Friday, 24 September 2004

Real Eco Contributions

The Malta Independent 

The country needs real eco-contributions; not mere fiscal measures, but real measures to reverse the persistent deterioration in our environmental standards.

This week`s car free day is a mere symbolic but ineffective demonstration of how better our quality of live could be if we are stimulated sufficiently to change habits from private to public transport means for moving around.

If there is a single measure which could bring about a step change improvement in our quality of life and environmental standards then it is having an efficient public transport system.

High motorization rates, excessive traffic density, poor, indeed atrocious, state of our road network cannot but result in a serious upward trend in` traffic accident statistics causing grief and pain to those unfortunate enough to be involved in such accidents.

Meanwhile public transport service continues to deteriorate in spite of regular increases in bus fares. The higher these go the more unsatisfied all parties become. Those who have no option but to use public transport rightly complain of a higher price for a reduced quality of service. The public transport operators continue to be hit by the reduced number of people using public transport as commuters desert the unsatisfactory service to arrange their own private transport means.` And those who are forced to use private transport means add to the traffic congestion problem which leads to an increase in the impact rate of traffic accidents.

The consequences of such an inefficient transport system propagate widely. The importation of cars much more than we really need, the use of petrol and diesel far beyond what would be` necessary if an efficient public transport service were to be available, drain away scarce resources.` The loss of life in fatal accidents and lost man-days of work due to serious traffic injuries translate into unquantifiable waste of needed resources.

Unless a radical new approach to public transport is taken the situation will gradually spin out of control.

The end solution is simple and clear. We need to have an efficient and reliable public transport system which motivates commuters to use it in preference to private transport means. This would reduce congestion on our roads, make a much more efficient use of energy ( and help protect the environment), and restore economic feasibility to our public transport without over-taxing those who must use it and without relying on government subsidies.

Whilst the solution is simple, how to get at it is much trickier and complicated. It would demand some unpleasant discipline which might initially find resistance until its benefits start emerging in the medium term.

The first reform necessary is that we need to clear our city and village centres from all traffic except public transport means.` Coupled with parking enforcement this would provide the necessary motivation to prefer public transport.

A further reform would be in favour of public transport routes on fixed rails free from traffic blockages. This would ensure timely arrivals of public transport services making it reliable enough to re-build confidence and custom by the general public.

This would need to be further supplemented by service up-grading in terms of cleanliness, customer service, frequency and reach of network services.

No partial or half-hearted approach would bring home the desired results. Public Transport requires a total solution which would demand an investment which can only be recouped if the volume of users is increased in multiples within a relatively short period of time.

If Government cannot find the necessary energy and resources to bring about the necessary changes, it should invite private bidders to propose a solution on the built operate and transfer model which would safeguard the interest of current bus-owners who are otherwise destined to a slow death by attrition. Government could subsidise fares for an initial period until confidence in the system is re-built by levying a corresponding tax from those using private transport means and/or from enforcement of parking regulations.

I see this as much like the revival of the cinema industry that until fifteen years back was almost annihilated until the Decesare`s provided a totally new approach to Cinema entertainment.

And let me just finish with some thoughts about the eco-debate as to whether or not our tourism development needs more golf-courses.` May be it does and may be it doesn`t.` But what it really needs, rather than copying others in areas were we are poorly set to compete effectively, is substantial and material up-grading in what we already have and which distinguishes from and give us an edge over most of our tourism competitors.` It is the protection and promotion of our unique cultural heritage.

Let`s protect what we already have before wasting energy debating about building more white (green!) elephants.

Sunday, 19 September 2004

Beyond Self-Praise

The Malta Independent on Sunday 

We are in the self-praise season. Whilst an element of self-praise could be justified, as the saying goes, it is no virtue. We really need to look beyond it.

Take for example of the Conference organised this week by the MFSA to celebrate the 10th Anniversary of the legislative package that rendered Malta an onshore financial centre by re-branding the former MIBA (Malta International Business Authority) into MFSC (Malta Financial Services Centre) later re-named MFSA (Malta Financial Services Authority) when in 2002 it became the sole regulator for the financial sector.

A fair amount of self-congratulations is proper as the is one of the rare occasion where the government and the opposition co-operated to give the legislative structure` a consensual foundation which adds comfort and security to foreign investors seeking a well-regulated and efficient jurisdiction.

I felt however that the Conference fell short in analysis as to whether things could have been better; whether results achieved are as good as could have been expected;` and what is being done to render Malta truly a financial centre competing successfully and pulling business away from established centres like Luxembourg, Dublin and London just to mention three EU financial centres, acknowledging that it is now too late to compete with the advantages of non-EU financial centres.

Instead we had unreserved lauding of the smooth transition from the former dual regulatory model (Central Bank of Malta and MFSC) to a single regulator (MFSA) for the whole financial sector. Even here regretfully we had a very partial view. The concept of having a single regulator is now an accepted wisdom the world over. No one argues against it. So why continue debating something about which we all seem to agree`

What we should be analysing is the wisdom of having the MFSA as the single regulator rather concentrating regulation at the Central Bank and leaving the MFSA to conduct promotion for attracting foreign investment to Malta without conflict to its regulatory role.

The model of residing regulation in a separate Authority outside the Central Bank was adopted by several other countries. The question is whether this model is suitable for our size and characteristics.` I doubt it. If the Central Bank had been retained as the single regulator the current separation of the task for maintaining financial stability at a macro-level (which still resides with the Central Bank through its lender of last resort function) from the regulatory function of the individual licensees would have been avoided.

That the current model is not working as efficiently as it would have worked if the Central Bank was tasked to become the single regulator with responsibility both for overall financial stability as well as for the proper conduct of each licensee, was evident from the speech given by the Governor Michael Bonello at the same conference.

He said `This positive performance notwithstanding, there remains scope for further improvement in the framework through which the Bank and the Authority seek to safeguard the health of the domestic financial system. ` and` `While the current institutional and regulatory framework has been successful in keeping any major systemic disturbance, further progress is required, for example by defining the roles and responsibilities of the Bank, the Authority and the government.`

To put the matter in simpler language does it make sense for the Central Bank to be responsible for overall financial stability and the MFSA to be responsible for regulating separately HSBC Malta Bank plc and Bank of Valletta that between them carry 90% of the domestic banking market` These circumstances are unique for Malta given our size and characteristics and should be considered before importing foreign models lock stock and barrel which ultimately land us in non-sensible and inefficient work duplication.` In the very unlikely, almost unthinkable, event that one of the big banks meets instability, is it not obvious that its sheer size will cause instability to the whole system that the MFSA on its own would not be able to handle without the intervention of the Central Bank in its function of a lender of the last resort` So why split the functions between two organisations`

Shifting to another area I am sure that next week we will hear eulogies of self-congratulations for the country`s performance during the first forty years of independence.

Again in a sense part of such eulogy would be justified. We have come a long way since the mid-sixties when we used to export our best human resources as migrants to Australia and Canada. Our average standard of living has increased from near poverty line to a fairly comfortable middle-class with access to public services of` education, healthcare, pensions, housing and law and order which is comparable and at times even surpasses those available in richer countries.

But beyond the self-praise it would be a fool`s paradise not to question whether what we have built is sustainable when we are faced with a daunting task of handling` the twin peak mountain of debt and debris which our `progress` has produced. It would be totally unrealistic not to question whether what we have achieved was at the expense of borrowing resources from future generations which our children and theirs will have to make good for by rolling back standards of living to more sustainable level.

By all means let`s enjoy the self-praise season and take heart from what we have achieved. But above all let`s also be self-critical and see whether we are in fact running not just faster than we used to run forty years ago, but whether we are running as fast as our competitors. Let`s move from absolutism to relativity and put our self-praise in this context.

Friday, 17 September 2004

Crisis of Identity

The Malta Independent 

This government is suffering a crisis of identity.` It is being torn apart by the need to present itself detached from, and guiltless of, the problems inherited from the Fenech Adami administration.` At the same time it needs to continue peddling the fad that things are getting better and problems will be solved by merely talking about them without .the need to demand sacrifices from the electorate.

Quite obviously it is wrong on both counts. Whilst there is no argument about the political weight of the Prime Minister leading the cabinet, ultimately the executive is the collective responsibility of the whole cabinet. By and large the current is the same cabinet coming down from past PN administrations.

It is therefore surreal and tragic to hear the Prime Minister talking about the need to enforce efficiency as if he has just arrived on the scene. It is equally incredible to see government expressing the need to re-check the whole Mater Dei hospital project to see who is responsible for the cost overruns and delayed implementation.

It is clear that the principles of accountability are not being well-served by the extended tenure of the same government where subsequent administrations composed largely of the same constituents cover-up their own weaknesses till costly mistakes are rendered only of historic value.

The first crisis of identity of the Gonzi government is the need to distance themselves from past mistakes and excesses without disowning themselves and without admitting their direct responsibility for the economic sclerosis that the country has been landed in and is finding it so difficult to extract itself from.

It is obviously easy to expect and demand apologies for excesses and mistakes of Labour administrations of the seventies and eighties. But charity begins at home and if we are to start the apologies profession, it should start in a time descending order. So demands for apologies for political discrimination abuses of past Labour administration should be given weight by offering an unreserved apology for loading us with a debt equivalent to 75% of the GDP whilst still suffering from heavy infrastructure deficiencies.`

The second dimension of the crisis of identity of this government is that whilst the administration is willing to admit problems, though dismally attempting to distance itself from their authorship, it is not doing much about them. Problem identification and acceptance are indispensable first steps to prescribing effective solutions.` On their own, however, they do little other than intensify the economic gloom.

So I fail to see how we are expected to believe that things are getting better purely because the administration has the `courage` to admit problems in areas previously defined as fine and dandy. How we are expected to believe that the economy is growing again healthily when all ground zero indicators show otherwise`

I am inclined to accept the thesis that Maltese politicians are so afraid of driving the necessary change, unavoidably at the expense of their political fortunes (just look at the experience of Chancellor Schroder and his SPD in Germany) that only a crisis will force change upon us, and this at a future point in time when we will be in no position to refuse.` We do not have what it takes to deliver the necessary change to avert the crisis. We are sitting out watching the paint dry, waiting either for an economic miracle (like a sharp improvement in the international economic scenario which could generate substantially increased demand for our exports of goods and services) or for the crisis time-bomb to explode.

Probably the opposition is praying for the crisis to explode under the watch of this government whilst the government is just procrastinating hoping to limp to the end of its term leaving the gale to turn into a hurricane under the watch of the current opposition.

If my reading of the situation is correct than it is truly the case of the country being very badly served by its political class.` If we have come to stage where government cannot implement the necessary change process as it fears political repercussions and if no agreement with the Opposition can be reached for a consensus approach towards solving problems of a national scale, then it is time for the politicians to reconsider their role in society.

When Italy went through a similar experience in the 1990`s the whole political landscape had to be re-drawn and for some time non-political executives like Ciampi, Dini and Prodi had to be called in to execute the unpopular changes that the politicians had no courage or discipline to deliver.

Politics is all about bringing and stimulating positive change. Unless politicians can rediscover their true identity and mission, then they should, in the national interest, make space for solutions that can be offered for some time by professional executives who are free from the pressure of having to be tested for electoral popularity at the next democratic calling.

Friday, 10 September 2004

From Risk to Risq

The Malta Independent 

Risk in English language phonetically sounds quite like Maltese language `risq`.` The meaning is almost diametrically different.` Yet the transformation of risks into risq (blessings; good returns; well-being) is the challenge facing us, as we seem lost and overcome by the structural risks which are bedevilling the economy.

Party talk these days is about how bad the business situation is and how, export sector apart (this depends on foreign demand and our competitiveness), there is little comfort to believe that anyone is doing anything about it.` The general feeling is that the situation is beyond repair and that only a crisis can galvanise the parties to do what needs to be done, painful as it may be, rather continue shadow boxing each other whilst defensively guarding their patch expecting the others to give ground.

History is replete with examples of how successful change is generally undertaken when crisis hits. Crisis is a great catalyst for change.` The rapid build up in national debt has financed temporary but expensive solutions averting unpleasant crisis, but it has not exactly done us any lasting good. It has complicated the definition of true lasting solutions and has not allowed crisis to melt down the inbuilt resistance to change.

Now that the national debt allows no room for buying more fudged solutions should we resign ourselves to the need to let crisis force change or can we overcome ourselves and embrace change to avert the crisis`

Let me relate current experiences of some well known international business brands in handling crisis.` The 9/11 terrorist attacks spelt disaster to the fortunes of most international airlines. Not only they saw their revenues fall as travellers shied away air travel but the political instability has raised the cost of energy, one of the principal operating costs of any airline.

British Airways and Lufthansa understood the need to undergo immediate restructuring, involving re-inventing a whole new way of doing business generating efficiency through reduced headcounts with various rounds of layoffs.` Costs were brought down to the level of available business until confidence returned to rebuild to the market.` After the initial shock both BA and LH soon returned to profitability and are now well poised to capture market share as air travel volumes get back to normal growth trends.

Compare this to Alitalia. Resistance to change and management lack of determination to manage, together with dirty political compromises for which the Italian system is well-renown, has rendered Alitalia an unbearable financial burden on the State. Furthermore the State has limited ability to continue bailing out Alitalia given the objectives of fair trading in the EU single market which makes operational state aid illegal. Companies like British Airways are eagerly awaiting Alitalia`s collapse to capture their market share.` They have recently rebuffed and fought back measures by Italian aviation authorities meant to compel them to raise their prices on routes to Italy in order to give a chance for inefficient Alitalia to compete with its more efficient and agile competitors.

How does Air Malta compare` My impression is that it lies somewhere in between the BA and Alitalia experience but much closer to the Alitalia pole. Restructuring came in late when many millions had already been lost and it is doubtful whether the restructuring is enough.` I am always very wary of re-structuring which excludes redundancies as a matter of principle. If a job can be done with less why should it be done with more rendering the organisation uncompetitive and threatening the sustainability for employment for all, both the needed and the not needed`

Redundancies are unpleasant and hurtful and should be adopted as a last resort. But redundancies should never be excluded if change is to be successfully delivered. It is then up to the government to build social systems to cushion the frictional pain as people pass from one productive job to another and this has to include both social payments and re-training inputs.

Another current case study of how crisis could lead to successful change is the case of Samsung, the Korean global champion.` In the late 1990`s it was the struggling producer of cheap consumer electronics. The 1997 Asian financial crisis had forced Korea to accept a US$58 billion IMF bailout. It exposed for Samsung the fragility of its corporate philosophy. Samsung responded by slashing one third of its workforce, sold-off unviable businesses including plans to enter the auto sector, slashed its debts and re-focussed on new technology with high level of profitability. Their executive Vice-President was quoted as saying `Left to our own devices we would not have made such a fundamental shift but the IMF crisis forced our hand`

Today the company sits near the top-end of every market sector it competes in with reputation for innovation and creative design.` It overtook competitor Sony in new technologies like flat screen and digital video mobile telephony sets. It is certainly no longer looked down as the producer of cheap consumer electronics but has become a competitor to be reckoned with a brand competing with that of Sony.

Should we await the crisis to force change on us or can we embrace change to avert the crisis`

Sunday, 5 September 2004

Lost Mission

The Malta Independent on Sunday 

When Central Banks speak the economic world listens, digests, takes note and acts.

When Alan Greenspan, the Fed Chairman, speaks, even when he speaks in Greenspeak code, even when occasionally he contradicts what he had said not much earlier, the markets stop in awe to listen and decipher the message. His words carry more economic weight than the Treasury Secretary and indeed, even more than the US President.

When J C Trichet, ECB President, addresses the Press Conference after each ECB rate setting meeting, journalist from all over the world congregate to understand the ECB motivations for the decision that would have just been announced regarding the interest rates for the Euro.

When the minutes of the meeting of the Monetary Policy Council of the Bank of England get published, they are pored over by economic journalists who try to infer the weight of the majority for the decision taken and any dissenting view which might be developing. This is often the first sign of the upcoming shift in policy, if the dissent grows larger in subsequent meetings.

How is it then that when the Central Bank of Malta speaks, generally through its Head the Governor, who enjoys autonomy from government through fixed term Presidential appointment, the country takes little or no heed`

We have got used to the annual speech every November just before the budget, where successive governors over more than a decade have reminded us that we cannot continue to amass debt to finance living beyond our means and that reality will catch up with us sooner rather than later. We get the next day coverage in the Press which is forgotten by the day after and the country continues to plod on regardless, sinking deeper into the bad habits that `have turned us into a middle class society living in a poor country.

The Governor communicates with us through the short press release which is issued monthly after each Monetary Policy Council meeting that sets interest rate levels and gives some very succinct economic reasoning for such decision, normally all in three short paragraphs.

Here again the press would simply quote the Press Release verbatim and life goes on regardless.

How can society continue so blatantly to disregard the wisdom coming from the Bank for which it pays handsomely through the engagement of a Governor, a Deputy Governor, five Deputy General Managers, 10 well staffed departments employing some 300 odd full-timers, sixteen part-timers all housed in two fine buildings right at the vehicular entrance to Valletta just a few metres away from the power centre at Castille`

What exactly are all these doing there` With exchange control no longer in force and with banking regulation having migrated to the MFSA,` society is quite entitled to look at the Central Bank, with skepticism, as not exactly the shining example of efficiency that can preach virtues from the top of the mountain. It could well be that for society at large the Central Bank has lost it moral authority to preach reform, painful re-structuring and the need for efficiency gains when it is itself failing in all these aspects.

Frankly I feel that the Central Bank has lost its mission. From its official communications it appears that it considers its sole objective as the stability in the rate of exchange peg of the Maltese Lira and considers itself quite an incidental and indirect contributor to growth for the Maltese economy. Its most important role of conducting monetary policy has now been reduced to simply adjusting the premium on the Maltese Lira that has to be priced in the official interest rate to ensure that the exchange rate peg can be sustained through protection of the external reserves.

Let me try to put this in layman`s language, something that the official releases of the Bank take little effort to do. The Malta Lira is composed of three currencies in varying weightings i.e. Euro 70% GBP sterling 20% and US dollar 10%. The official interest rates of these component currencies are 2%, 4.75% and 1.50% respectively. 70% of 2%, 20% of 4.75%, `and 10% of 1.5% give a theoretical rate for the Maltese lira of 2.50%.` The official rate of interest set by Governor through the Monetary Policy Council is 3% meaning there is currently a `% premium on the Maltese Lira rate of interest.

Why is such a premium necessary, `one may ask.` It is meant to compensate Maltese savers, who free from exchange control now have complete freedom to invest their capital in overseas currencies by drawing on the Central Banks official reserves, for the risk of the Maltese Lira not remaining stable with such overseas currencies. It is meant to stimulate domestic savers to keep their savings in domestic currency by rewarding them with a half percent hike on a like for like basis.

The Governor no longer controls the general trend of interest rates which is set by developments of the foreign currency components of the Maltese Lira basket, mostly the Euro whose weighting will continue to increase as we cruise towards the eventual fusion into the EMU. If Euro rate goes up the rate of interest of the Maltese Lira will have to go up whatever the domestic state of the local economy which could well be in need of lower interest rates. What the Governor decides is the level of the premium necessary on top of the underlying interest rate to protect foreign reserves and keep exchange rate stability.

Once we join the Euro this premium will disappear, the Maltese Lira will be consigned to the books of monetary history and yet one more of the important functions of the Central Bank will cease to exist making it yet more difficult for the Bank to continue to justify the excessive use it is make of national scarce resources.

Frankly I feel that the Central Bank has lost its mission and has detached itself from the society it is meant to serve. No wonder therefore that society takes little heed of the Bank`s warnings like `the need to strengthen support for the exchange rate peg by enhancing the country`s capacity to generate export earnings, particularly by containing wage and other costs and achieving productivity gains` (rate decision press release of 29th July) or `given the relatively large share of labour costs in the overall price structure, increases in wages should be matched by productivity gains` (rate decision press release 26th August).

The Bank`s mission is being lost in the contradiction of its statements. Once the Central Bank own research consistently shows that the Maltese Lira rate of exchange at current levels is 10% over-valued in real terms over the level of 1995 I strongly argue that enhancing the country`s capacity to generate exports earnings need to be restored not only by containing wages and other costs to productivity gains levels, a process that even in the best of circumstances would take a long time to deliver, but also by removing the over-valuation in the Maltese Lira that the Central Bank unwittingly let to sneak in.` Yet the Central Bank disregards its guilt in bringing over this situation and would rather continue to preach the need of exchange peg stability at its uncompetitive level above all else.

I am all for stability.` But stability at an uncompetitive level would lead to the stability of the cemetery. I stand for stability in consistent growth and in restoring and maintaining our international competitiveness. Keeping its high moral grounds by preaching from the mountain top and keeping itself detached from the sufferings of operators who are tasked to maintain and enhance the capacity for export earnings, will continue to render the Central Bank prematurely irrelevant, before it becomes inevitably irrelevant when eventually we join the Euro.

I have one offensive suspicion which I pray is not real. However, experience teaches me to be on the look-out for conflict of interest situations and to guard against even their theoretical risks. Could the inexplicable obstinacy of Central Bank senior executives even to engage in discussion on the correct level for the external value of the Maltese Lira, have anything to do with the fact that their personal financial interest is favoured by maintenance of the peg at its current overvalued level so that the burden is carried by those ground zero private sector operators who will have accept cut in their benefits to preserve the export earning capacity of the country. 

The Bank needs to re-discover its mission and to engage in wider discussion to ensure that the issue of the right level for stability of the exchange rate peg is not dominated by internal vested interest.

Friday, 3 September 2004

4-D eco punch

The Malta Independent

A one month delay was all that was necessary for the government to conclude its sardonic exercise in euphemism to launch the eco-contribution. As finally agreed upon it turns out to be just another layer of consumption tax over and above the VAT layer. In reality it is a four dimensional punch of a new consumption tax which insults our intelligence.

Its first dimensional punch is that it is a tax, period. Contribution is something I make of my own free will when I heed the appeals of Kerygma or Strina. This is a fiscal measure which is payable without any choice.` Its being referred to as a contribution is insulting euphemism. Do I have a choice not to drink bottled water` Do I have a choice not to change my car tyres when they wear out, not to buy batteries for my kids toys, not to buy a fridge when the current one exhausts its economic period of use So let`s call it by its proper name. It is a tax and though I appreciate nobody likes to pay taxes, on the other hand if we expect environmental protection we have to pay for it. So what is very offensive more than the tax itself is its being referred to as a contribution. Not to confuse I will henceforth refer to it as fiscal measure.

The second dimensional punch is that it is being falsely sugar coated as a fiscal measure which should be paid quite willingly as it is earmarked to benefit our environmental standards.` How may ask is this happening` We have been told that recycling mechanisms will be studied and launched which will give the consumer the option to avoid paying this fiscal measure if he/she accept to make the little effort necessary to choose recyclable products and to participate in the recycling chain.

Such recycling mechanisms should have been introduced before the eco fiscal measures so that such measures would have acted as a stimulus for consumers to participate in the recycling chain. In the absence of such recycling options the funds generated by the new eco fiscal measure will just be lost in the fiscal wash and one could easily preview that without the necessary funding the promised recycling mechanisms will never see the light of day.

The third dimensional punch is that the consumer will not only be paying the eco fiscal measure which is included without proper distinction in the final price, but will also have to pay the profit margins thereon applied by those producing, importing and distributing the product and in the end also VAT both on the basic eco fiscal measure and on the profit margins layered thereon by the various commercial handlers of the product.` In the end not only the consumer pays the eco fiscal charge but, unlike VAT, he/she has no idea, not even a rough one, of how much is being charged for it. `May be initially one could remember the old price and arrive at the incremental payment by mental subtraction. But memories are short and producers are experts in re-packaging products to make impossible an easy comparison with the old price.

The fourth dimensional punch is to my mind, the most offensive. Not only do consumers have to pay the eco fiscal measure and the margins layered thereon, but there is every justification for doubting whether the fiscal funds would ever arrive to their intended destination.

How could any serious government that has an obligation towards whole society allow itself to be bullied by the GRTU and accept not to charge the fiscal measure on the stocks in hand and not to charge and collect this fiscal measure a the point of importation or, in case of local production, at the factory exit door`

How can the consumer know whether the product he is buying at a higher price is new stock or old stock? And do we really believe that merchants will make such clinical distinction rather than charge all stock at the new rates. Don`t the Authorities know about the business dictum that costing is a science while pricing is an art. An art to price the product, free of pricing controls, at the highest level that the consumer can pay, irrespective of its cost. And now that the consumers` perception has been conditioned to expect price rises by the new tax, the merchants` capacity to mark up prices will increase and will undoubtedly be used.

It is laughable to hear the Authorities proclaiming that no price increases should be expected. Who is going to pay the fiscal measure then? The merchants have taken all precautions to ensure that not only they pass on the fiscal charge down the line to the consumer but also to layer their profit margin thereon. The way the government postponed implementation of the tax to concede to all commercial sector`s demands but has not met and discussed the issue with consumers` representative shows that government consider this as fiscal measure outside the budget which consumers have to pay whether they like it or not.

And the final proof that government has been had by the GRTU is the concession not to pay the new fiscal measure at the point of importation where controls are easy and effective. How could government accept arguments that this would have caused business cash-flow problems when these same importers cash-flow has benefited, as from 1st May 2004, from saving VAT payment at customs clearance stage.  Is there anyone governing the country or is GRTU in charge?