28 Feb. - 6 March 2001

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Joe Gasan

In the driving seat

His lines of business are diverse, but entrepreneur Joe Gasan admits he still has a soft spot for the automobile division. Here he tells MIRIAM DUNN how the Gasan Group has changed over the years and where it is heading

Gasan is a family business. Just how much has it expanded over the years?

We are a family business in the sense that the Gasan Group of Companies was started by my father 80 years ago and the shareholders are me, my sisters and our children.

But we try to ensure that the Holding Company and all its subsidiaries are managed and run professionally, rather than along the lines of a family business in the traditional sense.

When my father began the business in the 1920's, the main focus was shipping and then he took the Ford franchise in 1928 and the main public transport bus company in the mid-30's. During the second world war, the company was heavily involved in the repairs of all British military vehicles, including engines of planes.

Since I took over from my father in the early 1970's, we have expanded and diversified.

In the automobile division we have branched out into different marques, including Jaguar, Volvo and Yamaha motor cycles, but we have also diversified into new areas of business.

Now we have five divisions, which, apart from the automobile line, includes the property development division, where we have been working on some of our own ventures and others in which we are investors with other major companies in Malta.

GasanMamo Insurance is the leading insurance agency in Malta and then we have our information and technology division, which includes BDS Ltd and Melita Cable plc, in which we have an important share, and this is probably our most exciting line at present.

In the late eighties, we recognised that ITC was the growth sector of the future, so, of course we wanted to be there. Although it is an area that brings a great deal of satisfaction, it is also challenging because there is a lot of competition and in the past, there were many barriers.

Property development also presents many hurdles, because it can be a slow process. Projects tend to get caught up in red tape, or perhaps become stuck at the planning stage, but we always give our ventures plenty of attention and are proud of the results.

The car business probably remains the area I enjoy most, although I can admit that we've had difficulties in recent years through increased competition, and that's one of the reasons we've invested in the new premises in Mriehel, which will open next month and which are, I don't mind admitting, probably long overdue.

The new project, which took us two years to design and build involves an investment of some Lm4.5 million, will help us in terms of customer service, space, location and parking. Both employees and customers stand to benefit.

What changes have you noticed in the business world over the years?

Competition has definitely increased over the years. The single biggest problem in business in Malta is that you can never have a new idea and base a realistic business venture on it, because you know that if it works, within a short time there'll be others copying it. Granted, this is the nature of business and competition, so it is to be expected. But the end result is that in most business sectors nowadays there are too many competitors and some, especially those who haven't invested in the right technology, as well as people and training, will suffer; not all will survive.

The other factor that has affected the local market is the high number of mergers taking place abroad. Many businesses depend on foreign principals, whom they either import from or represent.

Someone with an excellent franchise or an agency might suddenly find that their principal has changed through a merger or a takeover. There could be a scenario where the principal has to choose between local companies. Once again, your chances of survival weigh heavily on investing in people and training, which enable you to give a good service.

Do you think Malta is adapting to the global market in terms of becoming competitive? Do you see certain monopolies as being problematic in this regard and what about the monopolies in the automobile industry?

It is important to remember that sole representation is not the same as monopolies.

In the motor industry, for example, a monopoly would be one company representing all the automotive manufacturers.

I believe sole representation in Malta is justified in many products and services because of the size of the market – it simply doesn't warrant more than one agent.

This is not that different from what happens on mainland Europe, where countries like the UK and Germany have dealers for specific areas and locations, which usually are much larger than Malta, at least in terms of population.

We must remember that at times when there has been more than one agent, certain problems have arisen, such as a conflict over who would take up the burden of stocking parts and specific tools.

On the question of whether the sole agent has sufficient incentive to provide a good service, I would answer yes, because you need people to come back. Today's customers are rarely loyal enough to a brand for any agent to get away with providing a poor service.

In general terms, I am against monopolies, since I believe they breed inefficiency, and I fully support liberalisation in the long-term. Speaking in the short-term, there are certain businesses where you need a monopoly for a certain time-frame.

Melita Cable was an example of this. Nobody would have taken up the government's offer to make this investment unless they were granted a monopoly for a number of years because of the nature of the business, the size of the investment and the length of time it would take to see any return.

But to prove our commitment to our philosophy, we have agreed to the removal of our legal monopoly, which we had until 2006, on 1 June this year. Granted, other monopolies will be going at the same time, but, at least this means there will be more of a level playing field.

Traffic congestion is a major problem in Malta. As someone involved in the automobile industry, do you have any suggestions as to how to deal with the problem?

Working in this line, of course, makes you aware of these problems. But I don't believe that the solution is to think of restricting people's right to use or purchase cars because the roads are below par or because there are insufficient parking places.

I think it is the right of every person to have the option of having a car and I view our figures of car ownership as a sign of prosperity in the country. The average car per person has trebled in the last 12 years in Malta, which brings us nearly in line with mainland Europe.

Having said that, I have long highlighted the inefficiency of the public transport service, which, at present, is simply not an option for many people. But even if it is improved and there are more routes and better buses, and this really needs to be done, I still think people would want their own car. The solution is to improve public transport, to encourage people to use their cars less frequently, while also improving the roads and parking problems.

Where do you stand on the issue of European Union membership?

Personally I am and have always been very much in favour of Malta joining the EU as a full participating member; I view the Maltese as European and Malta is a very small country, so it is unwise for us to stand alone.

The great majority of our trade is with members of the EU, while most of our tourists also come from member countries, so it makes sense in this way as well.

My own view is that the sooner we join the better, although I recognise that the terms and the timing are important.

Yes, some areas of business will feel some pain, while others will do better, but if we don't join the EU, a lot of Malta's new investment and lines of business will suffer.

There are opposing views being relayed about the state of the Maltese economy at present. What is your own opinion on this issue and if you believe it needs a boost, how should this be done?

There's no doubt that the sooner everybody knows whether or not Malta is going to join the EU, that will help remove the uncertainty.

Yes, I agree that the economy needs some sort of boost, but I also feel that a lot of the projects that have got underway over the past couple of years have helped in this respect, while other investment opportunities opening up now and soon will also lift things somewhat.

I believe the boost needs to come from the private sector, but the government's privatisation plans will also help. I believe in them fully, although I must admit that sometimes I think it would be nice to see things moving a bit quicker!
If these projects of liberalisation and privatisation move ahead as planned, I think the Maltese economy has a bright future, and my view is based primarily on the faith I have in the Maltese people.

The Maltese worker can, if well trained and well treated, compete with any foreign counterparts and this is why the anti-EU argument that we could lose jobs to foreigners doesn't hold water with me – because I firmly believe that we are as good as anyone else.

What are your views on the Tax Compliance Unit?

I can't comment on something I haven't seen in action yet! I think it's very important that everybody pays their taxes and that they are treated fairly, although of course I would never mind taxes going down!
If the Tax Compliance Unit serves as an efficient way of ensuring everybody pays the taxes due, then that's a positive step.

However, it is important that the system doesn't turn into something of a witch hunt. This could be dangerous and I think already, in the stock market and investment market, we are perhaps witnessing the effect of people panicking.

One very important thing the Nationalist government managed to do in 1993/4 was to encourage the return to Malta of a lot of money invested abroad. If people take their money back out again, it will have a negative effect on the Maltese economy, so we should try to avoid this scenario.

What are your business goals for the coming year?

It's easier to talk in terms of a decade than a year because many of our projects are long to medium term.

In the automobile business, we hope, over the next few years, to regain some of the market share which we lost. We have some very good franchises and I am very confident that the new premises and the investment we have made in training will help us.

In the property development line we have some very exciting projects coming up and our goals are to get things done within the budgets we have set and hit the market at the right time.

Some projects we have coming on line in the next couple of years date back decades, such as the Union Club project, which I personally have been working on since 1967! Others are newer, like the Embassy which opened in November 2000 and of course the very exciting and ambitious Manoel Island and Tigne Point project (MIDI).

Our goals are now to put these and other new, exciting projects to the market.

Following the merger of Gasan Insurance and Galdes and Mamo, we want to consolidate our position in the insurance sector and also move further into financial services.

We are also working very hard in the ITC field. It promises to be a very exciting decade in this field and, with the investment we have planned and the opportunities that liberalisation presents, we plan to be one of the leading organisations in media and telecommunications

Photo by Paul Blandford

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