Rainbow flags don’t put food on the table
Gay issues by all means, and how – but the impression we’re getting out here is that the government is placing all this focus on contentious matters which are irrelevant to the economy simply to obscure the fact that there are problems in that sphere.
After the news that unemployment is rising and that the trade deficit has widened significantly because both exports and imports are down (and a decline in imports is caused by lower demand in Malta because consumers are spending less and businesses are investing less), we had the news yesterday that the governor of the Central Bank has warned about the decline in bank lending.
And today the Chamber of Commerce has released a statement saying that the subdued demand for bank credit from larger businesses is mainly attributable to uncertainty which leads to a reduced appetite for investment in manufacturing and import and distribution.
The Chamber then goes on to list the complex problems which need to be addressed. Some of those problems have been around for a while, but the government needs to address them instead of giving us the impression that all it is doing is playing around with rainbow flags and dancing to Cyrus Engerer’s tune.
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This is the Chamber of Commerce’s press statement, in full:
Business Sentiment Is Leading to a Decline in Commercial Lending
The Malta Chamber shares the concern about declining levels of lending as expressed by the Central Bank Governor. The concern was reported in this morning’s press wherein Prof Bonnici was reported to ask why lending rates were declining locally and why Malta was not following the trends manifested in the rest of Europe.
Through its recording of business sentiment levels amongst its members, the Malta Chamber is able to shed some light on this matter.
Contrary to simplistic conclusions aired in previous weeks and months, the Malta Chamber is convinced the decline in demand for commercial credit does not relate to interest rates.
Banks in Malta have, in the past, experienced a higher demand for commercial credit when interest rates were at the same level or indeed higher. The Chamber is informed that while local banks are experiencing a strong demand for credit from SMEs, the demand for credit from larger businesses has declined.
This subdued demand for credit from the larger businesses is mainly attributable to the uncertainty which leads to reduced appetite for investment in certain affected sectors such as manufacturing and import and distribution.
Investor confidence in the manufacturing sector is currently suffering due to high operating costs especially in terms of energy rates that are the third most expensive in Europe. Other expenses including transport and salaries are increasing at a higher rate than productivity.
This is leading to significant loss of business as new product lines are being channelled to other more competitive countries or regions. At the same time, the new EU regional aid intensity guidelines will deliver a further blow to investment in manufacturing after the transitional period which will be ending very soon.
This is because future incentives for investment in manufacturing will be restricted solely to green-field and diversified activities.
On the other hand, the Malta Chamber has, only this week, stepped up its intensity on the matter concerning its members in the import and distribution sector.
Here, appetite for investment has diminished considerably as a result of a situation of unfair competition that continues to be tolerated by the authorities between law-abiding companies and others who do not comply with fiscal, environmental and consumer regulations.
The Malta Chamber has been making active representations with the authorities with a view to seek urgent closure of these matters which are of serious concern to its members. These efforts are in line with the Chamber’s primary mission – that of ensuring the right environment for business to invest and create the level of prosperity that our country deserves.
Trust and confidence are critical to the effective functioning of business, including trade, investment, spending and of course borrowing.
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http://www.timesofmalta.com/articles/view/20140513/local/Bank-Governor-warns-over-decline-in-lending.518789
http://www.timesofmalta.com/articles/view/20140514/local/business-sentiment-leading-to-decline-in-commercial-lending-malta-chamber.518943
Now it’s getting serious.
Counted days for Josef Bonnici.
[Daphne – I receive comments with the expression ‘counted days’ so often that I feel this time I must set it straight rather than correcting it before upload. The correct expression is NUMBERED days. Or more specifically, ‘his days are numbered’.
While I’m at it, I’ll deal with another common bugbear: ‘birds of the same feather’. NO. It’s ‘birds of a feather’.
Now that I’ve got that off my chest, let’s get to the point: the governor of the Central Bank is accountable to the European Central Bank and not to the government of Malta. He cannot be removed.]
Touche` on counted days.
However, after a quick online search, these articles both indicate that the appointment was given by the Prime Minister.
http://www.independent.com.mt/articles/2011-04-30/news/josef-bonnici-to-be-appointed-central-bank-governor-291523/
http://www.maltatoday.com.mt/news/national/11109/josef-bonnici-takes-over-as-central-bank-governor#.U3MuxfmSwc8
I hope I am in the wrong, for the country’s sake.
[Daphne – The fact that the selection of the governor of the Central Bank is made by the government of Malta does not mean that he can be removed by the government of Malta. For comparison’s sake, take judges, who are appointed by the Justice Minister but can only be removed by parliament, and a two-thirds majority at that.]
Daphne I see your point, you are considered to be perfect in English writing. But most of us were not exposed to the schooling you received. My English is, as you well know… the very end. I try to improve, but it takes time.
[Daphne – I did not learn English at school. And girls’ schools in Malta were abysmal in my generation, even the private ones. There was no chance of anyone learning anything much at any of them. Educating girls was still largely considered to be a waste of time. People in Malta don’t speak and write English well because they don’t read and they don’t listen either. Languages are not learned at school but through use and exposure. Most people watch English-language television, and inconceivably, they fail to pick up the way nouns, verbs and idiomatic expressions are used. I find this amazing. It really irritates me, because it seems to be a form of deliberate ‘blindness’.]
Prof Bonnici was asked to resign, like every other head for that matter, on day one of this new so-called government.
When this government of clowns realized the blunder it kept mum on the matter.
The governor of our central bank is doing nothing less than his sacrosanct duty of sounding the alarm bells on matters of great national importance involving the economy.
The drop in demand for borrowing coupled with the consistent fall in imports and exports are ominous signs.
These are all indicators of a shrinking economy, while Nero fiddles.
‘…Investor confidence in the manufacturing sector is currently suffering due to high operating costs especially in terms of energy rates that are the third most expensive in Europe. Other expenses including transport and salaries are increasing at a higher rate than productivity….’
He’ll obviously blame the previous administration when truth is those rates were planned for reduction via the interconnector. I believe a 40% reduction at lowest demand.
Which interconnector has gone off the radar, no deadline, no progress update, and no plan to utilise it to its maximum capability anyway.
The effects of his hare brained scheme, kick off a deficit spending spree to ‘stimulate’ some fatuous internal demand artificially, bite back.
He’s compromised his ability to maneouver by locking himself in someone else’s business strategy, and that means no reduction until that bloody power station is on line. Of course apetite’s reduced, would anyone put their money in a place where the prime minister keeps changing tack according to the microphone’s political slant?
Nice. Muscat wants to play Mintoff in a Malta which open economy requires the exact opposite.
‘Counted days’ is a literal translation of ‘giorni contati’. Mole wins a morbid cushion.
From one who expected to have documents ‘scannati’, which means skinned.
Josef will go next. That’s a very comfy position he’s holding, excellent for a taghna lkoll pampalun!
The European Commission has recently stated that the Maltese economy is robust and performing better than expected. Who is stating the truth?
[Daphne – Read the whole thing, David, and not only the bits you want to read. The people who feel it first are the ones on the ground. http://www.timesofmalta.com/articles/view/20140505/local/updated-european-commission-sees-robust-growth-outlook-for-the-maltese-economy-pn-reacts.517725 ]
Maybe Bonnici should get his facts right and consult wonderboy Silvio Schembri! Malta is thriving and it will soon be the economical hub of Europe. Or something like that…
Happy to see the Central Bank governor and the Chamber address an issue which was very evident from the recent results published by Bank of Valletta.
See my comment under this post here.
http://daphnecaruanagalizia.com/2014/04/all-those-eu-and-malta-flags-and-that-podium-to-announce-two-cents-off-petrol/
In 6 months, the largest bank in Malta saw its level of loans to the economy grow by only Eur 17 million.
In the year 2013, HSBC had reported a decrease in the overall loans and advances by over Eur 50 million year-on-year.
Considering that private funds in new productive investment usually account for a smaller proportion than bank credit, one can imagine how little the private sector has invested out of its own funds.
It has been reported locally that the EU is predicting “robust economic growth” in the coming year. How can the economy grow faster if bank credit is declining?
What are the implications of this on the level of unemployment? If the economy does not grow, who is going to provide jobs?
Labour does not work.
BREAKING NEWS?
Good to see another update. Having questioned yesterday why there is no announcement on any of the websites of Gasol, Siemens, Socar or Enemalta about the signing of the new powerstation deal, I see that Gasol has obliged.
My comment with questions here:
http://daphnecaruanagalizia.com/2014/05/the-benefit-of-hindsight/
Gasol announcement today:
http://hsprod.investis.com/ir/gas/ir.jsp?page=news-item&item=1762588006285312
Reported in MaltaToday:
http://www.maltatoday.com.mt/business/business_news/38981/gasol_first_company_to_buy_30_of_enemalta_subsidiary
This update probably sheds more light on the news item by Kurt Sansone, published only on the print version and the e-paper of The Times, about the signing behind closed doors of the power plant deal.
http://daphnecaruanagalizia.com/2014/05/power-station-due-in-march-contract-signed-last-friday/
The secrecy about the matter showed that something was not right.
And this probably reveals that the prime minister may have told a bigger lie than we thought when he told Simon Busuttil that the new power plant contract had been signed.
With the information available, it is clear that the deal behind closed doors was not the signing of the new power purchase agreement, but merely a commitment by Gasol to acquire its share in the company that will eventually be called Electrogas Malta (but which has not even been renamed so as yet – six Privitera exclamation marks appropriate here).
Based on the content of the Gasol announcement, one can conclude that the other shareholders have not as yet agreed (signed) to their commitment to acquire their share in that company as yet.
Therefore one can reasonably conclude that the government has not signed the power purchase agreement – for how can it enter into such agreement if the members of the consortium (other than Gasol) are not as yet shareholders of Electrogas Malta (currently still known as Malta Power & Gas Limited)?
Malta Power & Gas Limited is still controlled by Enemalta, so how can Enemalta enter into a contract full of long term commitments with a company controlled by itself?
And the PN needs to be told that the real value of the deal involved here is not the price of the power station and LNG tanker investment, which amount to about Eur 400 million. Enemalta is not buying the power station. The real value of the deal is the cost of all the electricity units that Enemalta will commit to buy for 18 years, which according to my estimates, run into billions of Euro.
This news item is worth chasing.
Kurt Sansone should go back and investigate more. Has Labour been using him and The Times?
Oh, thank goodness. Tal-PN qamu.
http://www.timesofmalta.com/articles/view/20140514/local/pn-people-still-awaiting-explanation-on-power-station-agreement.519004
Why is it that the link to the “Electric deal is signed behind closed doors” now appears underneath the article, but:
1. It is not traceable as a separate link on the internet.
2. It shows date published as 12 May, but has no readers’ comments to date?
That article was never online before.
Journalists should check at the Registry of Companies if filings have been made about changes in the shareholding of Malta Power & Gas Limited over the past few days, since the beginning of May.
The original shareholders of MPGL are Enemalta and Aviation Fuelling Services Ltd.
It is not clear if Gasol plc has merely signed a commitment to buy, or if it has already acquired a 30% stake in MPGL.
The findings should be interesting.
“NO REPLIES ON POWER STATION CONTRACT
Earlier, during Question Time in Parliament, Energy Minister Konrad Mizzi turned down Opposition requests to publish the contract awarded by the government to Electrogas on the new power station. He also refused to give details.
In all cases, he said questions had to be put in writing as they had nothing to do with the original question.”
http://www.timesofmalta.com/articles/view/20140514/local/government-turns-down-requests-to-publish-henley-and-power-station-contracts.519014
I am morally convinced that the contract for power purchase between Enemalta on the one hand and Electrogas Malta Limited (a company still called Malta Power & Gas Limited and still controlled by Enemalta) has not been signed as yet.
“ElectroGas intends to rename MPGL “ElectroGas Malta Ltd.” prior to closing the financing for the Project. ”
http://hsprod.investis.com/ir/gas/ir.jsp?page=news-item&item=1762588006285312
Does this not mean that Electrogas has not even concluded the financing of the project as yet?
If the financing has not been concluded as yet, the project is not yet doable and shareholders are unlikely to commit to the project until the financing is committed.
Gasol has not specified the value of the shareholding to which it has committed.
MaltaToday is detecting something wrong too:
“the Delimara gas plant contract, a first tranche of which was signed on Friday last week, if they are submitting in writing.”
Notice the use of the phrase “first trance.” As if a power purchase agreement is signed in tranches.
“The consortium ElectroGas has so far entered into a share purchase agreement to acquire a 30% stake in Enemalta’s special purpose vehicle Malta Power & Gas Ltd (MPGL). ”
What we know is that in a stock exchange announcement, Gasol has said that it has signed a Share Purchase Agreement to acquire its 30% share in the company MPGL, and that the other shareholders will do so separately.
“So far, the government has been cagey about whether it had secured the contract with ElectroGas: Prime Minister Joseph Muscat on Reporter said the contract had been signed, but the Opposition is raising questions about the veracity of his statement.”
http://www.maltatoday.com.mt/news/national/39000/mizzi_unwilling_to_answer_question_on_electrogas_deal
Full text of Gasol plc announcement:
“Electrogas Malta acquires Special Purpose Project Company for LNG to Power Project in Malta
Gasol, the AIM listed gas to power company, is delighted to announce that, as part of a consortium called ElectroGas Malta (“ElectroGas”), it has entered in to a Share Purchase Agreement (“SPA”) pursuant to which it will acquire a 30 per cent. stake in Malta Power & Gas Limited (“MPGL”), a special purpose company established by Malta’s state power utility, Enemalta, to own and operate the LNG-to-power project (the “Project”) in Malta that was awarded to ElectroGas in late 2013. MPGL has obtained the relevant development permits for the Project.
Pursuant to the SPA, the remainder of MPGL’s shares will be acquired by the other members of the ElectroGas consortium as follows: SOCAR Trading SA (20%), GEM Holdings Ltd (30%) and Siemens Projects Ventures, the equity financing arm of Siemens Financial Services (20%).
ElectroGas intends to rename MPGL “ElectroGas Malta Ltd.” prior to closing the financing for the Project.
Commenting on the Project, Gasol COO Alan Buxton, said: “This is a significant step in the development of the Project and we look forward to the implementation phase.”
http://hsprod.investis.com/ir/gas/ir.jsp?page=news-item&item=1762588006285312
I say it again that the media nowadays has been hijacked by LGBT issues. And it’s not only in Malta.
My thoughts were exactly the same as the title above says when the law on civil union was passed and there were all those festivities.
Although I do not have anything against the bill everyone knows what happened in Spain once the Socialists were back in government following a long period of Conservative rule. The feeling at the time was similar to here of 2 weeks ago when same sex marriage was legalised and allowed but everyone knows what happened to the job market and unemployment. Not to be misunderstood it has nothing to do with the legalisation of same sex marriage/union, but Socialist parties tend to get excited about legislating about ‘civil rights’, which should be, but think that jobs will be created by default, which is definitely is not the case.
The Governor of the Central Bank cannot be removed by the government of Malta …. and may I add that were this not the case and were the Governor to fail the Malta Taghna Lkoll test, he would have been sent packing ages ago.
And this explains why Labour’s protégé had to settle for a Deputy Governor’s post created specifically for him in true Joseph Muscat meritocracy style
Isn’t Putin doing the same in Russia? He is creating turmoil in Ukraine to spur up nationalism and his personal approval rating in order to deviate away from the faltering Russian economy.
‘..Here, appetite for investment has diminished considerably as a result of a situation of unfair competition that continues to be tolerated by the authorities between law-abiding companies and others who do not comply with fiscal, environmental and consumer regulations…’
Read all those companies who refused the reality of EU membership. Guess who those voted in and what they were promised.
I just love your lessons :)
Enemalta is still unaware that it has signed a multi million/billion contract with Electrogas Malta. Maybe it just does not feel it is important to inform its stakeholders – including us customers – about such important agreement and its implications for us.
http://www.enemalta.com.mt/news.aspx?cat=3&news=9