In final days of 2009 we all witnessed a gorgeous Gibraltarian crowned Miss World, a massive achievement for a country with a population of just 30,000! Congratulations Kaiane Aldorino, you have done us all very, very proud. The International recognition of this highly deserved win is virtually priceless. Today many of us use “Google Alerts” to keep abreast of information about places, companies and “things” that happen around the World. On Saturday the 12th of December anyone with “Gibraltar” as a “Google Alert” would have seen their in-boxes filling as the online news media reported this brilliant achievement – very well done Kaiane, you have massively raised the international awareness of Gibraltar, and the column inches of press comment your win created, were phenomenal.

A milestone was achieved last December when the Spanish Ferry company Transcoma launched a new ferry service between the ports of Gibraltar and Algecirias. The new vessel “Punta Europa II” can carry up to 150 passengers, and offers three sailing per weekday and two on a Saturday. After a gap of 40 years the Chamber welcomes this new service as an additional form of travel into Gibraltar for frontier workers and tourist alike.

As Twenty Ten progresses we have seen some very positive press in the UK about Gibraltar being a less taxing place to live and work. We are all aware that our current two-tier corporate tax system becomes redundant at the end of the year, and we all been told that our new “one tax fits all” will be 10%. But at the time of writing the new legislation has still yet to be gazetted. The Chamber urges GOG to push forward with the new legislation with utmost speed, so the finance sector can understand fully the details of this crucial piece of legislation.

In this issue we have a frank interview with the new mayor of La Línea, Alejandro Sánchez. The Chamber looks forward to a new found dialogue with our closest and important of neighbours.

Over the past few months The Chamber has become increasingly worried about the ability of Gibraltar to sustain the growth we have witnessed over the past few years. As we have said earlier we have seen some very positive international press, and with our low tax jurisdiction status, Gibraltar will have a great offering, with huge opportunities, but we appear to have a crisis in the availability of office space. The reality is that there is no point in being an “attractive”jurisdiction, if we cant´ accommodate new entrants. What is even more worrying is that there is very little in the pipeline.

This issue needs to be addressed, urgently.

In the early 1980s, prior to the border opening for pedestrians, something huge happened in Gibraltar. It caused havoc on the roads and represented a major logistics exercise. But it was worth it: Gibraltar got its first escalator!

Tony Welsh, managing director at the local branch of Marks & Spencer, a franchise run by his family in Gibraltar for over four decades, smiles when he recalls that day.

“It caused mayhem on the roads as we brought it in,” he said. “It was like a military operation to get the thing through the city gates and into the store.”

It was an immediate success, not least for children at the time for whom riding the M&S escalator was a good way to while away an otherwise laborious slog chasing mum round the store.

There was, of course, good business sense behind the investment. The M&S branch was opened by Tony’s father in the late 1960s, just ahead of the border closure. It had proved a successful venture, but with a limited local market. Nearly 20 years later, with the border about to open, it was time to expand and get ready for increased demand.
For Tony Welsh, it was a natural progression. “I was working at this store from the age of 13 for pocket money, so it’s always been in the blood,” he says. “I served my apprenticeship here.”
At the age of eighteen, he had moved to the UK to undertake a business studies course in London and, having completed it, joined Marks and Spencer as a management trainee.
“My first store was in Fulham, where I suddenly met half of La Linea,” he says. “A lot of people had moved there looking for work after the frontier closed.”
Tony also worked at M&S head office, learning invaluable lessons about the company’s internal systems that would serve him well in the years to come.
He confesses that he had no intention of coming back to Gibraltar at that time, finding the Rock somewhat claustrophobic with the border shut. But while working as a merchandiser in head office, he met his future wife, Penny,a buyer for M&S. This was at the time when Spain was poised to enter the EU and Tony, aware that the change in political mood in Spain would lead to the frontier reopening, saw an opportunity and returned home.
“For years I’d been telling my father how to run his business, telling him how to do this or that,” he says. “And he would say, ‘if you want to do it, come back and do it’.”
“So, Penny and I got married and came back, except the frontier didn’t open until a couple of years later.”
This proved to be a mixed bag of fortunes. While the setback was frustrating, it also gave the Welsh’s time to prepare things in anticipation of an increase in business. They expanded into the first floor of Gibraltar Heights and more than doubled the size of the store. They also installed the escalator.
The opening of the border led to a surge in demand for M&S products. During the closed frontier years, the branch had “more or less ticked over” on the custom of local shoppers and the British garrison. The difficulties of resupplying products by sea also added to the complications of this difficult period.
“When the frontier opened, it was boom time, like a roller coaster,” Tony says. “We more than doubled our turnover in the first year and that growth went on for three
or four years.”
“Gibraltar was a Mecca for shopping because there was nothing like it in the
area in terms of variety. It was crazy.”
This was a trend that continued after the opening of the border. In response, M&S continued to grow, moving into new parts of Gibraltar Heights whenever possible and even expanding into other premises nearby on Main Street.
Fast forward to 2010 and the years of consistent growth have begun to ease off. The trend of double-digit growth has levelled out and the business, while still growing year on year, is doing so in single digits.
“Spain has changed dramatically,” Tony says. “Shopping is much more professional over there now, there is choice, and many Spanish brands are market leaders.”
Tony remains bullish about Gibraltar, highlighting the number of major brand names with stores on the Rock, a market that does not fit the normal brand profile in terms of population and size, as evidence of an exceptional retail sector. But as the business climate changes across the border in Spain, so too do the fortunes of commerce on the Rock, where shops rely on cross-border shoppers for growth. Currency movements can also have a dramatic effect on those who source in Euros and Gibraltarian shoppers buying in Spain. That puts an emphasis on change and innovation in order to attract new clientele. With M&S, for example, the Welsh’s stepped up to the challenge by opening a food store.
“Gibraltar does remarkably well, but unless you introduce new lines of business and move away from a static market with the same products, it’s very difficult to sell much more,” he says.
Tony knows his store back to front and likes to keep in close touch with its day to day running.  For such an experienced manager, he admits he finds the paperwork a chore. He prefers the hands-on moments.
“I like getting in there, I like getting my hands dirty sometimes just to remind myself of how it’s done,” he says. “You have a good time doing that and the team appreciate it because you’re not just sitting in your ivory tower, albeit they haven’t seen much of me this last year .”
More than a team, the M&S staff is like a family. Husbands and wives have worked there. Husbands have met their future wives there. Mothers, daughters, cousins have all worked on the same floor. As for the store’s longest-serving employee, Anita Copello, she has worked there for 41 years, right from the start.

“She’s resigned twice, retired twice and she’s still here,” Tony says. “About 15% of our people have been with us for over 20 years.”
OTHER VENTURES
For this local businessman, growth was not only about M&S. When he came back from the UK, Tony brought with him a notebook with a list of companies that he would talk to with a view to opening up a branch in Gibraltar. The first franchise had a decidedly personalised feel to it. Having shopped for his children in the Early Learning Centre in the UK, he decided open up an outlet here in Gibraltar, a move that has proved over the years to have been a good idea.
“It’s never going to set the world alight, but it’s a nice little business,” Tony says.
“To me it’s my stress buster. I just go in there and watched kids messing around.”
Next was also on the list. Tony opened up a franchise of the popular UK clothing store on a site in Main Street that had first housed the M&S food store. On the side of his core franchise businesses, he is also involved in Sapphire Networks, a local telecommunications business of which he remains a shareholder and director.
But always in search of new opportunities, Tony recently fulfilled a long-time dream of opening an M&S store in Spain. It took many years of talking to M&S but last November, the doors of the new store in La Cañada, Marbella, finally opened for business. The target market is not just expats, a natural focus, but also Spanish shoppers. It is still very early days, the signs are positive despite the difficult trading climate.
“It’s been a very good response, but it’s also very evident that the recession in Spain is really biting,” Tony said.
“It is very, very tough, but if I can’t make it work in La Cañada, I don’t think it’s going to work anywhere.”
For someone who has been intimately involved in setting up so many major business ventures, Tony believes he is conservative in his approach. He describes himself as “a bit of a plodder” when it comes to business.
“I stick to what I know,” he says. “I’ve tried thinking out of the box on a couple of occasions and delved into property and stuff, but I don’t know enough about it so I’ve reined myself in and stuck to what I know.”
“Retailing is something I know quite well.”
So what is the secret to choosing a franchise? On the face of it, it sounds simple.
“You look for the success stories, but you also look at new, up and coming brands,” Tony says. “I’m not going to give my secrets away but there are two or three brands that, if the right opportunity came along, I might consider.”

For newcomers, he has some words of advice.

“You’ve really got to do your research on the business case,” Tony said. “You have to bounce your ideas around other people because you need to find out what the pitfalls are. What works in London may not be viable in a population of 28,000.”
A classic pitfall, he says, is under funding. Even if the product is good, it will take months before the turnover builds up to break even and get into the black.
It is also worth taking advice from people with specialist knowledge. Tony says he would never enter a serious business venture without first speaking to some trusted advisers in business. “It’s very easy to convince yourself that you have a great idea. You need someone to tell you if you’re being stupid,” he says.
It also helps, of course, if you have business in your blood. The Welsh’s are a husband and wife team who work fulltime at their businesses and whose children are following in their footsteps.
Tony himself is treading a well worn path. His father went to Nigeria in the 1930s as a young man and worked there for 15 years as a trader, selling British products from the UK in the Nigerian market.
“He was in his 20s and he saw an opportunity,” Tony says.

After Nigeria and World War II, Tony’s father moved to Morocco and lived in Tangier, where he used his contacts from Nigeria to become a manufacturer’s representative selling goods on commission.

Tony was born in Tangier and lived there until he was six when, with a tide of nationalism building up in Morocco, the family moved to Gibraltar.
“As far as I was concerned, we’d gone on a holiday,” Tony says. “Except we never went back.”

As he plots a recovery strategy for his cash-strapped city, Alejandro Sánchez, the mayor of La Línea, has his sights set firmly on the Rock.

Mr Sánchez has an unenviable task ahead of him. La Línea has debts of over E120m and around 10,000 of its citizens are currently out of work.
When the Spanish property sector collapsed with the global economic downturn, so too did a crucial area of economic activity for La Línea. Its primary source of income and employment was gone.
Now, Mr Sánchez is at the head of a team that is trying to pick up the pieces.
The mayor has strong links to the Rock, having studied here in the past and made many friends and contacts.
Like other mayors in the Campo de Gibraltar, he has also read the report commissioned by the Gibraltar Chamber of Commerce into Gibraltar’s contribution to the Campo economy.
Among other conclusions, the report found that Spanish frontier workers, of which there were 2,749 in October 2007, earned £43m in 2007 and repatriated it to the Campo economy.
In addition to Spanish workers, a further 2,689 workers of other nationalities crossed the border to earn their living in Gibraltar while resident in Spain.
All in all, the study found that Gibraltar’s economy contributed some 12.2% of the total gross domestic product of the Campo area.
Those factors have combined into an inescapable conclusion, one that Mr Sánchez views with optimism.
“In my mind, there is no border when it comes to economic activity,” he said.
“Gibraltar is very important for us. Gibraltar and the Campo are a great economic force, two territories that complement each other. Gibraltar has needs that can be covered by the Campo, and vice versa.”
Economic cooperation will be at the top of the agenda for a meeting that Mr Sánchez is set to have late February with Chief Minister Peter Caruana.

This will be their first formal meeting since the Popular Party mayor took over after his controversial predecessor, Juan Carlos Juárez, was forced to step down.
“I intend to discuss in depth the economic and commercial relations between the two cities,” Mr Sánchez said.
“There are many economic aspects, from business projects to investment, which could be extraordinarily beneficial to both communities.”
Mr Sánchez, who has close contact with many people on the Rock, said he was aware of numerous opportunities in the Gibraltar job market that could be filled by Spanish workers.
The mayor, working with other municipal officials, employers and union representative, is negotiating a retraining program for La Linea’s unemployed. They call it “recycling”.
The two main areas being considered are the industrial sector in the Campo area and the Rock’s tourism and leisure sectors.
The team has established urgent training courses which initially will include the preparation of those who already have a basic grounding in certain important areas.

One focus will be on breaking down language barriers, giving unemployed persons the communication skills that will enable them to seek work in sectors such as tourism and leisure.
La Línea wants its citizens to learn basic English skills that will strengthen what they have to offer employers and thus help open up new job opportunities.
“We have to push ahead with training courses for the unemployed,” Mr Sánchez said.
“We don’t have that at the moment and it is vital in order to emerge from this employment crisis.”

Another key point of focus is the construction of Gibraltar’s new airport. Mr Sánchez has moved to fast-track the administrative steps required to enable construction work of what he calls “the north terminal” on the Spanish side of the border next to Gibraltar’s new terminal.

That phrase has rankled with opposition parties on the Rock, who say the airport is Gibraltar’s, not Spain’s, and who are concerned about the wider political implications.
But Mr Sánchez, publicly at least, is focusing on his city’s immediate economic problems and is in search of new business opportunities. He is talking about freight, commercial areas and “green and sustainable” architecture.
To that end, he has held several meetings with companies active in this sector and plans to train – retrain, even – people who have worked in the construction industry, with a view to equipping them with the skills to work on this project.
“The fact that people in La Línea will have that north terminal will bring enormous and unprecedented beneficial effects for our city,” Mr Sánchez said.
“That is why we are determined to lay the first stone during the course of the coming year.”

When British builder Haymills collapsed last year, an uncomfortable question about PAYE emerged as the dust began to settle.

In response to questions in Parliament, Chief Minister Peter Caruana revealed that a company part-owned by Haymills owed the public purse hundreds of thousands of pounds in unpaid taxes.
Mr Caruana did not provide the exact amount owed by Labour Hire (Gibraltar), but he described it as “a very, very substantial sum of money.”
“It’s not a million miles from a seven-figure sum,” the Chief Minister told Parliament at the time.
Labour Hire (Gibraltar) was half-owned by Haymills (Gibraltar), which went into liquidation along with several subsidiaries after its UK parent folded as a result of the economic crisis.
The remaining stake in Labour Hire (Gibraltar) was owned by Berrylea, another construction company that carried out extensive work for Haymills but ceased trading in 2008 leaving a trail unpaid debts with local suppliers.
Mr Caruana told Parliament that another company also owed arrears of PAYE and social insurance.
PCG Group, which worked under contract to the Ministry of Defence, went into liquidation owing “substantial six-figure sums”, the Chief Minister said.

The revelations drew a sharp response from Gibraltar’s opposition parties, who said large companies were being allowed to run up tax debts while smaller businesses were chased aggressively.
“The Government seems to be more lenient with large companies that owe large amounts than with smaller businesses who owe considerably less,”said the GSLP/Liberals in a statement at the time. “Indeed, while many small businessmen are called up by the tax office and reminded to pay their taxes on the 15th of every month, as stipulated in the law, the big fish who owe hundreds of thousands of pounds in taxes seem to be immune from this treatment and get away with it.”

“There can be no other explanation as to why such a huge sum of money is owed in taxes.”

The PDP expressed similar sentiments and asked why the debts run up by Labour Hire (Gibraltar) had not been picked up sooner.

“The Government should be monitoring such matters much more closely and not allowing companies to build up hundreds of thousands in tax or social insurance debts,” said PDP executive member Gigi Sene.

The Government roundly rejected the criticism and said Haymills, which had been widely regarded as a reputable British company, had succumbed to dire market forces.

It said Haymills itself had been up to speed with PAYE and social insurance contributions. Debts owed by a part-owned subsidiary could not be deducted from payments to Haymills for work done under contract to the Government.

As for the claims of discrimination, those too were off the mark according to the Government.
“The tax office has one policy and practice for all tax defaulters,” a spokesman said at the time.

“The allegation that there is preferential treatment for big companies compared to small companies is unfounded and untrue.”

And as Gibraltar moves into a new tax regime this year, Mr Caruana warned that officials would adopt a tougher approach to those who default on tax payments.

Speaking at the Chamber’s annual dinner in November, he said the new 10% tax rate would represent a very significant reduction in tax for most businesses.

“It is inevitable that its introduction will be accompanied by a new, more aggressive approach to collection, compliance and enforcement,” he said.
“Now, therefore, seems a good time for those of whom it is not already the case to put their house in order in respect of corporation tax, PAYE, Social Insurance contributions and correct registration and contractual classification of employees.”

“This also is a vital element of the much wanted ‘level playing field”.

Gibraltar Port has an incredible heritage having been established over 200 years ago. Key to Gibraltar’s success is its location. The east-west shipping motorway passes the “front door” and the north-south shipping route is less than 20 miles away. Location is the key to its success.

It is incredible to think though that set against the economic background of 2009, Gibraltar not only held market share but forged ahead in passenger numbers, cruise ship calls, vessels requiring marine services and bunker volumes. Overall the port saw an increase in trade in the order of 10%.

But looking back over the last 12 months a business is not just built on volume, a number of major projects have reached key milestones at the port. The most significant of these was in July when the workforce signed a new agreement, which took the port into the private sector. Key to a sustainable business model is developing your personnel.

The agreement has given a new sense of direction to the staff that are keen to build on the current situation. Although the port will continue to be owned by the people of Gibraltar, authority status will in time allow faster decision-making; and thus the ability to respond faster to market conditions.

The port is financially autonomous and not is a financial multiplier to Gibraltar’s economy but will also be a significant contributor to Government finances.

Another key milestone in 2009 was the start of the implementation of a new vessel traffic management system (VTS). The system will provide a platform that will deliver, during 2010, enhanced safety in the management of navigation, greater ability to monitor the environment. As well a new a web-based information system that will detail arrivals, departures and scheduling will be built. In time, this technology will deliver other benefits to the shipping community.

Although the economic climate is cool and trading patterns are changing, Gibraltar remains well positioned to benefit from the economic resurgence. A key target for 2010 will be to ensure shipping operates as efficiently and safely as possible.

Building upon the excellent reputation that Gibraltar has as a maritime service centre, during the next 12 months the port will look to deliver Safety, efficiency, profitability and of course value for money. This will require all stakeholders to pull together, working as a team equipping and enabling everyone to deliver their best.