Fabian Demicoli

GRTU only partially satisfied with the new Euro Changeover Guidelines

GRTU: Malta Chamber for Small and Medium Enterprises is pleased to note that many of the suggestions forwarded by GRTU were carried by NECC in the published guideline and best practice document. However, the fundamental issues were once again ignored.

GRTU: Malta Chamber for Small and Medium Enterprises is pleased to note that many of the suggestions forwarded by GRTU were carried by NECC in the published guideline and best practice document. However, the fundamental issues were once again ignored.

The Chamber for Small and Medium Enterprises never agreed on the obligatory dual pricing but suggested a voluntary dual pricing for all business organisations and a period of obligatory dual pricing for government / parastatal organisations. This in order to ensure no increase in prices and hence to ensure price stability. In an obligatory system, the businesses shall incur unnecessary cost, including Human Resources costs. GRTU insisted with NECC to understand that the utilisation of resources is a major cost in business as well, particularly in smaller businesses with very few employees.

In this light, the Chamber for Small and Medium Enterprises had proposed also a positive discrimination in encouraging voluntary dual prices. Such positive discrimination was based on size of the retail space and on the annual turnover. Unfortunately the NECC ignored such proposal as well.

The Chamber for Small and Medium Enterprises, furthermore reiterates that there is an over emphasis on the effectiveness of Dual Pricing in the whole campaign. The most successful country in the first wave countries introducing Euro on 1 January 2002, Germany, resorted to other medium and they were proven right as may be seen from the table hereunder
The following table shows the annual percentage change on the same month in the previous year.
Euro area (%) Germany (%)
Feb 2002* 2.4 1.8
Jan 2002* 2.7 2.3
Dec 2001* 2.0 1.5
Feb 2001* 2.3 2.5
Jan 2001* 2.3 2.2
*on previous year

Source: HICP
The statistics show clearly where information was obtained by the consumers.

41 per cent thought the media
14 per cent thought shops and other retailers
46 per cent thought the banks
8 per cent thought consumer or other representative groups
31 per cent thought family and friends

In this light, the Chamber asks on how come in spite of the clear indications the NECC is placing so much emphasis on Obligatory Dual Pricing.

Furthermore the observatory being set up seems not to be aimed at assisting and educating businesses but as another blood hound, something which is not acceptable to the Chamber for Small and Medium Enterprises.

The Government should also ensure that the costs that it is obliging businesses to incur or as an incentive to abide during the voluntary stage, Government should allow a 200 percent tax credit on all costs incurred related to the Dual Prices or Euro adoption. Capital Expenditure incurred in this respect should be written off for tax purposes in the same year.

Furthermore, GRTU reiterates that businesses require the necessary guarantees that the Euro will be introduced on 1 January 2008 and that the irrevocable fixed rates shall be fixed in July 2007.

The Chamber for Small and Medium Enterprises believes, however, that the main issue on Price Stability is to ensure that in the first place the costs are stable for businesses. In this respect, Government should with immediate effect commit itself for no increases in all government driven costs including Fuel and Water and Electricity Surcharge which is having a big effect on prices.

In view of the above, GRTU Malta Chamber for Small and Medium Enterprises, holds its directive to businesses and keeps its withdrawal status from NECC until an acceptable solution is found.

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