometimes I wonder! But if this is not corruption it is gross gross negligence and they are both serious and punishable as they all lead to the same result. The Maltese tax-payer is being short changed by an incompetent lot who after amassing debt which eclipse Argentinian proportions, they are now distress selling our best assets.

Sunday, 17 February 2002

Ittra lill-Editur tan-Nazzjon


Ittra lill-Editur tan-Nazzjon

Sur Editur,

Nitlob li tippublika din ir-risposta skond il-ligi ta` l-istampa.

L-editorjal tieghek ta` l-16 ta` Frar 2002 jghawweg dak li wegibt u jiskanta b`dak li ma wegibtx.` Dak li wegibt mhux ser nerga` nirrepetih, tghawweg kemm tghawweg.` Nsostni biss li l-ghan politku tieghu huwa li nahdem id f`id ma Alfred Sant kemm bhala Kap ta`l-Oppozizzjoni u fil-futur bhala Prim Ministru.

Nwiegeb dak li ma wegibtx qabel.

L-ewwel fuq il- VAT. Alfred Sant wieghed li jnehhi l-VAT fl-1996.` Dan sar. Illum li l-VAT rega` dahhalha il-gvern prezenti,` il-partit laburista mhux kommess li jnehhi l-VAT u dan johrog car minn dokumenti li gew approvati mil-Konferenza Generali. Qabel l-elezzjoni ta` l-1998 saru stqarrijiet cari minn Alfred Sant li jekk jitla` gvern nazzjonalista u jerga` jdahhal il-VAT mhux probabbli jkun hemm opportunijata` ohra li terga` titnehha. Ghalhekk meta u jekk il-partit laburista jikkonferma iz-zamma ta` l-istruttura fiskali tal-VAT, anke jekk ikun hemm tibdil fir-rati u fit-thresholds, ma tkun l-ebda disfatta la ghal` Alfred Sant u lanqas ghal haddiehor fil-partit laburista.

Fuq l-Unjoni Ewropeja il-Partit Laburista ghazel it-triq ta` partnership milli membership bla ma jghalaq l-ebda bibien ghal revizjoni fil-futur skond kif jizviluppaw l-affarijiet. Din hija l-politika ufficjali kif approvata mil-Konferenza Generali. L-allahares qatt li tirreferi ghaliha int tapplika ghal politika tal-gvern nazzjonalista li jdahhal lil Malta f`membership akkost ta` kollox u fuq ir-regoli prezenti li mhux addattati ghac-cirkustanzi ta` Malta bhala pajjiz sovran zghir u periferali.` Ghal din jien ukoll nghid allahares qatt.

Rigward dak il-promotions li nghataw fil-Mid-Med Bank taht ic-Chairmanship tieghi niddikjara li dawn saru bl-aktar mod serju u meta gew approvati mil-Bord f`jum l-elezzjoni kien biss biex ma jkun hemm ebda leakage li tista` b`xi mod teffetwa l-ghazla elettorali ta` l-impjegati. Il-process kien ilu ghaddej xhur u lahaq il-kolmo tieghu fil-jiem ta` l-elezzjoni ghax din giet bla mistenni. Fil-fatt il-promotions li setghu jistennew ghalkemm gew decizi thallew jistennew il-konferma tal-bord ta` wara.

Rigward il-kritika tieghek tal-buy back li kont varajt tidher li m ghandekx ideja ta` x`inhuwa buyback. Ghax dan ma jobbliga lill-ebda azzjonist ibiegh xi sehem tieghu lil bank u jghin biss biex dawk li` jiddeciedu jew ikollhom bzomm ibieghu idahhlu prezz ahjar milli kienu jdahhlu kieku ma kienx hemm il-buyback. Il-qliegh kien jaghmlu il-bank u kienu jgawdu minnu l-azzjonisti tieghu. Jekk illum l-azzjonisti tal-bank jistghu ibieghu l-ishma bl-Lm4.15 huwa biss mertu` ta` l-Assocjazzjoni li fondejt ma ohrajn biex niddefendu l-interessi taghhom` minn min ried jixtrihom biz-Lm2.90 bhal ma ghogbu jbieghhom il-gvern bla protezzjoni xejn ta` l-azzjonist iz-zghir.` Din il-protezzjoni iggieldina ghaliha jien u shabi anke fil-qorti.

Fuq is-suppost xiri ta` bini hdejn l-ex-Centru Ruzar Briffa, xiri li qatt ma sar, jien kont l-uniku Chairman li qatt bghat il-process ghall-approvazzjoni minn qabel ta` l-Awditur Generali. Imqar li John Dalli ghamel l-istess qabel ma biegh il-Mid-Med kollu bla offerti ta` xejn ghal nofs prezz u mhux qas biss ma informa l-kabinett! Il-kritika ta` l-Awditur Generali minkejja li tlett periti indipendenti li qabbad huwa stess ikkonfermaw il-prezz bhala gust, hija dwar strategija tal-bank li l-Awditur ma ghandu l-ebda prerogattiva fuqha u li ssahhahli l-fehma li anke l-Ufficcju tal-L-Awditur , l-istess bhal Housing Authority, kien partu minn skema biex joholqu taparsi skandli lejlet l-elezzjoni ta` l-1998. Jekk thares nadwarek, sur editur, tara kemm korpi pubblici qed jixtru propjeta` tmiss maghhom bla tender u l-ebda Awditur ma jitniffes.

Alfred Mifsud




Il-proposti li qed jaghmlu is-sidien tan-negozji fil-Kunsill Malti ghall-Izvilupp Ekonomiku u Socjali huma ta` stmerrija u qatt ma jistghu iwasslu la ghal ftehim socjali u wisq anqas ghal soluzzjoni vera tal-problemi ekonomici tal-pajjiz.

Donnhom li s-sidien jemmnu li l-piz biex jigu solvuti il-problemi ekonomici tal-pajjiz ghandhom igorruh il-haddiema billi jnaqqsu il-livell tal-ghixien taghhom u billi jaghtu lura beneficcji li nkisbu matul is-snin.

Hekk per ezempju is-sidien iridu li jitnaqqar id-dritt tal-frank, tal-mard u tas-sahra li l-haddiema kisbu matul is-snin. Dan ma joffri l-ebda soluzzjoni u huwa attentat pwerili ta` min ifittex il-gustizzja biss wara bieb haddiehor.

Ma nghidx li m`hemmx xi elementi minn dak li qed jipproponu is-sidien li ma ghandhomx ikunu kunsidrati biex jiffurmaw elementi minn pakkett aktar wiesgha ta` mizura biex il-problemi tal-pajjiz jigu indirizzati b`mod effettiv. Jien wiehed milli nemmen li biex l-ekonomija tizviluppa ghandha tissahhah il-flessibilita` u l-mobilita` tal-haddiema halli tissahhah l-efficjenza ekonomika.

Izda huwa zball kbir u ma joffri l-ebda prospett ghal-soluzzjoni li jintefa il-piz kollu fuq il-haddiema qishom il-haddiema huma ir-raguni tal-problemi li ghandu il-pajjiz.

Dan mhux il-kaz. Hemm hafna aktar ekonomiji fejn il-haddiema ghandhom pagi u drittijiet ahjar minn tal-haddiema Maltin u minkejja dan il-pajjiz ghandu ekonomija b`sahhitha. Jekk tiehu bhala ezempju l-Isvizzera tara kemm il-haddiema ghandhom livell ta` ghixien superjuri izda l-pajjiz xorta ghandu ekonomija b`sahhitha.

Il-haddiema Maltin iridu jkunu parti mis-soluzzjoni izda ma jistghux igorru huma il-piz kollu tas-soluzzjoni. U l-gvern, is-sors principali tal-problema, ma jistax jahsel idejh u jhalli is-sidien u l-unions jitqatlu kontra xulxin halli huwa politikament la jinten u lanqas ifuh.

Irid ikun gvern laburista gdid, b`entuzjajzmu u impenn li jiggwida lill-unions u lil min ihaddem ghal kuntratt socjali gdid li jindirizza bis-serjeta` il-problemi tal-pajjiz. Gvern Laburista gdid li johloq opportunitajiet godda li jippermettu li t-tibdil u r-ristrutturar li ghandu jsir ma jsirx a skapitu biss tal-haddiem.

Il-problemi tal-pajjiz m`humiex id-drittijiet tal-haddiema.` Il-problemi tal-pajjiz huma l-infiq ezagerat tal-gvern fil-hmerijiet, in-nuqqas ta` l-investiment, u fuq kollox in-nuqqas ta` sistema serja ta` edukazzjoni u ta` tahrig kontinwu ghal-haddiema biex ikabbar il-mobilita` tax-xoghol u biex jattira investiment minn barra li l-aktar li jfittex huma haddiema mharrga u mhux incentivi fiskali.

Fuq dawn il-binarji ghandha tigi mfittxa soluzzjoni u mhux fuq proposti li jwasslu biss ghal konfrontazzjoni.

Friday, 15 February 2002

Scraping the bottom of the barrel

The Malta Independent

Scraping the bottom of the barrel As the mini-electoral campaign related to the March local elections intensifies, government`s shaky handling of the business of governing is falling to all-time lows as it desperately reaches out for the make-up bag to avoid embarrassment. This was nowhere more evident than in Zebbug last week. The Zebbug mayorship is always closely contested. So the PN is using every trick in the book to de-stabilise Labour in the locality. The withdrawal of Doreen Attard Montaldo for technical reasons brought to the surface by the PN, in eagerness to win points on the table rather than in the field, has deprived Labour of one of its vote-pullers. The farcical show put on by PN activists at a local council press conference is indicative of the gutter level that politics has fallen into. A project much needed by the locals to avoid rain water stagnation in some of the busiest village streets (I should know as I lived there until 1998) is being jeopardised through obstructionism. The Ministry of Justice (also responsible for local councils) has invoked the Auditor General to check whether the contract award was all in good order. A good practice by all means but, if the ministry means to stay above politics and not become a PN mouthpiece, this should have been done after the local elections. Otherwise this has all the makings of a fabrication in the time-honoured tradition of the Lay Lay scandal, skilfully fabricated prior to the 1998 general elections. It is unbelievable. A government that sells Mid-Med Bank at half price to the first offer through direct negotiations without a bidding process, involving a loss of some Lm50 million liri, has the audacity to throw the book at a Labour-led local council at the instigation of the PN general secretary. And this on the eve of a local election regarding a badly needed water flow project involving just over Lm100,000. That this was done during these very days when government has signed away for peanuts and posterity effective control of the monopoly postal service, again without a call for transparent bidding, emphatically states that the government is scraping the bottom of the barrel. Who will be invoking the Auditor General to investigate the Mid-Med and Maltapost multi-million deals` Or is it just convenience that Labour deeds are sent for investigation by the Auditor General whereas the PN prefers to investigate their own mess-ups through the government controlled PAC` All this has a purpose. It helps to keep attention deflected from the aggravating economic situation, as was further confirmed in the CBM quarterly for December 2001. Firstly why is the December quarterly published in mid-February` Maybe to keep the bad news away from the Christmas cheer` And there is plenty of bad news. Just note these: business perceptions have been negative for four consecutive quarters and pessimism is gathering momentum; the economy has contracted for two consecutive quarters and year on year inflation is up to 4.3 per cent. The result is that the Real Effective Exchange Rate for the Maltese lira is 10per cent more than in 1995, meaning that we are that much less competitive on international markets because of our rate of exchange policy and the high relative domestic inflation. But take consolation. The Minister of Finance assures that devaluation of the lira is not on the cards and the Minister for Economic Services assures that we are not in a recession.

Thursday, 14 February 2002

Ittra lill-Editur tan-Nazzjon


Ittra lill-Editur tan-Nazzjon

Sur Editur,

Nitlob li tippublika din ir-risposta skond il-ligi ta` l-istampa.

L-editorjal tieghek ta` l-14 ta` Frar 2002 huwa skars hafna fuq il-verita`.` Naqbad biss zewg punti.

Int dawwart dak li ghedt biex gibtu qisu li jien ghedt li Alfred Sant ilu bizzejjed u ghandu jwarrab.` Jien ghedt precizament hekk : Something else which kept me away is my belief that politics is a profession with a limited lifespan and then you have to move on. I believe that the lifespan of a politician in government is of about 10 to 15 years. Zgur li tifhem li z-zmien indikat huwa zmien fil-gvern u Alfred Sant dam anqas minn sentejn fil-Gvern,` Fadallu tlettax il-sena bhala Prim Ministru qabel ma jkun sar il-hin biex iwarrab u jien ghandi kull intenzjoni biex nghinu jaghmel dan ghal gid ta` Malta u tal-Partit Laburista. Jekk hu time up huwa ghal xi hadd iehor li issa ilu prim Ministru 15 il-sena interrotti biss bi 22 xahar tal-gvern laburista.

Ghedt ukoll li tahti meta kont chairman tal-Mid-med Bank il-prezz ta l-ishma tal-bank tant kien sejjer hazin li ridt li l-Bank jixtri l-ishma tieghu stess.` Meta dhalt Chairman tal-Bank f`Dicembru ta` l-1996 il-prezz kien Lm1.40 u meta tlaqt sentejn wara il-prezz Lm2,` zieda ta` 40%. Altru milli tahti il-prezz ma marx hazin. Il-verita` hi li jien kont naf li l-ishma fil-fatt` kienu jiswew hafna izjed skond il- rofitti li kien qed jaghmel il-bank u ghal potenzjal li kellu u ghalhekk ghamilt bhal ma jaghmel kull management serju f`cirkostanzi bhal dawn, jigifieri jaghmel share baybuck.` Il-bierah stess Swisscom, l-aqwa kumpanija tat-telekomunikazzjoni Svizzera, habbret share buyback ghax temmen li l-ishma taghha jiswew izjed milli kwotati fis-suq.


Alfred Mifsud

Monday, 11 February 2002

Let`s Change


Let`s Change

Each new day unfolds events which make it ever more obvious that this country must change otherwise we will just disappear from the economic face of the earth.

Which country with any self-respect would allow to pass as if nothing has happened a solemn unfulfilled pledge by the Minister of Finance in the budget speech just 6 weeks before year-end that privatizations netting Lm47 million were all wrapped up and sealed to be delivered by the year-end. Normal self-respecting countries would expect the Minister of Finance to stand up in Parliament and explain why what was so close to conclusion 6 weeks before the year end is in limbo even six weeks after.

Let's make it clear. I am not critising the fact that privatisations were not concluded. These are delicate negotiations which need time and skill to conclude to ensure that, apart from the strategic implications, we do at least get the best deal for the assets being privatised.

What I am criticising is the arrogance with which suggestions from well intenders like yours truly that the economic environment after 11th September 2001 had turned so bleak that privatisations should be postponed to negotiate the best terms in the background of upbeat economic scenario, were brushed aside` rudely by the Minister of Finance. He, as usual, solemnly professed he knows it all, need no word of advice and has the best obtainable terms wrapped up and ready for delivery irrespective of the grimness of the new economic realities brought about by Bin Laden, especially in the travel industry.

Then last week out of the blue the partial privatisation of the postal monopoly provider was announced as a major step forward when in fact it is the work of amateurs who have no idea of how to handle a rather complex business transaction. Frankly I think that the Ministry of Finance allowed this privatisation to be handled outside the terms of the Privatisation Unit only to create a match for the Mid-Med sale scandal and thus deviate some attention away from the Minister of Finance colossal fiasco which is fast approaching its third anniversary.

Just think it over calmly. The postal service was always in the hands of Maltese nationals. With a country of our size,` running an efficient postal service should not be terribly demanding.

When I created Maltapost as Chairman of Mid-Med Bank that held 45% of its original equity I had clear ideas of where we wanted to go.` We had to central the core postal sorting operation to avoid double sorting in the centre and in the branches. We had to convert the branch network into a distinctive retail network extending the service offered from pure postal products to financial and e-communication services.` `We even had to offer clients different marketing channels to send very focused mail-shots to prospective clients for their products and services.

And all this had to be done through re-organisation to ensure that postal collection starts late in the afternoon/early evening with the post being sorted overnight ready for delivery at the start of the next business day and permitting a second premium same day delivery for item posted before 12 noon in certain business areas.

Clearly foreign expertise was needed to make the changes in an orderly and cost-effective manner.` This was sought and the German Postal service were chosen as apart from charging reasonable fees for their technical inputs while agreeing to very specific deliverables,` they immediately brought value through a very lucrative international distribution of Malta' philately products which left a sizeable amount of profit sharing and procured totally for free all postage stamp printing.

The intention was to get Maltapost well on the road to profitability through efficiency and quality service and eventually to privatise a good minority holding of Maltapost leaving effective control in the hands of the public sector.

This ensured the best of both worlds. It guarantees private sector efficiency while retaining ultimate control of a natural monopoly in the hands of the public sector.

Just see what we are loaded with through the stupid agreements reached with the NZ postal services. With a minority holding obtained for a mere Lm490,000 and some highly inflatedly priced technical services, the Kiwis` have secured for themselves` full control of the monopoly. As government privatises its remaining 65% in a fractionalised manner, the NZ minority holders will effectively guarantee for themselves total effective control of the company assuring the annual charges in their favour at the expense of the Maltese consumer, of highly lucrative technical fees for posterity.

This is the work of amateurs pretending they can take on some of the best blood suckers around.

Alfred Mifsud

Sunday, 10 February 2002

A New Way

The Malta Independent on Sunday

A New Way

My friend Winston Zahra blew his top off this week writing in one of the English dailies to express how fed up he is with the current way of doing politics. He` has good reason to be.` As an investor creating wealth and employment and contributing to sustainable productive economic growth,` he expects our political class to add value to society.` Instead quite often our political class is more apt to waste the country`s resources in petty squabbles while leaving unaddressed the real economic problems.

No amount of writing in the press will however bring about the desired change. The change has to come from the democratic choice that the electorate makes when exercising its electoral privileges. Every country gets the government it deserves. And quite frankly the electorate made a bad choice in 1998.

A government has to govern in accordance with its pre-electoral pledges and its manifesto.` This is the basis of its mandate.` As long as it remains loyal to its pre-electoral pledges the government has a right to demand co-operation from the social partners and,` if not constructive criticism, at least non-obstruction from the opposition.

The real reason why we have the sort of politics that Mr Zahra rightly complains about is that we have a government that got elected on a false mandate and is betraying its own manifesto.

I well remember the current Prime Minister, then Leader of the Opposition, denying with a saintly face the existence of any financial problem in government`s fiscal position. I vividly recall the pledge that as soon as the PN gets elected one hundred million liri would start flowing to us effortlessly from Brussels each year by` simply de-freezing the membership application. Don`t we all remember the straight pledge that the burden of taxation would be rendered easier on all of us permitting consumption based economic growth leading to ever higher standard of living`

Now compare this to what is being delivered.` Not only the fiscal problem has become real but the impact of taxation has hit one and all but most of all has broken the cash flow cycle feeding the business sector. Business confidence has plummeted. `Higher` tax impact is lowering general standards of living and deflating demand.` Worse,` it is not even addressing` the underlying fiscal deficit problem.

This inevitably leads to the sort of frustration exposed by Mr Zahra. In these circumstances where government has lost the moral authority of its mandate,` it is in a weak position to demand and get broad based support, if not consensus, for devising real, if not painless,` practical solutions to the country`s economic ills.

`If the government continues to deny that its prescription and economic formulae are not delivering the bacon and keeps re-assuring us that we are on the right track when all evidence shows that we are rushing towards a thick concrete wall, then small wonder that politics do not allow scope for consensus driven serious restructuring solutions.

Which basically means that the new way of doing politics which Mr Zahra and I both aspire for can only emerge following the next general election if the electorate gives a mandate to a government that is truthful about the real state of the economy and realistic in the solution it offers.

Which basically means that we need a full five year dose of Alfred Sant`s 1996 ` 1998 style of governing with two differences. Firstly is acceptance that Labourites are not children of a lesser god and deserve to be treated equally as the rest of them ( nationalists). Secondly that Labour has a right to govern in accordance with its mandate and anybody who wants to play partisan games in spite of the obligation to be faithful to the government`s mandate had better make way for those of us who are prepared to give the country a chance to try a new way of doing politics.

And this will not be too differently from the way Mr Zahra and his likes provide for` solutions to their` business problems.

Firstly there` is problem identification. I think we have had six years of this now and problems are known and acknowledged. Unlike 1996 a new Labour government does not need to waste energies raising awareness.

Then the alternative solutions have to be outlined with their pros and cons and the choice of a practical solution is made in country`s best interest. Following this a very strong communication exercise has to be conducted where the chosen solution is persuasively explained and sold to the broadest cross-section possible of society. The inevitable immediate pain of the solution has to be eased by focusing on the medium term benefits which will continue to be enjoyed recurrently.` Then the identified solution has to be applied with vigour and determination, celebrating small wins as they occur and alleviating pain through social solidarity whilst permitting the economy to grow and stimulating investors to start believing again that sustainable economic structures can be rebuilt and sustained.

When this happens I am confident that the likes of Mr Zahra, whatever their personal political inclinations, will be part of the solution which will rid us of the current poor way of doing politics. I am confident that politics will return to adding value to society which can be at peace with itself whilst fostering diversity of opinion.` That is the new way I aspire for and why I have taken I decision I have long been avoiding.

Wara Agatha - ikompli l-karnival


Wara Agatha ... ikompli l-karnival

Tlifniha. Tlifna l-aqwa mara li qatt ipproduciet din l-art Maltija. Daqstant kienet kiefra il-gimgha li ghaddiet li serqet minn fostna mara b`qalb tad-deheb li dejjem hadmet senza interessi ghal haddiem u ghal klassi l-baxxa.

Agatha kienet mara unika. Qatt ma nsiet min fejn bdiet minkejja li lahqet l-oghla kariga li wiehed jista jilhaq f`pajjizna.` Il-glorja u l-unuri qatt ma telghulha ghal rasha. Telghalha ghal rasha biss l-idejal socjalista li baqghet temmen fih meta intefghet bla htija l-habs fis-snin hamsin daqs meta kienet President tar-Repubblika fis-snin tmenin.

U kienet dejjem konsistenti ma dan l-idejal. Kont inhares lejn Agatha bhalha l-aktar persuna li kellha personalita` u awtorita` morali biex tressaq lura fil-Partit lil min tbeighed minnu sabiex il-Partit jersaq lejn l-elezzjoni li gejja ponn wiehed, ghaqda wahda taht il-leader wiehed taghna Alfred Sant. Dak li ma kellix zmien bizzejjed biex taghmlu f`did-dinja , perzwaz jien, li Agatha ser tkompli taghmlu mil-glorja tas-sema fejn zgur li ga hadet postha.

Lil Missier etern Agatha mhux ser titolbu xi` post komdu fejn tidher.` Izda zgur li ser titolbu biex jibqa` jroxx il-barka tieghu fuq pajjizna u fuq il-haddiema tieghu u biex jaghti dehen u kuragg lil gensna biex jaghzel gvern li tassew jiddefendi l-interessi tal-haddiema u tal-poplu li b`gharaq gbinu u b`demm uliedu feda lil din l-art minn mijiet ta` snin ta` hakma mill-barrani u ta` kolonjalizmu.

Ghax il-hajja tkompli u wara l-ahhar tislima lill-Agatha ikompli l-karnival. Mhux il-karnival li qed jigi celebrat f`dal-jiem ghax dan parti mil-kalendarju folkloristiku li ghandna nsostnu.` Kollox irid ikun, anke harba ta` ftit jiem mir-rejalta iebsa li qed tifni lil tant familji.

L-aghar huwa li jkompli l-karnival kontinwu u s-sena kollha fl-amministrazzjoni ta` pajjizna minn Gvern li tilef kull sens ta` dekor u ta` rispett lejn il-poplu malti li suppost qed imexxi biex jiddefendi l-interessi tieghu.

Ghax hija karnivalata l-informazzjoni li qed tohrog dwar il-konsulenti li ghandhom il-ministri. Konsulenti li mhallsin mil-belli liri tat-taxxi taghna. Hemm certi ministri tant ghandhom konsulenti li bejn li jaqraw ir-rapporti li jaghmlu dal-konsulenti u bejn li jmorru f`kull okkazzjoni fejn ikun hemm il-cameras tat-TV tiskanta kif jista` jibqghalhom hin ghat-tmexxija vera ta` pajjizna.

Hija karnivalta li dan il-pajjiz gie ridott ghar redikolu ta` amministrazzjoni li dejjem tistudja u tornda r-rapporti u mbaghad ma taghmel xejn. U meta xi darba taghmel xi haga tfattarha.

Ara John Dalli meta biegh il-Mid-Mmed Bank, hemm fejn kellu verament bzonn konsulenti biex igib l-ahjar prezz ghal-Bank, hemm qabad u fattarha u wehel bl-ispiza il-poplu Malti.` Fi zmien ftit jiem u bla ma kkonsulta lil hadd, lanqas lil-kabinett, qabad u biegh il-Bank b`nofs prezz.

U issa mid-dehra ser jikkopjah siehbu Josef Bonnici. Dan ukoll b`mod skandaluz u bla trasparenza xejn biegh 35% tal-Maltapost lil barranin minn New Zealand b`mod li dawn bil-minoranza ser jikkmandaw fuq kumpanija taghna lil ghandha monopolju. Kieku riedu jkabbru is-servizzi internazzjonali setghu ghamlu kumpanija ohra u hemm jaghtu sehem kemm iridu lil-barranin li kapaci jgibu ix-xoghol minn barra.` Izda x`sens jaghmel li il-Posta ta` Malta li anke fi zmien il-kolonjalizmu dejjem kienet immexxija u b`mod efficjenti mil-Maltin wasalna fi stat li nbeghu terz minnha l-barrani u dritt li jikkmanda kollox anke eventwalment kemm jiccargja tas-servizzi teknici li jaghti.

Mela tassew li dal-gvern tilef ghal kollox il-fiducja f`gensna` Dal-karnival jehtieg jieqaf.` Agatha ghinna minn fejn int.

Alfred Mifsud

Friday, 8 February 2002

Closing down

The Malta Independent

Closing Down

Following the Mid-Med Bank sale scandal a White Paper was issued with inputs from World Bank officials outlining the strategy that would be adopted for future privatisations.

The announcement last week that 35% of the equity of Maltapost has been `sold` to a New Zealand company specialising in Postal Consulting was very short on details and long on empty talk that this partnership will bring much value-added. Did we not hear this as a sort of justification for Mid-Med`s haphazard sale Was the White Paper completely forgotten`

We were not informed whether the selection of the NZ partner resulted from public offers, how many interested bidders there were, which bids were short-listed and on what criteria was the NZ bidder chosen .`

The indications are that, as in the case of Mid-Med, the sale was conducted through direct negotiations without any public offering. Even more serious it appears that the chosen partner not only is not paying a reasonable` premium for the strategic share ownership, but also is more or less bartering two-year technical services for the 35% equity position.

Maltapost is a company offering a strategically important service.` Under Labour`s serious privatisation policy such companies would remain under public sector control but a substantial minority equity would be privatised by offering it for subscription` to the general public with precautionary measures to avoid undue concentration of private ownership.

This formula offers the best of both worlds. On one hand it maintains public accountability for natural monopolies that are conditioned by the minute size of our economy. On the other hand it brings private sector discipline to the internal management of the organisation to avoid unethical and undue political interference.

PN`s way of privatising Maltapost, from the scant information provided, is a classical example of how not to.` Where is the transparency when only the superficial details have been given These are public assets. Their disposal demands full public accountability. Why must information be first denied on the incredible excuse that the deal was a commercial secret and then the documents be published only after extensive grilling by the Opposition and without any background justification`

What sense does it make to give a strategic holding to a technical partner which thus gains the prospects of controlling the company when the government eventually floats the remaining 65% in line with declared government policy to act only as regulator`

Why do we have to pay for technical inputs through equity priced at give away rates` When Maltapost was originally set up through my personal initiative we had technical partners competing for the job but equity was offered to none. Offering equity to a technical partner locks the company into the technology of the equity partner.` It leaves poor scope to negotiate the cost of technical inputs on an arm`s length basis through inviting competing bids. What if the technical partner does not deliver` Would we still be locked with him through the equity position`

And why should such a potentially controlling stake be offered through a quasi par` share capital increase without an appropriate premium reflecting the on-going business, the brand and the monopoly situation When the Government acquired the 45% equity holding in Maltapost formerly held by Mid-Med Bank prior to its sale to HSBC, government paid a premium to Mid-Med even though the company had only been operational a few months. How is it the government has a knack for buying high and selling low`

Have we` lost all sense of national pride or is government` in a closing down sale mode.` Is the government closing down`

Thursday, 7 February 2002

Another step forward to mediocrity

The Times of Malta

Another step forward to mediocrity

Dr George Hyzler ( The Times 7th February 2002) in defending his government`s decision for the` Maltapost contract signed with a NZ company,` prefers to attack his predecessors, hoping that twisting or obscuring facts will make the present mediocrity that little bit more acceptable.

He says that lack of vision typifies the no-longer-new Labour. So vision in Dr Hyzler`s dictionary is putting to the side` the White Paper on privatisation published soon after the Mid-Med Bank sale scandal, and taking a leaf from the Minister of Finance book by concluding direct negotiations without a transparent bidding process. Some vision!

Then he is extremely economic with the truth when he says that Labour did the same with Singapore concerning Freeport. Can Dr Hyzler please produce any document where Labour committed itself to do any business with the Port of Singapore without a transparent bidding process. Singapore were just given a facility to conduct a due diligence of Freeport without any commitment by either party. Labour did not even have a policy for privatising Freeport and the Singapore involvement was being sought to engage them in the possibility of management enhancement` and procurement of new business by networking into Singapore`s unique international shipping network.

He then says that Labour is misinforming in saying that technical assistance from the German Post was obtained for free when in fact Lm60,000 were paid. Is this not indicative of what technical fees should cost. So the German Post were doing the whole postal system re-organisation for some Lm60,000 whereas the NZ firm is being paid Lm735,000 with very limited clawback facility in case of non-delivery.

But that it is only half the story. Dr Hyzler should mention` the agreement for printing of postage stamps and enhanced international distribution which the German Post brought to Maltapost which delivered instant benefits many times over the technical fees.` All in all the technical services negotiated by the original Maltapost team under Labour were cash flow positive and produced an operating profit.` I can categorically state that management accounts for the period from incorporation in May 1998 to November 1998, when I last touched with Maltapost through the then Mid-Med Bank shareholding, showed substantial operating profit. So where are the politically motivated and short-sighted decisions taken in 1997/1998 which according to Dr Hyzler brought untold hardship and disruption to postal employees and stunted the company`s growth` That this profit performance was turned into losses under Dr Hyzler`s` administration, cannot be blamed on Labour, I hope.

I can re-assure Dr Hyzler that what Malta is now be paying through its nose for technical services would by now, under Labour plans,` have all been implemented with little or no cost in technical services including centralisation` of core postal sorting services and conversion of branches into modern retail network extending into ancillary products, including financial services.

But enough defence from the unjust accusations levied by Dr Hyzler. I wish to pass judgement of the deal with Transend after having studied the published documentation.

It is strategically wrong and economically hopeless. Strategically wrong but it is crazy to buy technology through equity. It is expensive and locks the company into the technology of one provider without the possibility of seeking technical inputs from other more reliable economic sources.` The` future as it unfolds brings` changes to` the economic fortunes often` turning giants into dwarfs and vice-versa.

It is economically hopeless because selling a 35% stake in Maltapost with a guaranteed monopoly on UPU postal service, with the assurance of 17% increase in postal rates and declaring willingness to privatise the rest in a fractionalised manner leaving the foreign minority shareholder` in the effective control of whole company,` and all this` for a mere` Lm1225000 payable just Lm490,000 in cash and the rest bartered in instalment over highly over-priced technical services, is daylight robbery. Effectively the NZ company are investing part of the profits from the technical services in the cash element of the transaction and securing themselves the right to control Maltapost for posterity.` In` the process they will comfortably` keep charging sizeable technical services each` year to the detriment of the small shareholders and the consumers who will eventually foot the bill through monopoly driven rate increases.

Has` this country has lost so much confidence in its own ability to manage itself that even a service that under colonial rule was always domestically controlled has to be offered on a silver platter to a firm from down down under. If for Dr Hyzler this is a step forward than he must be driving` looking at the rear mirror.

Monday, 4 February 2002

Total Solution


Total Solution

The happenings in Argentina are a living example of the social disaster which follows a macro-economic collapse.

It is the answer to those doubters who think that the Nationalist way of money no problem can be pushed eternally into the future and that we can spend our way out of any problem.` It is the reason why Labour`s more rigorous way of economic management as experienced between 1996 ` 1998 has a strong social dimension inbuilt in it.` `It is the only serious way to avoid the social havoc of an economic collapse which will bring ruin and poverty to the most needful and unprotected.

Let me outline the step by step road which would lead us to Argentina if the people who doubled our national debt in the space of five years and who made us one of the most indebted countries in Europe were to be returned to power to continue playing their illusionary finance game.

For some time the position can be sustained through privatisation revenues which finance would` the growing budgetary gap without addressing it. But when we work our way through the privatisation revenues without addressing the underlying deficit problem, the national debt will start rocketing up again.

If this should coincide with an upturn in the international interest rate cycle the cost of financing would become increasingly unbearable.` Interest rates would have to be held up higher then the composite rate of the Maltese Lira basket in order to protect against flight of capital. This will continue to stifle economic growth.

At some point in time the general public will become increasingly suspicious of how sustainable the financial system would be and the flight of capital would gather momentum irrespective of the interest rate differential. The risk of devaluation would be perceived as much higher than the gains through higher interest.

This will build on itself forcing the government into a crisis.` Local borrowing would be neigh impossible and government would have to resort to foreign borrowing at high interest rate to sustain the financial system. At this time our international credit status would have been depressed so much that even foreign borrowing would become quite expensive.

As normally happens, reality could be delayed but never avoided. The markets or international lenders` will force the government to face reality and administer the medicine which we all wish to avoid. These measures would be a crisis devaluation, a substantial cut in government recurrent expenditure including public sector payroll and social security benefits and the pension system.

At that point in time the Maltese people will receive an overdue wake-up call returning them from the PN illusion to the economic hard reality. Then it would be too late to avoid the pain as the Argentine lesson is so painfully showing.

Labour must provide solutions to avoid this grim scenario. It must ensure that solutions protect those most in need and who are faultless for the economic mess we are driving ourselves into. Rather than allowing the whole edifice to crush burying beneath it the most needful and the least responsible, Labour must propose realistic` ways to dismantle gently the wobbly financial structure they will inherit and gradually rebuilt on the sound foundations of real economic growth.` This is the only way` to ensure there is wealth to share rather than` misery to throw at one another.

Each day avoiding to address the real problems inches us that much nearer to an Argentine catastrophe making the real solution that much more difficult. The country needs a total solution not haphazard crisis measures.

Alfred Mifsud

Sunday, 3 February 2002

Bla sens


Bla sens

Id-decizjoni tal-Bord ta` l--Awtorita tax-Xandir rigward l-ilment tal-Partit Laburista fuq l-ispots poltci tal-MIC hija bla sens.

Immagina kieku jkollok kawza u tirbahha u l-imhallef jaghtik ragun izda ma jtikx rimedju. Anzi japprova li l-ligi tista` tkompli tinkiser. Hekk bejn wiehed u iehor iddecidiet l-Awtorita` tax-Xandir.

Mhux ta b`xejn il-Bord kien maqsum dwar dan u kien biss bil-vot tac-Chairman li ghaddiet id-decizjoni tal-biki li ghaddiet.` Ikunu f`mumenti bhal dawn li juru is-sinsla tac-Chairman ta` Awtoritajiet daqstant awtonomi u importanti ghad-demokrazija.

Meta jigri dak li gara u Chairman jiehu decizjoni li togghog lill-gvern li appuntah u li fl-opinjoni tieghi tmur kontra is-sens komun allura tibda tiddubita xi skop hemm li noqghodu nonfqu l-flus f`Awtoritajiet. Ghax la l-Gvern jinghata de facto ragun meta de jure jinghata tort,` mela allura l-Awtoritajiet qeghdin hemm biex jahlu flus ic-cittadin u mhux biex jipprotegu lic-cittadin.

Ghax wiehed forsi jista` jifhem li kieku l-Awtorita iddecidiet li m`hemmx kaz ta` zbilanc kif ilmenta il-Partit Laburista.` Izda dan qajla seta` jsir meta l-Awtorita ghandha precendenti li juru bic-car li hemm zbilanc sagrosant fuq materja ta` kontroversja politika nazzjonli. Ghalhekk l-Awtorita tat ragun lil Partit Laburista li l-programmi tal-MIC qed joholqu zbilanc fuq ix-xandir pubbliku.` Ma setghetx taghmel mod iehor.

Izda x`jiswa r-ragun bla rimedju` Kwazi kwazi huwa aktar offensiv.

L-unika rimedju li kien jaghmel sens huwa li kieku ix-xandir pubbliku kien orndat jibbilancja l-informazzjoni dwar is-shubija fl-Unjoni Ewropeja b `informazzjoni dwar l-ghazla l-ohra ta` partnership specjali skond it-twemmin laburista ta` Malta Svizzera fil-Mediterran. Izda r-rimedju ta` l-Awtorita kien li kollox jibqa kif inhu, minkejja li l-istat ta` l-affarijiet kif inhuma kien dikjarati zbilancjati, u jigu varati sensiela ta` programmi ta` diskussjoni dwar l-ghazliet li ghandu quddiemu il-poplu Malti dwar l-Unjoni Ewropeja. Bhal li kieku jekk il-Partit Laburista sofra gol mhux validu u l-protest jaccetta lil-gowl kien invalidu, jista jkun hemm rimedju billi jaghti gowl iehor lil kull wiehed liz-zewg timijiet. Mhux xorta ser jibqa`l-izbilanc!

Kienu wkoll offenzivi tal-MIC li hargu jifirhu b`din id-decizjoni stupida ta` l-Awtorita tax-Xandir u qalu lil tal-Labour ma jridux lil-poplu jkollu informazzjoni dwar l-Unjoni Ewropeja.

Ikun tajjeb jekk il-Partit Laburista ixandar il-korrispondenza dwar din il-materja li kien ghaddiet bejn il-MIC u bejn Super One f`Novembru u Dicembru tas-sena 2000. Ikun car hemm min tassew irid li l-poplu jkollu biss verzjoni wahda mhallsa minn flus il-poplu u rrifjutha li jaghmel l-istess programmi ta` informazzjoni dwar l-ghazla laburista.

Tal-MIC kienu irrifjutaw bl-aktar mod assolut li jonfqu somom ekwivalenti ta` dak li kienu qed jonfqu biex jaghti informazzjoni dwar is-shubija biex jinfurmaw ukoll dwar Svizzera fil-Mediterran. Bl-aktar mod assolut kienu ghamluha cara li huma biss interessati li jaghtu informazzjoni biss fil-kuntest ta`shubija.` Ma accettawx li ntellghu dokumentarji biex jispjegaw jekk in-nies ta` l-Isvizzera , tan-Norvegja u ta` l-Islanda ihossuhomx anqas ewropej ghax pajjizhom ghazel arrangament differenti minn shubija ma l-Unjoni Ewropeja. Dawn id-dokumentarji kien tellaghhom Super One stess minn butu u qatt ma gew murija fuq l-istazzjon pubbliku.

U issa minn fuq iridu jghajjru lill-Partit Laburista li ma jridx jinforma dwar l-Unjoni Ewropeja.` Ta Super One konna ridna li jkun hemm zewg verzjonijiet. Huma tal-MIC, issa bil-barka tac-Chairman ta` ` l-Awtorita` tax-Xandir, li jridu jsemmghu qampiena wahda avolja l-Awtorita qablet li dan l-izbilanc huwa illegali.

Minghand ic-Chairman ta` l-Awtorita` tax-Xandir kont nistenna ahjar. Ghax il-gvernijiet imorru u jigu izda s-serjeta` u l-irgulija, jew in-nuqqas taghhom, jibqghu` jigri wara dak li jkun jghaddi kemm jghaddi zmien.

Alfred Mifsud

Friday, 1 February 2002


The Malta Independent


Apartheid may have been consigned to history in South Africa but in Malta it is alive and kicking.

The way different categories of workers are treated with regards to job security and redundancy provisions shows that de facto, if not de jure, not all Maltese are equal citizens.

Employees in the private sector are heavily exposed to redundancy risks.` The law provides no more than eight week notice period to redundant private sector employees even if they have 30 years of faithful and efficient service to their employer. Any additional compensation depends on the strength of the union representing the employees, if any, and on the financial position of the employer. The fact that the employer was forced to discharge employees through redundancy is itself indicative that the financial position is probably not at its best.

At the other end of the spectrum there are central government employees and employees of public bodies who either deliver a monopoly service or are some part of a regulatory organisation. These operate under scant controls of accountability and enjoy maximum job security.` In general their level of efficiency is inferior to that of the private sector, but,` if not in terms of salary level, their job provides superior quality of life conditions including summer half days, job security` and all.

Inefficiencies are hidden in government general recurrent expenditure budgets or in case of monopolist suppliers in excessive charges for delivering a monopoly service.

Somewhere in between these extremes there are employees of publicly owned commercial companies or` organisations who have to compete with the rest of the world to earn their living.` These would include the shipyards, Freeport, Air Malta, Maltacom etc.` When these organisations fail to achieve economic sustainability they seek financial support form the government through subsidies, loans, financial guarantees etc. These become all too evident and give rise to general level of discontent by general taxpayers even though their` financial drain is not as big or as permanent as that applicable, though less visible, to central government employees.

For this category of employees the redundancy `offer` comes with a four or five digit cheque and a veiled threat that unless accepted `voluntarily` there can be no guarantees.

As a taxpayer I can only say one thing: what a waste of resources. It is quite obvious that the redundancy cash offer will be accepted, if at all, only by the more able and skilled employees thus depriving the organisation from the very ingredients necessary for its revival.

The resources should be devoted to launch massive retraining programmes for all employees irrespective of who their employer happens to be. Retraining is an obligation of the whole society to all employees to provide them with the best prospects and security against redundancy. It produces mobility and flexibility so much necessary to keep our economic structures evergreen with new green shoots replacing the dried twigs. And in the interest of social justice retraining opportunities have to be offered to one and all and redundancy protection has to be harmonised to treat all Maltese as equal citizens.