27 Dec 00 2 Jan 2001
A year in retrospect
Over the course of the year, The Business Times has called on many an industry leader, businessperson and independent observer for their views on current events, the direction in which the country is heading and for their suggestions to bring enhanced prosperity to our islands. Following narrow cross-section of the interviews we have carried over 2000.
IPSE Chairman John Vella Bonnici calls for entrepreneurial co-operation
Furniture makers and other entrepreneurs must learn to work together to adapt to changing market trends triggered by the restructuring process, according to a recently-finalised study.
Joe Vella Bonnici, chief executive of the Institute for the Promotion of Small Enterprise, told The Business Times that a sectoral study commissioned on the furniture industry had now been completed and would shortly be discussed with entrepreneurs working in the sector.
"Although the study revealed no major surprises, it did highlight the need for enterprises within the sector to learn to work together," he said. "Businesses have to adapt so that they question the environment that has been created where each enterprise looks at the other as a competitor. This is perhaps a by-product of a protectionist environment. Companies have to learn that they not only need to live together, but also that although they might be competing at a certain level, on other levels there has to be a degree of co-operation."
Mr Vella Bonnici said the concept of joining forces was an important aspect of the restructuring process, especially for smaller enterprises.
"Our plan is now to launch certain initiatives where we encourage our enterprises to work more together and co-operate, by entering into strategic alliances," he said. "These initiatives, which can be described as programmes of action aimed at getting people together, should be launched within days."
IPSEs chief executive cited the example of enterprises working together as a consortium.
"We are saying to small businesses that rather than approach us individually, get together and we will try to guide you about the best practices for doing business and provide financial incentive you to work together rather than work against each other," he said.
Mr Vella Bonnici explained that the furniture sector study was undertaken with a view to seeing what needed to be done not so much at an enterprise level as at a sectoral level.
"The idea was to try to see where the strengths and weaknesses of the local furniture industry lie," he said. "We also wanted to discover how things were changing in light of liberalisation and EU membership and the opportunities and threats this could bring. Then, when enterprises come to doing their individual business planning process, they will, at least, have a framework to which they can relate."
IPSE is now commissioning a study on the printing industry and is then set to focus on the building materials sector; the other main sectors involved in the restructuring process.
The most common consumer complaints in Malta are over white goods, although other problems clients have encountered in the catering industry are also on the rise.
The Parliamentary Secretary in the Economic Services Ministry, George Hyzler, told The Business Times that the indicative patterns are that consumers' expectations are improving and this is combined with a willingness to express them.
"Complaints about white goods have been and are still leading however, while complaints about services are mainly about specific shortcomings and/or problems related to the actual service supplied, complaints about 'customer service' highlighting a lack of customer orientation are evidently increasing, particularly in the catering industry," Dr Hyzler said.
But the parliamentary secretary admitted that in the past, apathy from the client and even some of the social parties involved had prevented progress in consumer affairs being made at a swifter pace.
"The problem at times in consumer affairs, has been not so much the absence of laws, but rather the lack of awareness and interest by the public," Dr Hyzler admitted. "
I cannot but note that even certain constituted bodies are too much on the defensive and adopt an over-cautious approach when faced with the prospect of new consumer laws."
Consumer affairs is very much in the spotlight at the moment; a first national conference on the issue was held recently in Malta, coinciding with World Consumer Rights Day, with the participation of international speakers including an officer from the European Commission.
The government has provided a new premises for the Consumer Affairs Council, which it now operates hand-in-hand with the Department of Consumer Affairs, and a Consumers Affairs Task Force was set up through Dr Hyzlers parliamentary secretariat to upgrade Maltese consumer legislation to fall in line with that of the EU.
The parliamentary secretary told The Business Times that the legal framework for the move is ready and many of the consumer policy directives are to be implemented by the end of this year.
"Some, notably those on consumer credit, product liability and general product safety will be implemented between 2001 and 2002," he added.
Dr Hyzler also highlighted the success that the Consumer Claims Tribunal appears to be having, pointing out that it is dealing with a "steady flow" of cases.
"The Tribunal has proved to be an effective form of redress for consumers who, as a result, no longer face the daunting prospect of going to Court for redress," he said.
The General Workers Union should be officially deciding where it stands on European Union membership before the end of the year, secretary general Tony Zarb said.
Speaking during an interview with The Business Times, Mr Zarb denied that the GWU had already taken a decision against EU membership.
"We have not adopted a position against EU accession; the EU issue is the focus of ongoing internal discussion in the GWU," he said. "The union will be looking at all the 30 chapters in detail over the coming weeks and will compile a report about their contents. Our national conference will then discuss the EU issue and the GWU should then arrive at a decision on where it stands about European Union membership."
Mr Zarb added that the lack of political agreement on EU membership was not an issue that worried him.
"It does not concern me that Malta does not have political consensus on the EU, primarily because the stand we decide to take will be purely a trade union decision," he said.
The GWU secretary general admitted that the question of whether workers will benefit from a better deal in the EU would be a significant talking point during discussions, but stressed it was only one aspect of the whole issue.
"This is only one of many questions that has to be examined," he said. "It is important to look at all the sectors, especially industry, and see how they are going to be affected by EU membership.
Once the pros and cons for all sectors have been weighed up, then a collective decision will be made, which will be the official decision of the GWU."
Mr Zarb stressed that the union would not take its decision until it had completed its internal work, but the GWUs stand would be decided upon before EU negotiations.
"I believe the final decision is likely to be made later on this year," he said.
On the subject of whether the GWU administration was caving in to pressure from its more militant sectors, Mr Zarb said he believed that to be a good trade unionist, it was vital to be militant.
"The bottom line is that we have to be prepared to work in the interests of our members, whatever that might involve and that is our militancy," he said. "In this respect, I would not say that the union has been pressurised into militancy from certain sectors."
Maltapost is gearing up to ensure it retains its place as market leaders of the postal service when the sector is liberalised.
Chairman, Frank Dimech, however, does not believe the company, whose shareholdings are 85% government and 15% Maltacom, is likely to be privatised within the next two years.
"We will not be ready for privatisation until we have a proper IT infrastructure in place," he said. "Before we install communications and proper PC systems, the associations we can set up are very limited."
Mr Dimech told The Business Times that consultants have just started working to identify the IT system which will first be set up in one branch.
"This will act as a prototype and will be multiplied across the other branches once were happy with it," he said. "Hopefully, by December, we will see the first one ready and we can look for associations with big companies."
Mr Dimech, who took over at the helm of Maltapost in March 1999, is now beginning to see the dividends reaped after his first year, which was largely spent identifying the companys problems and working out how to rectify them.
Maltapost is now in the black for the first time, and a new five-year strategic business plan for the company is in place, with an operating plan for the fiscal year 2000. The companys efficiency level has risen from 57% to 82%.
"I didnt want a plan that would remain a very nice document," he explained. "We needed concepts that could be put into action within a realistic timeframe."
Maltapost will be providing a number of new products and services, some of which are already on offer, while a Lm10,000 plus refurbishment for each of the islands 22 post office branches is in the pipeline.
"We were already doing bulk mail addressing service and the aim is for Maltapost to eventually offer a hybrid mail service, which will see the company print the actual flyer or circular," the chairman explained. "We are very close to offering this facility. All thats left is for us to begin doing the printing and then we will be providing the whole service."
Mr Dimech added that plans are in the pipeline for Maltapost to carry out some international hubbing, especially for North African countries, pointing out that the company is already in discussions with a foreign company to tap this market.
HSBC found a need to change the criteria used to determine how loans were assessed when the Group came to Malta last year, the chief executive of the banks Malta base said.
Speaking to The Business Times in an interview which marked one year since the bank came to Malta, Tom Robson explained that having bought Mid-Med Bank last year, HSBC decided there was far too much emphasis on lending against security, which is usually property.
"A loan should be assessed against the viability of a venture, while the security should only be a secondary back-up," he said. "In Malta we found it was the other way round; the value of the security was being used to determine the size of the loan given, with the result that the viability was not being assessed correctly."
He explained that this meant money might be loaned against a non-viable project, and clients could end up with no way of repaying it from the cash flow.
"The banks then either have to look to the security, or extend the loan, which is in no ones interest," he said. "We owe it to the customer not to lend him money when the venture is not a viable proposition, but it is taking time for the concept to be established."
He stressed that if a client agreed a repayment programme, HSBC would expect them to stick to it.
"If not, we have the right to take action," he said. "It is a fact that repayment programmes havent been rigorously followed through in the past. In a small country, people know each other and banks were, perhaps, prepared to give clients much more time and leeway.
That is not HSBCs system; we expect people to stick to their side of the bargain and I dont think thats unreasonable."
HSBC Maltas chief executive expressed his wish to see banks enter the general insurance market.
"We will also be delighted to enter the marketplace if legislation for private pensions is enacted," he said. "We have the products available and also believe that such legislation will benefit the country."
Mr Robson admitted that HSBC still had some "bridge-building" to do with the unions and employees, although he stressed that time and the opportunities which the bank could provide staff with were both helping in this respect.
"People are starting to realise that HSBC doesnt have several heads and forked tails," he said.
The recent take-overs of major players in the tour operator industry is likely to have major repercussions on Maltas tourism trade, the then President of the Malta Hotels and Restaurants Association has warned.
Speaking to The Business Times in a wide-ranging interview, Joe Preca pointed out that the take-over of so many tour operators throughout Europe, which leaves package travel in the hands of two or maximum three tour operators, has changed travel patterns completely.
"This development is dangerous in many ways, since not only are the operators in a position to dictate prices that hotels charge, but they also control the volume they want to send to a particular destination," Mr Preca said. "This could have an adverse effect on Malta, especially bearing in mind that the latest take-overs involved Thomson and Frosch Touristik, both of whom happen to be the largest suppliers of tourists to our Islands from our two main core markets the UK and Germany."
The MHRA President explained that in the past, the large operators took high risks to achieve volumes, since their main objective at that time was to obtain a larger market share, because they were all trying to take over the market.
"The result of this was that they would sometimes go over the natural capacity by offering a bigger flight capacity and then selling it cheaper even though this meant they were sometimes taking a risk because it gave them market share rather than profit," he said. "But now that they have cut out the competition they are after profit rather than volume, so they we are bound to see a reduction in numbers."
Mr Preca admitted there wasnt much that could be done about the changing trends with the big tour operators, but added that on the positive side, the need to look elsewhere could open up new opportunities.
"Niche markets that have speciality operators and are not dominated by big operators can help replace the decrease in volume," he said, "while the Internet is another new development that is positive."
Mr Preca admitted there was no way of knowing whether the cultivation of speciality markets would compensate sufficiently for the drop in volume of visitors, but said it had to be viewed as an opportunity.
"We should also remember that the niche markets were untapped before because we didnt have the space to offer them," he added. "But if the large operators decrease their volume, we can at least take up these new options."
A large number of vacancies exist in both the construction and IT sectors, despite the fact that some 8,000 people are registering for unemployment benefit, the Chief Executive of the Employment and Training Corporation said.
Mr John Camilleri told The Business Times that the shortage of workers in these two contrasting sectors existed for a number of reasons.
"In the construction area, it is evident there are job opportunities that people are not ready to take up, possibly because of the conception that this is a very demanding industry physically," he said. "In contrast, the problem of vacancies in the IT sector stems from an explosion in the industry. The sector has grown so fast that it has proven difficult to keep up with it."
Mr Camilleri admitted that the lack of manpower in both these sectors could have serious implications.
"The need for workers in construction is likely to increase when the major projects get underway this year and next," he said, "while, where IT is concerned, we are very much aware that unless our workforce is educated in this sector, we do not have a future. Illiteracy in itself is already a problem, but IT illiteracy further complicates matters."
Mr Camilleri said the ETC was taking steps to tackle the problem of unfilled vacancies in both sectors.
"We are now discussing two schemes with the Building Industry Consultative Council one for traineeships and the other for apprenticeships - which should be launched in March," he said.
On the issue of training in IT, he stressed that problems stemming from the explosion in this industry had not only affected Malta, but was an international trend.
"But admittedly, we started making the adjustments a bit late and are still catching up," he said. "We are, however, now elaborating on a plan for an Information Technology-literate workforce." Mr Camilleri highlighted the need for Maltas workforce to be flexible in order for the country to compete in a globalised, competitive, economic environment
He told The Business Times that the ETC has acquired the services of a consultancy authority from Ireland that is helping the corporation make an in-depth review of its operations. The consultancy would, he explained, help the government in drafting Maltas first human resources strategy.
"This will encompass the skills identification process that at present has no set-up," he said. "There is a definite need to set up a mechanism to identify skills that workers here will need for the future. If we do not plan ahead, we will not produce fully qualified employees."