Furniture retailers react to early levy removal

By Mario Schembri Wismayer

Most of the furniture retailers contacted by The Malta Financial and Business Times were not too happy about the current state of affairs but they were all realistic about the necessity to speed up the removal of levies by two months. Both importers of furniture, as well as manufacturers were contacted as these two different aspects of the industry were expected to react differently.

"The move was long overdue, really. We import as well as produce furniture, so we were hit from both sides, so to speak. On the importation front, the complete removal of all levies ruined our projections and in fact we are having to sell stocks at a loss," said Mr Michael Barwani of Tikams when contacted by the Malta Financial and Business Times for his reaction to the early removal of the rest of the furniture importation levy.

"As producers of furniture this move means that when it comes to high volume production runs, we can no longer compete with the bigger companies abroad. We have to focus on low volume production and specific requests from customers," said one manager who works in the furniture manufacturing sector.

An official from Joinwell said that it was still too early to say. "We are still feeling out the market. When it comes to exportation, our market is quite small. We do not import any furniture, so we are not influenced from that angle.

"Our main interest is production for the local market. What we hope is that the people will make comparisons between what is locally produced and that which is imported and will draw their own conclusions. Our product compares well to what comes from abroad. This move is going to bring about certain changes in the market and we are waiting to see how those changes will manifest themselves," the official concluded.

The manager of another import company who spoke on condition of anonymity, said that now that the levies had been removed they were hoping to see an improvement in purchasing. "People have been stalling, waiting for the levies to disappear and thus see a reduction in the prices. Unfortunately, however, people have come here, expecting to see prices slashed by 60 per cent while in fact the levies are reducing the price by, on average, 15 to 25 per cent. Having said that we are going to lose a lot of money on stock which had been valued before the levies were prematurely removed.

"Maybe the government will compensate us for our loss," he concluded, somewhat sarcastically.

The move to remove furniture levies was prompted by a request by the Malta Furniture Manufacturers organisation, who, together with the backing of the Federation of Industries and the Chamber of Commerce, asked the Ministry for Economic Services to remove levies on imported furniture, when it noticed that people had practically stopped buying furniture in anticipation of the levies being removed on the first of January 2003. The levy was meant to be removed in two stages, with the last 50 per cent being axed at the beginning of next year.