Fabian Demicoli

Addressing the Rising Price Issue

 

 Mario Debono, president of the pharmaceutical and trade sector, addresses the GRTU price monitoring council: "The news that food prices in Malta have risen is not so surprising, considering that they have been doing so all over the world. Oil has reached new heights, crops for growing biofuels have taken over food crops, and the dollar's fall doesn't seem to have reached the bottom yet. Sterling is also at an all time low against the dollar. The news isn't good, my friends and its getting worse every day.

 

People are also blaming the Government here as well. GRTU feels that the price of diesel is a significant contributing factor. And so it is. We import everything; food, clothes, medicines, whatever we need. But not many people realize the problems businessmen face in order to get the products we need.

First off, Malta is a small country with the population of a large market town in the UK. Our buying power is very limited, because we cannot take advantages of the economies of scale that others in mainland Europe can. Secondly, it has become increasingly difficult to find the freight service to bring it here. Our Freeport may be a success, but that success came at the detriment of our local freight services. The space for Malta bound goods is just not there. Airfreight is also expensive and limited in capacity. It does get better in summer with more flights but prices do not come down. Thirdly, importers need to store goods, keep temperature control in their warehouses, freezers and cold rooms, and lastly they need to sell and distribute their products. This means fuel, and lots of it. It means electricity, and lots of it. And whatever the cost, it has to be paid for. No mistake about it.

The bottom line is that it costs more to import products into Malta than it does in other countries. I'm not surprised that prices have risen by so much in comparison to other EU countries.

The  one area that the EU was right about is that food in Malta is marketed by a few large importers who, because of their clout, make it very difficult for others to enter. When they do enter, they use any means to stop them. That's where the Office of Fair Competition should take a long hard look.

We have had reports of individual supermarkets importing directly (and parallel trading) being threatened by the large importers with various reprisals. This has to stop. Competition should flourish. The failure of the OFT to act on cases like these means tacit protection is being offered for those who will abuse of their dominant position.  Why we are not surprised about this?

We might all gripe and grumble that our purchasing power is getting worse. The reality is that it will get much worse. Yesterday the Minister of Finance expressed concern that the price of food is rising. GRTU has been going on ad nauseam that part of the solution is for Government to shift its glance at the taxation not at the price of fuel. Diesel is heavily taxed in Malta, plus that VAT is paid on it.

This is a reality all over the EU, and GRTU is not alone in calling on Governments to reduce this tax.  For reasons best known to itself, no one is taking heed. The standard excuse it that any tax reduced has to be taken from somewhere else. This is partly true. So what's the solution? Robbing Peter to pay Paul by increasing VAT slightly?  The options are limited. The only way to increase revenues for Government is to foster business. And more and more of it.

Our people are fantastically inventive at finding ways to earn money, even by venturing afar and  We need to find ways together, stop this political bickering, and get on with it. Government is there to provide the soil where the seed of opportunity can grow. Frequently it's hampered by the empire building of its very own civil servants. And while we are at it let's together have a look at Government induced costs and get rid of them. The shameful warden "service" is a case in point. But I will write about that later on.

We are at a quiet and defining moment in our history. The future looks bleak. Rising prices will bring rising demands on wages and I shudder to think what demands will be made on businesses come next budget. Then the bleeding hearts will expect us not the raise prices. We will have to. No mistake about it.

Government's efforts at stemming the rise in prices will ultimately fail, and the opposition should realize that instead of beating its heart out every time it happens. What does it expect Tonio Fenech to do?  Don a suit of armour from the Palazz and go and fight the importers, bending them to his will? Let's stop this political opportunism and get real!

GRTU does not profess to have the solutions. But what we do have is a body of people representing the widest cross section of businesses imaginable in Malta. Our hand of co-operation is stretched out to the Government (who should listen more), the opposition (who should also listen more), our fellow constituted bodies. But it's time for Realpolitik now. The dreams of the past have been shattered. The rise in oil prices have seen to that. Our only defence is a national effort, with decisions being taken collectively instead of by government to counter the rise in costs. Is anybody out there?"

 

 

 

 

 

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