NEWS | Wednesday, 21 May 2008

UK government loses hope in financing commercial office in Malta

High Commissioner explains

David Darmanin

The UK government’s recent refusal to renew budgets for a longstanding commercial office operating under the auspices of the British High Commission in Malta has led to the inevitable decision of shutting the section off for good. Approached by Business Today, British High Commissioner Nick Archer explains the rationale behind this move.
“What we call commercial sections, are there to provide market research to British companies who would be interested in exporting to a particular market. What we realised about a year ago was that our section was not being used,” he started.
“Most of the service’s commercial sections offer are chargeable, which means that the office receives a fee for the research it conducts. When we looked back we discovered that in the last eight years till 2007, they only had one chargeable piece of market research commissioned… we couldn’t justify keeping the section here.”
Asked to elaborate on whether there were budgetary constraints or reductions of any kind that may have prompted the closure of the office, Archer said: “The commercial section here was financed by the department of international trade in England. They have a budget and they have to choose where to put it globally. It’s limited. So it has actually nothing to do with my budget, but rather with a global trade measure.”

“They (the department of foreign trade) want to provide these services where they are in demand. So they felt that if their services weren’t needed here they should be spending their money somewhere else. The budgetary restriction has nothing to do with the commission in Malta but it was a decision taken to look across the globe. The department decided to invest more in India or in China because it’s more difficult to do business there.”
Explaining that Malta’s entry into the single market did not have a direct bearing on this decision, Archer insisted that the demand for the office’s service started dwindling with the increase in popularity of the internet, a development that, according to Archer, has made market research far easier and more accessible.
Justifying why the high commission felt that market research assistance was becoming pointless, Archer added: “Whereas in a large economy you might find 18 manufacturers of a particular product, here you have one, two or three. Then there is the language issue… With the English exporting to Malta they would know from the start that the language is the same, and that actually business practices are very similar.”
The team running the office was originally made up of three people, which eventually went down to two.
“The team sat here (at the high commission) and were tasked to do this research. They did other things as well and I don’t want to imply that they weren’t doing anything. They would answer queries as companies rang up, and they also took the initiative to visit companies and search for opportunities… These two people don’t work here anymore.”
Toning down any possible perception of controversy behind the issue, Archer said: “I wasn’t sure what the reaction would be because obviously there are some people out there who worry. In fact I had one complaint and that complaint was essentially for sentimental reasons. That is to say, the person who wrote in described the shutting down of the section as a ‘sad day’. But when I recently announced the decision to business people at the Chamber of Commerce, their reaction was completely different.”
The reason why budgets were cut off now, and not say, five years ago, remains hazy. Archer blames it on bureaucracy.
“It (the decision to shut the office down) was overdue but bureaucracies move quite slowly. If you’re in business you would know that when one of your cost centres isn’t performing, then you would need to shift your business somewhere else. Here there was a sense of “wait-and-see”. We wanted to see what would happen after accession. We wanted to see if getting into the single market would increase demand,” he said.
It actually transpired that after accession, business between the UK and Malta was made easier, Archer explained.
The British government however, did not allow enough time to see what would happen with Malta joining the Euro area. Asked whether the Euro could have dented the UK’s competitiveness, therefore calling for more support within those countries trading in Euro, Archer said: “It’s too early to say. A lot of people would speculate that, but we’re now looking at a further complication - which is the relative weakness of the Sterling. Logically, the weakness of the Sterling should mean that the figures at the end of this year would show a further rise of British exports.
“I never charged the full market rate,” he said, turning back to the issue at hand, “so the idea was there to provide research that could be commissioned by a private company – but at a reduced rate. This was done in order to encourage British export and provide a government guarantee of quality to potential exporters. UK companies exporting to Malta however, aren’t even making use of private companies, they’re getting on the internet. The evidence of that is that if you look at the trade statistics – our market share has been very healthy. You still find a lot of Maltese companies sourcing products from England… There are also British investors coming in to Malta, such as HSBC and Vodafone. More recently there were companies like Crimson Wing and Betfair. So there are companies coming here and creating jobs.”
Asked about what plans are in store for the High Commission to improve business relations between Malta and the UK now that the office has been shut down, Archer said: “We don’t believe in improving business relations. We believe that business relations are a sum of their parts. So when company meets company there is a business relationship.
“Now if you look at exporters, they’re still coming in. I went to Farsons brewery recently, when they signed a deal to represent Bridvic, huge suppliers of soft drinks and mixers, to get into competition I guess, with Schweppes.
“Then there are two other things. First of all, part of my job is to provide what we call political support – so if there’s a big company coming in and there’s tendering for government business involved I would get involved if I am needed, as I got involved with tendering at Mater Dei last year. Another thing is that, independently to the high commission, the Chamber of Commerce have recently gone into partnership with an institute in Coventry, and this was done to set a soft landing zone. This is a new and experimental way of supporting businesses.”

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21 May 2008

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