13 December 2006

The Web
Business Today

Enforcement slackens on illegal parallel trading

Matthew Vella

Vans stocked to the brim with merchandise collected from Sicily, just hours away by sea on the catamaran ferries that regularly cross the Maltese channel, are cutting in on legitimate traders’ business in what is being described as a ‘racket’ of illegal parallel trading.
Entrepreneurs and traders who spoke to this newspaper are talking of their exasperation at illegal traders driving up to Sicily by ferry to transport merchandise back to the island, without being licensed or paying the taxes and charges upon landing.
“They have cut into our trade radically, by using ferries and not having to pass by customs, declare the merchandise, present any manifest of goods being carried, or even pay the haulers to take the merchandise to Hal-Far,” an established firm told Business Today.
The illegal parallel trading has gone beyond mere booze cruises and now turned into an underground enterprise of illegal ‘groupers’, who collect merchandise in Sicily – mainly clothes and detergents amongst other items – for various Maltese traders. Their prices are net of government taxes and charges, because they are bypassing customs and port authorities by taking domestic ferries.
By law, any groupage – a consignment of goods carried for commercial purposes and destined for more than one trader – has to land at the Hal-Far Groupage Complex, as the authorised landing place for the unloading of groupage consignments. This includes paying haulers the fixed rates to transport the consignment to the Hal-Far complex.
But the illegal traders are ferrying the goods using the catamaran service, bypassing all authorities. This newspaper is also informed that the Commissioner of Police and the Prime Minister, as well as the finance and justice ministers, are aware of the problem which has become a serious concern for the private sector, which in turn has repeatedly attempted to bring the issue to the authorities’ attention.
Victor A. Galea, the president of the Chamber of Commerce, has lamented the lack of market surveillance at the points where illegal traders have been disembarking from ferries without paying any VAT, eco-contribution, or other taxes.
“This problem is creating economic complications, in terms of unfair competition, and loss of turnover for companies and foregone tax revenue for government,” he told Business Today.
Another established firm stated it had lost 1,200 cubic metres in merchandise transported to Malta because of illegal parallel traders – amounting to well over Lm30,000 in lost business.
The Chamber of Commerce has already taken the initiative to organise meetings with departmental heads of government authorities, namely customs, the VAT department, the market surveillance unit, the consumer and competition department, as well the port authorities and the Malta Standards Authority.
The Chamber is now proposing the setting up of a task force that will be armed with executive powers to ensure effective market surveillance and enforcement.
“It is ironic that now we are experiencing ‘cowboys’ who not only abuse the European free-trade system, but are doing so to the detriment of the law-abiding entrepreneur who was always loyal to the local customer. The Chamber is asking for a level-playing field,” president Victor Galea said.
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