21 27 March 2001
More sweet words
The Governor of the Central Bank has been quoted several times now, as talking about a country living beyond its means.
The all-important question here is what we understand by living beyond one's means.
Rather than putting the blame on entrepreneurial spirit, isn't it rather a lack of self-discipline and a lack of regulatory culture?
The arrival of HSBC on the banking scene has served to introduce a measure of regulation in terms of business viability.
But the same cannot be said for small investors or small-fry, who have been lured into the competitive market of low interest loans.
The reality is that many companies are living beyond their means. They suffer from improper accounting systems and are unwilling to distinguish between company funds and personal funds.
There are still too many companies that are run like family fiefdoms.
And the end result is that many do not see the red, even though it is staring them in the face. The Governor of the Central Bank spoke in shades of grey, but now is the time to speak in black and white.
For example, we all know that liquidity is a problem.
This has been exacerbated by the fact that the banks are being serious in their approach.
Which also means that some companies have started to feel the crunch or, shall we say, the pinch.
There is also the issue of accounting systems.
It is impossible that companies continue to segment company money to sustain unbridled lifestyles that does not tally with turnover or profits.
The general scenario in Malta is that everyone has a business and everyone is a success story.
Market forces cannot allow this to happen.
And it would do no harm for the Governor to pronounce himself more often.
On CIS and benchmarking
Yesterday, the Finance minister made a pronouncement, on the stairs of the future stock exchange.
He talked about the 1948 fringe benefits and Collective Investment Schemes.
On CISs, the Minister said that the tax for the time being on interest would be 10% and not 15%, until adjustment that is.
He also that a collective scheme that has all its shares invested in Maltese shares would be exempt from any taxation.
He explained that in theory, the tax on profits from foreign bonds and shares was 35% now it was being revamped and registered as 15%.
It is a well-known fact that the declaration of profits from foreign investments is not taken into account.
He emphasised that the global trend was for all countries to declare which other nationalities were availing themselves of investment opportunities.
He warned that in future, the Maltese government would be in a position to discover what investments the Maltese had in other countries.
In other words, the minister's words were simple: if we have to move on, we have to be ready for change.
And to erase any concern that the government might be resting on its laurels, he announced that the benchmarking exercise had been started and as soon as this was accomplished the TCU would spring into action.