B2B - The Voice of Gibraltar Business

b2b — Mon, 24 Oct 2011 14:52:44 +0000

Our future – The next four years

b2b — Mon, 24 Oct 2011 14:49:51 +0000

Every four years or so Gibraltar is gripped by election fever, and the business community is not immune to it! Far from it, we are in a position where we can help shape the future for our economy over the next term of government by lobbying all the parties to include items from our manifesto ‘wish list’.
Over the last decade and more, Gibraltar has seen many tangible and intangible developments in all spheres of our economic, social and political life under the stewardship of the current administration. The economy, in particular, has grown appreciably, which in turn has allowed improvements in our social development across many areas of Gibraltar. The economy can also boast of a low corporate tax regime, at 10% since January of this year, as well as progressively reduced personal taxation.
Politically, we have also taken significant steps forward, with the new constitution and improved relationships with the UK Government and that of Spain. While relationships with the latter are never easy, the current waters dispute being a case in point, the Córdoba Agreement was nevertheless a significant achievement, with Gibraltar for the first time sharing a forum with the UK and Spanish Governments with its own voice and representation. The achievement of this agreement has always been supported by the Chamber. The founding of the ‘Instituto Cervantes’ locally is also significant, in that these are only established outside Spain and is therefore a de facto recognition (by Spain) that Gibraltar is not Spanish. This is a small gain in the ‘eternal issue’ but, nevertheless, a gain.
This period of relative political stability has allowed Gibraltar to progress economically and it’s standing in the world has also been enhanced. In late 2011, with much of the western world in economic turmoil from the as yet unresolved issues (essentially these have their roots in uncontrolled and reckless sovereign debt) which led to the 2008 crisis, Gibraltar continues to do well.
Given the above, what do we, as a Chamber, want from the next administration? The short answer is more of the same! The next Government has to deliver the climate for Gibraltar to be able to carry on advancing.
For Gibraltar to continue to prosper, we need political stability and good economic conditions. We of course leave it to the politicians to deliver the political stability; all we need say is that it is essential.
On the economic front, and as the Chief Minister has said, although Gibraltar has weathered the recessionary storm quite well, it is not immune to its effects. One of the features of Gibraltar’s success has been the major public works program, either completed, in progress or in the pipeline. While it is impossible to achieve agreement on all of these (the airport, for example, could have conceivably been cheaper and smaller) by and large the projects have achieved the dual goals of improving our social infrastructure and contributing to our economy.
These projects are, of course, not for free and Gibraltar has rung up considerable debt which needs to be serviced, now and for some time well into the future. This is a fact that the next administration needs to take into account. At present Gibraltar has no problem in meeting these commitments but, as has been seen recently in most of the rest of the world, things can change quite quickly, public surpluses can convert into deficits and problems start rearing their ugly heads.
The watchword is clearly prudence going forward. It is much easier to act when things are going well. Any incoming administration needs to ensure good economic and financial management is in place to ensure our well being. Among other issues, this will require control on recurrent expenditure, encouraging office development to address the lack of quality accommodation and putting resources into other revenue producing industries such as tourism. Also, apart from consolidating on the existing pillars of the economy, alternative and additional revenue generators need to be explored so that the economic base can be diversified and widened going forward. This will allow our economy to better shield itself against future shocks.
So with this and much more in mind your Chamber looks forward to engaging all political parties to ensure the “voice of the private sector” is heard “loud and clear” so that Gibraltar will continue to prosper and punch above our weight for many years.”

Gemma Araujo – The B2B Interview

b2b — Mon, 24 Oct 2011 14:43:52 +0000

When the PSOE politician Gemma Araujo took office as the mayor of La Linea last July 11, one of the first things she did was order a physical gesture aimed at repairing the damage caused to cross-border relations by her Popular Party predecessor, Alejandro Sánchez. Early one weekday morning, she watched as municipal workmen demolished the infrastructure put in place by the former PP mayor as part of his failed plan to impose a charge on vehicles leaving Gibraltar. It was a token that was well received on the Rock, where people had breathed a collective sigh of relief at the departure of Mr Sánchez and his team.
Now, in a wide-ranging interview with B2B, Mrs Araujo leaves no doubt that La Linea´s town council sees Gibraltar not as a threat, but as an ally. La Linea, she concedes, is verging on bankruptcy. Gibraltar, she quickly adds, will play a significant role in its economic recovery.
“I believe Gibraltar´s role is crucial,” she says. “It was important to make a gesture and show Gibraltar that we were different, that our intentions were not the same as the PP’s.”
“All the municipalities have been hit by the crisis and unemployment, but La Linea has always had the salvation that you can go and work in Gibraltar.”
“In that respect, we also have to be self-critical as an administration. People go to work in Gibraltar because we have not been able to generate employment here, or in the surrounding areas.”
“Gibraltar has been the cushion that has softened the blow of the economic crisis in La Linea, even though the impact has nonetheless been significant.”
Mrs Araujo, 32, illustrates that economic contribution by reflecting on the damage caused by Mr Sánchez´s tough position on the Rock. Mr Sánchez had rarely recognised that Gibraltar was a source of direct and indirect revenue for La Linea and the surrounding Campo de Gibraltar. He had opted instead for a negative analysis, arguing that La Linea was vital to the Rock ´s success but that the town did not benefit from it. That entrenched position – and most of all, the hare-brained toll idea -led to many Gibraltarians avoiding the Spanish border town in protest. For the new PSOE mayor, the PP had followed a flawed strategy that backfired and impacted negatively on La Linea.
“For us, Gibraltar is an opportunity,” Mrs Araujo says. “Not only because there are Spanish people working there, but because of the opportunities for Gibraltarian interests to set up here and, above all, because of the revenue created by Gibraltarians who come across the border to shop here.”
“There is no doubt that those revenues dropped during that time and I regret the silence that there was on this issue, which was directly impacting on the economy of our municipality. During this period of direct confrontation under Alejandro Sánchez – and I personalise it in him because time has shown that it was his policy, not that of the wider municipality – there was a significant drop in that source of revenue, and we and our businessmen noticed that.”
“We realised the significant income that Gibraltar generated for our community.”
“I think we need to forget this period.”
Difficult Times
Mrs Araujo took office at a time when La Linea was reeling economically. The city has nearly 10,000 people registered as unemployed. Its town council owes tens of millions of Euros and cannot even afford to pay its 850-strong workforce. Every day outside her office, union activists and municipal workers protest loudly over unpaid wages. It has been this way for over a year and the protests have, on occasion, led to severe disruption to frontier traffic. When she became mayor, the workers were owed over €5m in unpaid salaries. Although some of that has now been paid off, the bill continues to rise. La Linea, its new mayor admits, requires some strong medicine.
To explore how Gibraltar might play a role in La Linea´s economic recovery, it is first necessary to understand the depth of the problems its town council faces. The monthly bill for municipal salaries is currently €1.4m, without including social security payments. La Linea receives €15m from the state every year but those payments are currently frozen because the council has a debt for social security and tax running to nearly €40m. From the Junta de Andalucia it receives €2.8m, while its taxes are collected on its behalf by the Diputación de Cádiz and amount to some €18m.
“With that income, a normal town council would have enough if the bill for salaries was lower,” Mrs Araujo says. “That is our objective, reducing the salary bill.”
“When all the income that a town council receives is earmarked to pay salaries, then other services suffer and that is the situation we are currently living.”
In practice, the size of the municipal salary bill means that La Linea struggles to find the cash to pay for routine work ranging from painting street markings and replacing street lights to fixing pot holes in the road. Public services and infrastructure deteriorate and this impacts not only on the people who live there, some of whom are Gibraltarians, but also on the people who move through the city, including people who live on the Rock.
“We find it hard to pay for the basic, essential things, and this has a direct repercussion on La Linea´s citizens who are now paying for the wasteful policies of the past,” she says.
“For many years, La Linea has lived beyond its means. Now we´re dragging a deficit and an accumulated debt as a result, and the current situation is serious.”
To tackle the municipal salary bill, La Linea´s town council is working to meet current payments while whittling away the debt as and when it is possible. In parallel, it is also working to reduce costs by removing benefits such as bonuses, expenses and the like. It has also moved to close down municipal companies that do not provide essential services or value for money. The list includes the municipal TV station, which was closed in August with the loss of 22 jobs. Ultimately, it will also mean redundancies to scale back the size of the municipal workforce.
“I know that these are difficult, unpopular measures, but I have accepted that this is a role I have to play,” Mrs Araujo says. “Until those measures are taken, this town council will not be able to recover and move ahead.”
Mrs Araujo uses her own salary to illustrate the cuts that she feels are necessary. Some of the council workers are paid very large salaries, much higher than what Mrs Araujo herself gets paid. The mayor receives an annual gross salary of €53,000, while some civil servants in La Linea are paid close to €100,000 a year.
“If everyone makes a sacrifice that reflects the current circumstances, then maybe we won´t have to lose that many people,” she says. “Salaries that are too high will have to come down, that´s the way it is.”
All of this might seem like a recipe for labour strife but Mrs Araujo has so far largely avoided the conflicts that were bread and butter during the days of Alejandro Sánchez. She has worked to recover dialogue with the unions and to some extent has been successful.
Although the unions protest daily outside her office, the turnout at these demonstrations is low and most workers appear to be biding their time in the hope that she will find a way through the financial tangle. With cutbacks on the horizon, they are also wary of raising their heads too far above the parapet. As such, the protests have become largely symbolic.
“Of course the unions are going to bang the drum if I don´t pay,” she says. “But they are also going to bang the drum if there are cutbacks in the workforce. I´d rather they banged the drum because of the cutbacks, but be able to pay the salaries of the workers every month.”
She does not hesitate to acknowledge that life for many municipal workers has become very hard. Most are surviving on handouts and credit, but many have run out of room to manoeuvre. In extreme cases the town council has had to step in to ensure families have access to essential services including water and electricity.
In that sense, Mrs Araujo says the workers must be praised for hanging in there.
“They have continued to work with absolute professionalism even though they knew that they might not get paid their full salaries at the end of the month,” she says.
Changing Things
In finding new sources of revenue for her city, Mrs Araujo highlighted the need to ensure that there was sufficient land to accommodate any company that wished to set up in La Linea. One of the key aims of a forthcoming review of La Linea´s urban development plan will be to earmark sites for commercial and industrial use.
“That will be one of the priorities,” she said. “We´re not talking of large businesses of the sort that set up in the major sites in Los Barrios or Algeciras, but rather very specific types of business.”
At present, though, this is a hope for the future. She concedes that the plan is not a response to interest from companies.
“We want to do it the other way round,” she said. “Have the land available first, then find the customers.”
Asked why a business would site itself in La Linea, she spoke of the city´s strategically-advantageous geographic location, with easy access to the A7 to Málaga, Gibraltar and to Algeciras.
“I think La Linea is naturally geared to the services industry and I believe that this is where we will find the interest.”
She also highlighted the new marina facilities and planned commercial developments in that area.
“We need to develop and promote those and create the confidence needed for companies to come and set up here,” she says.
Tourism is another area that Mrs Araujo and her team are keen to develop. She wants visitors to stay in the town and not just see it as a place to drive through en route to somewhere else.
“We have a privileged location, with North Africa just 30 minutes away, with Gibraltar a step away, and at the gateway to both the Mediterranean and the Atlantic,” she says.
“And then there is the potential offered by the joint use of the airport.”
Mrs Araujo met with state airport officials last July, shortly after becoming mayor, to unblock the sale of land on which Spain will build its access to Gibraltar’s new air terminal.
The sale of the plot of municipal land had been stalled for nearly three years by the PP Mr Sánchez.
The PP mayor said he was simply trying to get the best price for La Linea’s cash-strapped council, but others accused him of hampering the cross-border project for political ends.
Now, Mrs Araujo is leading the council initiative to untangle that impasse and renew discussions with Aena, the state airport authority that will oversee the project.
“We are concerned that the terminal in Gibraltar is almost complete and ready to be inaugurated in the coming months and we have yet to reach an agreement to release the land that AENA needs,” she says. “We’ve already had a first meeting to see how we could unblock this issue [and] we hope to renew the negotiations with AENA after the summer.”
“We’re going to sit down and try and close an agreement that will guarantee that the plot of land is available.
Gibraltar Cooperation
In all of these projects, Mrs Araujo sees the potential for Gibraltar companies to get involved. In the coming months, she hopes to strengthen her contacts with the Gibraltar Government and with the local business community to explore possible opportunities.
“Any initiative that aims to encourage mutual cooperation between the neighbouring communities is good,” she says.
“If on top of that we can generate employment or offer Gibraltar businesses assistance to set up here, or offer help finding employees, then that is always going to be positive.”
Mrs Araujo believes that many youngsters in La Linea are already well educated and trained but often struggle find jobs in their area of expertise and, as a result, have to settle for something else or move away.
“But I also recognise that many of them have yet to get up to a good standard of English,” she adds.
“One of initiatives will be to help these youngsters to perfect their English to help them find work in Gibraltar and remove that language handicap that can limit their employment opportunities.” She says the town council would look to see whether Gibraltar could play a role in this educational initiative.
She says that dialogue with Gibraltar had flourished under the PSOE government and the tripartite forum, whereas the PP has always opted for a “false patriotism” in order to hamper that cooperation. But she will not be drawn to reflect on the current political climate and the fact that the tripartite talks had all but collapsed as a result of the row over territorial waters.
“My job as mayor is to encourage goodwill and good relations between both communities,” she told B2B.
“Our common history requires this.” “But that does not mean that the Foreign Affairs Ministry in Madrid cannot have a determined position on Gibraltar in matters that are not within my remit.”
Despite her good intentions, Mrs Araujo concedes that there is potential for storm clouds on the horizon. Spain will hold its next general election on November 20
and the polls show that there is strong likelihood of the PP taking over in Madrid. National elections will be followed by regional ones in Andalucia – as this edition went to press, a date had yet to be fixed – and there are signs that the PSOE may for the first time lose its hold on the regional government too.
The PP has already promised a tougher line on Gibraltar if it wins in November. While it insists it is committed to local cooperation with Gibraltar, it prefers a “two flags, three voices” formula that recognises Britain as the sole interlocutor on Gibraltar issues.
“If that situation arises, then it is going to require even more effort from us,” she says. “Our competencies are local and we are going to continue working in that sense whoever is in government.”
She adds that should the PP win the national elections and harden Spain´s position in respect of Gibraltar, then the Gibraltar Government will have to play a critical role to differentiate between national policies imposed by Madrid and local initiatives led by a PSOE town council in La Linea. “It´s going to require a greater effort,” she says.

Changes in Civil Service Pensions

b2b — Mon, 24 Oct 2011 14:35:31 +0000

New entrants to the Civil Service will no longer retire on final salary pensions under new arrangements introduced by the Gibraltar Government at the last budget. The measures, which begin next year, are aimed at tackling a rising pensions bill that represented a significant burden on the public purse.
The Civil Service final salary pension scheme is entirely unfunded and is paid out of the Government’s annual expenditure budget.
As salaries increased over the years, so did the cost of meeting those payments.
In 1983, the cost of meeting the pension payments of retired civil servants was £3.8m. By 2011, that had risen to £26.6m.
Under the present system, Gibraltar employs civil servants, pays their wages and enjoys the services they provide, but it is future generations who must pay the pension of those civil servants.
“Because it is unfunded, what it basically means is that we are leaving the pensions liability for current civil servants to our children and grandchildren, who will be the taxpayers in 33 years time when a civil servant recruited today retires,” said Chief Minister Peter Caruana during his last budget address just before the summer break.
“Just as we, today’s taxpayers are now paying the pensions of past civil servants who have retired and will pay the pensions of current civil servants when they retire.”
In times of economic prosperity, such an arrangement works well and payments are met. But the risk is that a downturn in the local economy could saddle future generations with an unsustainable burden.
It is that risk that the Government sought to address by putting Civil Service pensions on a contributory footing.
“If at some future time the economy were to do less well, this could become unaffordable and thus a serious problem for our children and grandchildren and for future generations in Gibraltar,” Mr Caruana said.
“We should eliminate that risk to them as soon as possible. This can be done by establishing a new occupational pension system for future civil servants in which the Government and the employee both put aside each year a proportion of each employee’s salary into a pension fund for that employee.”
When that employee retires, the accumulated content – annual contributions plus investment income over the whole career – of that employee’s pension fund will pay for his her occupational pension, which will thus no longer be linked to final salary and will not be a financial burden on taxpayers at the time that he/she retires.”
Under the Defined Contribution Provident Scheme, the cost of public sector pensions will be spread over 33 years of a civil servants working life and paid annually by the taxpayers who employed and obtained the benefit of that civil servant.
Unlike in the UK, this change in the civil service occupational pension system will not affect existing employees, who will continue to enjoy their present pension arrangements.
In effect, it means the change will increase existing costs for the Government, which will have to meet current final salary pension payments while funding annual contributions for those in the new scheme.
“So this is not about saving money now,” Mr Caruana said. “It costs more money now.There is nothing in this for the Government today except extra cost.”
“This is about taking seriously our responsibility to our children and grandchildren and to future generations
by relieving them of need to pay later for the cost of things that we do, enjoy and decide today.”
Over 1017 public sector workers – around 25% of the public sector workforce – are already employed on the basis of this new pension scheme, most of them in statutory agencies outside the main Civil Service structure.
It already applies to new entrants in public authorities and agencies and, as from January 1, 2012, will apply to all new entrants in the Civil Service.
The Government is currently preparing the legislative changes needed to put the new scheme into place.
It also envisages improving the terms of the Provident No.2 Pension Scheme by increasing employer contributions from their current 10%.

Gibraltar Airport Winter 2011 Morning Rush Hour

b2b — Mon, 24 Oct 2011 14:32:21 +0000

Weekday mornings this winter in both arrivals and departures in Gibraltar airport’s new terminal look set to be what could be diplomatically described as ‘challenging’.
The quirks of slot allocation to the airlines mean that three flights are scheduled to arrive within five minutes of each other on Monday, Wednesday and Friday. This frenzy of activity will be but a blip as the ramps look set to remain empty for much of the remainder of the day during the year’s quiet season. The winter schedule comes into force on Sunday 30 October with the airport’s three established carriers continuing to provide service to various UK destinations.
Although British Airways (BA) has shifted its flights to Málaga to operate from London Gatwick, its daily service to Gibraltar continues to operate from London Heathrow’s Terminal Three. This winter however the airline has rescheduled the flight to operate later in the day and to offer better connections to passengers arriving from long haul services into London. The single daily flight will leave Heathrow at 10.05am with arrival into Gibraltar at 1.55pm. Departure will be one hour later with arrival back in London at 4.55pm. Additionally, the airline will continue to operate larger 156 seat Airbus A320 aircraft on the route.
easyJet (EZY) launched three weekly flights to Liverpool at the end of March this year. The airline will continue the service at the same frequency this winter.
The only change to the operation is that the Saturday flight moves to a morning operation from The Rock. Inherited with its purchase of GB Airways, the low cost airline’s daily flight to London Gatwick will continue but the schedule has changed to an early morning departure from London. Six days a week the flight is due to land in Gibraltar at 11.05am and after the airline’s customary rapid turn round it leaves for London just 35 minutes later. Saturday flights arrive just under two hours later.
Earlier this year Monarch (ZB) announced a big increase in flights to Spain and Gibraltar citing increased demand as tourists shifted away from North Africa. This winter the airline will be reducing this extra capacity back during the off season. From a peak of 11 weekly flights to London Luton in July and August, the airline will cut this to just four with effect from 07 November 2011.
Although this will be increased to five in the run up to Christmas and New Year, only three weekly flights will operate with effect from 09 January 2012. The airline’s route to Manchester, which saw four weekly flights this summer, will be reduced to three weekly services with the start of the winter timetable.
Looking forward to the summer season, Monarch will offer a substantial increase in flights to both London Luton and Manchester.
The big news however sees the launch on 31 March of bmibaby’s (WW) three weekly flights to Nottingham East Midlands airport – a route set to open Gibraltar and the western Costa Del Sol to the English Midlands.

New Opportunities for the Yacht Register

b2b — Mon, 24 Oct 2011 09:58:30 +0000

The transfer of the Gibraltar Yacht Registry from Companies House to the Gibraltar Maritime Adminstration has paved the way for the Rock to pitch for lucrative business from wealthy owners of luxury megayachts.
Joe Holliday, the Minister for Enterprise, Development, Technology and Transport, described the move as “an important milestone” for Gibraltar’s maritime sector.
Gibraltar’s Ship Registry has gone from strength to strength over recent years, consolidating it’s position as a quality flag that attracts owners of merchant ships from around the globe.
The Registry’s commercial fleet continued to grow in 2010, with a 4% increase in ship numbers. In 2010, there were 49 new registrations, bringing the total number of vessels on the Gibraltar Register to 320 ships totalling nearly 2.2 million gross tons.
But the Yacht Register has remained largely static in the same period. That now seems set to change.
A key element of the transfer is a legislative change that now will allow for yachts over 24 metres in length that comply with the internationally recognised Large Yacht Code to be registered in Gibraltar.
“This will open a new and exciting market for Gibraltar’s maritime services and to this end, a surveyor has been recruited to carry out the surveys and inspection on these vessels,” Mr Holliday said.
“A promotional campaign is being worked on to attract these discerning owners to register their yachts in Gibraltar. This is an important sector with immense potential for the future.”
As at March 31, 2010, there were 736 yachts registered in Gibraltar.
Gibraltar, at the western gateway to the Mediterranean, has long been a favoured staging port for yachts moving between the Mediterranean and the Caribbean.
New maina projects built in recent years have included sizeable berths to accommodate large megayachts.

Social Media

b2b — Mon, 24 Oct 2011 09:54:12 +0000

While a walk down Main Street remains the medium of choice for exchanging ideas in Gibraltar, a report published earlier this year laid bare the extent to which social media has taken root in this community and helped foster a parallel, online debate.
Nearly two thirds of the population of Gibraltar is registered on Facebook and a growing number of people are dabbling in Twitter and other platforms.
The figures released by the tracking website Socialbakers suggested some 17,540 people in Gibraltar hold a Facebook account. That amounted to nearly 61% of the community, the third-highest per capita concentration of Facebook users in Europe, according to Socialbakers.
Users in Gibraltar are spread across all age groups, with nearly half of them in their late teens to mid 30s, the data showed.
And when it comes to social media, there is no discrimination. In terms of gender, the spread is roughly even. Both men and women enjoy Facebook.
For many, Facebook is a means of staying in touch with family and friends who are not in Gibraltar.
But the popularity of discussion groups such as Gibraltar Politics and Speak Freely! demonstrates that social media also has a vibrant local dimension too.
Increasingly, mainstream media outlets such as The Chronicle, GBC and Panorama are also turning to Facebook and Twitter, both as a means of breaking news and as a source of information.
But is there a down side to all this? Perhaps.
Another recentsurvey, this time by Internet security company Webroot, found that 56% of the 4,000 people it questioned confessed to being addicted to social media.
According to Webroot, 46% of respondents visit their favorite social network several times a day or constantly, while 18% visited at least once a day.
The survey found that new technologies lay at the root of this phenomena, with 42% of those who visited their social sites several times a day or constantly accessing them from mobile devices.
The level of usage prompted questions about security issues and the protection of personal information, and one important piece of advice: Do not do or say anything online that you would not do or say in the real world.

2011 Trading Conditions Survey

b2b — Mon, 24 Oct 2011 09:51:19 +0000

Highlights
•   Half of this year’s respondents had seen their year on year sales either flat or reduced. This shows an improvement on last year when two thirds of respondents said that their sales had remained flat or been cut.
•   Respondents said that 44% of their employees were frontier workers against 40% in last year’s survey.
•   16% of respondents had made people redundant during the year. Collectively the number of people who had lost their jobs amounted to 11 people against 39 people in last year’s survey. Just 16% of respondents thought it likely that they would be making further redundancies during 2011, the same as last year although more optimistically 58 per cent of respondents had no plans for job losses during the year.
•   Competition from the UK (in last year’s survey it was competition from Spain), high business costs and staff recruitment and retention were by far the three factors deemed to have the biggest impact on local businesses. These three have remained virtually unchanged for several years although a close fourth has been government red tape.
•   Members returning completed questionnaires employed more than 1,069 people or around 5% of the private sector workforce in Gibraltar.
•   The survey generated a 27% response rate against a 32% response rate last year (70 completed questionnaires returned against 87 last year).

Employment levels
Members returning completed questionnaires employed more than 1,069 people or just over 11% of the private sector workforce in Gibraltar. Of this total, 473 (44%) were frontier workers.
Nearly one quarter of respondents (23%) said that they had increased the number of employees in the previous 12 months, whilst just under a fifth (19%) said that they had reduced their workforce during the same period. The majority reported no change to the number people employed over the period.
Business Performance
Around a half of those responding (49%) said that they had seen an increase in sales compared with the previous year. This is a better result than last year’s survey where only 30% of respondents reported a year on year increase. Just under one third of respondents (31%) said that they had seen a fall in sales. The remaining fifth (21%) said that their sales had been flat compared with the previous year.
Taken together these results are reason for some moderate optimism as broadly they show an improved trading environment compared with the result from the Chamber’s 2010 survey. We commented that last years survey results gave cause for concern as the trading environment seemed to be consistent with previous economic cycles. This year’s results give cause for some cheer as the worst seems to have passed. Nevertheless, it remains far from certain that the rate of economic growth seen in during the first decade of the new millennium will return. After all the growth levels of Gibraltar’s two principal trading partners, the UK and Spain, remain anaemic. Against this background, Gibraltar continues to do well.
Business Outlook
Despite this, two thirds of respondents remain optimistic about future business prospects for the rest of the year and for 2012 as well. This is consistent with responses in last year’s survey.
However, there remains a degree of concern about the prospects for this year as 27% of those responding expect the outlook to deteriorate in the year ahead. As with last year’s survey most of respondents predicting a worsening outlook are from the retail and wholesale sectors. This is to be expected as discretionary expenditure becomes tighter during a downturn. As with last year the principal sector which is most upbeat about the future outlook is the Finance sector which includes banking, insurance, funds, lawyers and accounting firms. The new lower corporation tax rate looks to be having initial positive effects in generating business for this sector. Long may this continue.
Some of the comments from the various sectors are as follows:
Retail sector “Slow, less disposable income and selling goods at less profit”
“The recession in Spain and poor sentiment in UK depress sales and substantially squeeze margins”
“Trend is downward.”
“Very mixed bag of sales. No pattern whatsoever.”
“Both UK and Spanish economies weak, so tourists will be spending less.”“Local customers are less able
to borrow, so they are also consuming less. This will not change in the near future.”
Wholesale sector “Costs up, food price inflation high, increasing competition from non-Gib established Spanish companies”
“Business is very much dependent on visitors to Gibraltar. But these must spend on consumable to benefit
the economy. If they visit but do not spend, what good are they to us?”
Legal sector “The risk of increased inflation and a shrinking private sector economy are a threat”
Insurance sector “Anticipate benefiting from continued rise in GDP and expansion of financial services”
“The recession is hitting Gibraltar”
Banking sector “I have noticed 2011 a lot quieter than 2010 on the number of clients I am seeing have to get business
from UK and Switzerland by actively promoting Gibraltar.”
Property & Construction “First half of year has already shown a positive growth by comparison to 2009 to 2010”
“Our market is incoming HNWI’s and companies. We are growing our market share and the size of the market is growing. We have reasons therefore to be optimistic.”
Hotel & Catering sector “Slightly better although greater pressure on margins due to increased cost of goods and staff costs, and increased competition”
Transport sector “Difficult trading conditions locally. International markets still weak”
Port & Shipping sector “Sales gradually increase as confidence returns amongst yacht visitors.” “Local boating market is restricted by laws, berth shortage and competition from Spain.”
“To maintain business to 2010 level as a minimum.”
Issues affecting business
As with previous Chamber surveys the three perennial factors deemed by members to have the greatest impact on their business in the year ahead were: increase in business costs (27%); competition from the UK and elsewhere (14%) and staff retention and recruitment. Other factors such as dealing with government departments, red tape and traffic congestion were seen to have an impact but not to the same extent as in previous years.
A new question in this year’s survey asked members whether they supported the government’s policy of getting tough with late payers of PAYE, Company Tax, Rates, Social Insurance and Municipal Charges. A resounding 76% of respondents supported this with just 10% of respondents not supporting this initiative. A cautious 14% were unsure whether to support this or not. (Maybe it depends on whether they have had a good month’s trading.) Perhaps what was most revealing were the comments which accompanied some of the answers.

Here is a selection:
“But treat ALL alike. It is despicable big companies are getting away with daylight robbery.”
“Absolutely. I question how ‘fairly’ they take this stance with ‘older’ family businesses.”
“We are always up to date with all our taxes and SI which makes us uncompetitive with companies who
are not and when they close down we pay the penalty.”
“Big boys seem to have got away with not paying before the decision to get tough is made!”
“Getting tough may mean shutting down some businesses. This has a negative impact on the economy. Everyone has to pay but the Government should try and introduce payment facilities to ease the burden and help cash flow.”
“Though it affects us, it also levels the playing field.”
“On condition that there is a level playing field and all are treated the same without exceptions, and that they are equal.”
“But surely they should be doing this anyway? It would certainly have prevented other businesses losing money with Haymills etc.”
“Such a policy has got to be seen to be fair, but when big business is allowed to get away with millions owing and simply wind-up and disappear and the small businessman is hounded for pennies, then this policy will never be seen to be equitable.”

“We are up to date on PAYE etc. If we get one month behind we are chased – this does not seem to be the case for some.”
“In principle, however everyone should be measured with the same stick.”
“Definitely. Government slackness on those in arrears is a disincentive to businesses who pay on time. Level the playing field!”
“Feel the Government gets tougher on the smaller trader than it should in comparison to the treatment of bigger institutions.”
“Need to also pay back owed money quicker.”
Will lower tax rate lead to increased investment?
This year the survey asked members about whether the introduction of the lower corporate tax rate would give them an incentive to invest more in their business. Responses were mixed: 28% said that it would give them an incentive, 34% said it would not and 38% were unsure if this was an incentive to invest more in their business or not. Thus far the impact on investment appears inconclusive. Again though some useful guidance was provided on the thinking behind some of the answers given. Here is a selection of the comments received:

“No real change to tax cost for company if it takes into account high personal tax rate.”
“Previously exempt – therefore we now have to pay tax.”
“It made us utterly paranoid of what may be deemed ‘benefits in kind’ and ‘allowable expenses’ and has put us off reinvesting in our business.”
“By encouraging more business to Gibraltar has increased sales opportunities.”
“It has made selling ‘Gibraltar PLC’ a lot easier. We have a compelling product.”
“The new rules are too radical and have created much uncertainty leading to expensive meetings with accountants who themselves are unsure how the new rules will be applied.”
“Lack of clear understanding. Government should resource guidance for small businesses.”
“Company too new to be able to comment.”
The new tax regime is still relatively new and as the Chamber commented in the 2010 Annual Report there were clear calls for clarification on parts of the new legislation. These comments reflect this and we understand that the Income Tax office is working through this with individual companies.
Banking sector woes
The survey asked what effect their banks’ lending criteria had had on their business. Just 3% of respondents said that this had had a positive effect on their business with 35% of respondents saying it had had a negative effect. An overwhelming 62% said it had had no effect on their business. Some of the respondents’ comments were enlightening:
“Limits development due to lack of finance.”
“Takes too long and too complicated to get any funds out of them.”
“Banks have remained supportive.”
“We applied for a loan in November 2010 – fully secured – we are still waiting to draw down 7 months later.”
“For the business itself we have no borrowings so no problem. For our clients, the banking situation is dire. We (interested parties in Gib) need to use all our contacts in the finance world and pool our intellectual resources to find a solution. There is ample equity out there, we just need a structure and some government led impetus to create a lending institute out of it.”
“No lending, none responsive!”
“It was as bad in 2009.”
“Very slow decision making process. There is little or no decision making at local level.”
“Monthly ‘business’ bank account charges are too high. They do not take into account the type of client/business size and volume. They make charges on every single thing they do.”
Government’s Economic Management
With a forthcoming general election due the survey asked members for their opinion as to whether they thought the GSD government were doing a good job in running the economy. The current administration should draw sharp relief that 64% of respondents thought it was going a good job. Just 16% thought it was not doing a good job and 20% of respondents were unsure.
Resourcing the Marketing of the Finance Centre
With the downturn elsewhere continuing to affect other economies and the significant changes to the Corporate Tax regime, the Chamber’s board wanted to get a feel from its members in the Financial Services sector if they thought that it was adequately resourced. Gibraltar Inc needs to bang its drum even louder now that other jurisdictions are even hungrier in attracting business. Gibraltar likewise needs to raise its game. Responses from members in the sector were pretty unanimous: 53% of those in the sector thought that the Finance Centre was not adequately resourced whilst 16% of those responding thought it was. 32% of respondents were unsure. Given what the Chief Minister said at Finance Centre dinners before the summer break (“we need ten more Jimmys”), this looks like being addressed in the near future.
Commercial rents
The survey asked members about the sustainability of commercial rents and whether they thought this was in the public interest. Given that a number of members are also landlords the answers to this question were not that clear-cut: 59% of respondents thought that it was not in the public interest; 23% of respondents thought that it was in the public interest and 18% were not sure if maintaining the current level of rents was in the public interest or not. To this end the survey asked if members would support an independent study of the current situation of Gibraltar’s commercial property market. Perhaps unsurprisingly the responses mirrored the answers to the previous question: 66% said that they would support an independent assessment, 17% would not support such a study and 17% were unsure whether they would support a study or not. Again some useful insights were provided in the accompanying comments as summarised below:
“Loads of empty retail shops on Main St.”
“Rents are unsustainable and in the future will have a negative impact as some will need to close.”
“The Landlord and Tenants Act does not work as it has led to the increases far in excess of increases in turnover. The issues of: A) Market Rents B) Arbitrations C) Upward only rents all need to be looked at.”
“Market will decide.”
“Yes as long as it was me! Can’t see the point really, focus needs to be on unlocking funding. There is enough space, enough developers, and enough schemes to build. Funding alone is the issue. Thereafter the market will resolve itself..”
“Landlords increase rents until operators fail. Then they are replaced by business with high margins.”
“We need more transparency.”
“Market will find its own level. A study would be a waste of money. How would any results be enforced? Legislation – you must be kidding!”
“Market forces dictate.”
“Rates on commercial property excessive. There should be concession on rates payable on empty premises for minimum of up to 2 years.”
“Commercial rents – let the market determine the rents. Look what happens when the Government gets involved in rents, we have far too many residential properties around town which have controlled rents. Landlords don’t invest in those properties as a result. Leaves a mess. The market is usually right.”
Burning issues
There was no shortage of opinions and views on what members wanted the board to take up on their behalf during the year. Here is a summary of the main ones:
“Ask opposition what they stand for in Main St.”
“Good Chief Minister but I am annoyed about over spending and high debt level. Good income in economy, but pathetic over spending. Sadly no alternative.”
“Abolition of import duty.”
“Concern is future legacy costs of these expenditures. Is Government not aware of dangers of excess expenditure? Need to consider the lessons to be learnt from what is happening around us.”
“Q17 Comment: Government spending too money on both capital (loans) and recurrent – big legacy costs for future.”
“Marketing the ‘tourist’ product.”
“Red tape (FSC data protection) etc. When traders allowed to carry out licensed activities without license and with impunity.
“Transparency in local sourcing of building materials.”
“More equitable distribution of tourists between the northern and southern end of Main St. Tourists could be dropped off in lay by behind museum and directed to Main St. They then have to walk the length of Main St. Hopefully they shop. Right now dropping them off at ‘Plaza del Reloj’ does not help anyone. Tour operators need to be engaged.”
“Commercial border to open on Saturday.”
“Lack of banking finance for expansion and development.”
“Traffic congestion generally.”
“High cost of public sector pay and pensions.”
“Government recurring expenditure insofar as it may or may not be sustainable.”
“Worldwide increases in regulatory burden and costs.”
“Payment facilities for internet trading.”
“A long term tourism strategy.”
“Monopolies and tenders.”
“Government capital expenditure.”
“Bring Gibraltar’s laws and all legislation up to date with the UK & Europe.”
“Unfair competitive environment re PAYE arrears / unregistered employees.”
“Spanish business not established locally to sell to local retailers.”
“Income Tax Act 2010 requirements re business expenses not allowable as a deduction.”
“Our infrastructure service sector is well below par. It is of huge embarrassment when we welcome HNWI’s and we cannot get their electricity or water switched on for 2 weeks because there is a queue. Or we cannot connect a new customer without appearing at the office personally. We have a third world system. No complaint about the staff. The system it third world.”
“Tender process, especially JBS monopoly.”
“Employ more Health & Safety Inspectors – insufficient number to cover Gibraltar’s businesses.”
“Foreign construction companies need to source more locally.”
“International expansion.”
“Overtime rates charged by Customs after 14.30 hrs for commercial entrance of goods.”
“Hopefully the power failures will be addressed by the temp generators and the proposed new
generating station.”
“Shutting of Government offices at 2 pm for 25% of the year needs addressing if we want to be the international finance centre of Europe. No need to erode workers’ rights. Just employ more staff or start a flexi-time system. We compete on the international stage. We need a government service structure to support that competition.”
Finally, the Chamber asked its members if it thought that the board overall were doing a good job. 68% of respondents said “Yes”, 5% said “No” and perhaps most worrying 28% were “Not sure.”
If you have any questions about the survey or the results please contact the Chamber on 200 78376 or email on info@gibraltarchamberofcommerce.com

MHBland – New Websites

b2b — Mon, 24 Oct 2011 09:39:19 +0000

MH Bland is pleased to announce that new MH Bland Group of Companies website, www.mhbland.com is now up and “live.”
Mandy Gaggero, Marketing Manager for the Group, said that “Of particular interest to the community will be the archive section which offers visitors to the site a wide selection of photographs and other material spanning the 200 years of the company’s and therefore Gibraltar’s history.
We have worked on giving the site a fresh look after celebrating our 200th Anniversary and taken the time to include a complete copy of the commemorative booklet which was commissioned in 2010. I hope that all visitors will enjoy the new look and I would welcome any feedback.”
MH Bland also recently re built and re launched their MH Bland Travel Services website, www.mhbtravelservices.com which offers clients details on special offers on both holidays and cruises.
MH Bland Travel Services also has a Facebook page as do Dolphin World which posts all the latest marine activity in the Bay of Gibraltar.

The Early Bird Catches the Worm

b2b — Mon, 24 Oct 2011 09:37:14 +0000

Want a pension at 65 of £10,000 a year in today’s money? Start saving at age 25 and it will cost you £270 a month. Start saving at age 45 and it will cost you £630 a month, well over twice as much. We’ve all seen these sorts of figures before. The moral is start saving early and let compound interest do its work.
Actuaries reckon that in future it will be common for homo sapiens to live to age 100 (and maybe without, as Woody Allen said, having to give up all the things that make you want to live to be a hundred). Governments have now begun to put up state pension ages, but not by as much as increases in life expectancy, so peoples’ retirements are getting longer and longer. The need to save, save enough, and save effectively is more important than ever.
Companies don’t have to offer a pension scheme, but most do. The view that the employees are not interested in or don’t understand pensions is no more or less true than any generalisation. Certainly pensions do seem to be bringing people out onto the streets these days. A recent survey of public sector workers in the UK indicated that a significant number would rather have a pay cut than reductions in their pensions.
Employers therefore play a valuable role in providing a good pension scheme. Understandably most now prefer the defined contribution model where their pension costs are a fixed and known percentage of their salary bill.
However, for many people a defined contribution pension is an act of faith.
The employer and employee each typically pay something like 5% of salary into a scheme and basically hope for the best. Pension benefits from a defined contribution scheme don’t have to be a matter of luck. Just like final salary pension schemes defined contribution schemes need to be regularly reviewed and made to work, so that when an employee reaches retirement there are no surprises or disappointments about the level of pension benefits.
This still doesn’t do away with the need to start saving early, but it certainly helps in a world in which it seems many more of us will become centenarians.