Minister raises possibility of new strategic partner for Maltapost

Public Investments Minister Austin Gatt said yesterday that it was time to consider whether Maltapost should take on a second strategic partner, particularly if it was to expand on the provision of certain financial services.

The government, he told parliament, intended to remain involved in the company, but one should consider an association by the company with a bank or an insurance company which would be able to use its network for the introduction of new services to supplement the core mail service.

Dr Gatt was speaking during the debate in parliament on an opposition motion on the situation at Maltapost.

He stressed that although Maltapost had experienced delivery problems last December and January, the current situation was very different.

Maltapost, he said, has gone through a largely successful three-year reform process which was "no mean achievement", as it involved a reform of manpower and operational practices.

The motion, moved by Labour MP Joe Mizzi, urged the House to consider the reasons which had caused the failure of the Maltapost management agreement negotiated by the government with Transend. This agreement, the motion said, had led to higher costs and a deterioration of service and, following many complaints, the government had decided to terminate it.

The motion also urged the House to consider the future of Maltapost and local postal services.

Dr Gatt said everybody spoke with nostalgia about the past. Those who spoke about the Posts Department should remember that in its last years, efficiency was declining, there was no investment in machinery, there were surplus workers, and the government subsidy had exceeded Lm1 million in a decade.

The situation was now very different. But developments in communications were such that the Maltese sent a million SMSs every day and the volume of postal items had, in three years, dropped from 60 million to 48 million per year.

It was also worth noting that the government had not handed to Transend the majority stake in Maltapost but only sold a minority of the shareholding and transferred management for a three-year period.

Furthermore, problems evident in the Christmas period were being generalised as if they happened every day. Complaints that were made were real, but they were about only a fraction of the total volume of mail delivered efficiently every day.

The question, therefore, was how to tackle current problems and the new problems posed by developments in telephony.

Initial efforts in the 1990s had been directed at engaging foreign consultants. Deutsche Post were among the consultants who were engaged, but they refused to take responsibility for implementation because of strong local resistance. The government then issued a call for expression of interest for a mail automation programme. Transend and Canada Post applied and that process developed into a strategic partnership and a management agreement where Transend assumed responsibility for the change process.

In was also worth remembering that Transend had invested Lm1.3 million in Malta.

Dr Gatt said the choice of Transend was based on the fact that it operated in 43 countries, it was financially strong, it had a vision for Maltapost and it was prepared to invest in Malta.

A business plan which was drawn up was built on three pillars - reorganisation, a strengthening of the management and the introduction of new products.

That reorganisation had been completed, even though it took three years instead of two. Management had been strengthened and succession planning for a new Maltese management once the Transend agreement expired was now well in place. New operating methods had been introduced.

Some new products had been introduced but new financial and electronic services still had to come.

Developments of the past three years were no mean achievement. Indeed, a loss of Lm226,000 in 2001 had been turned into a profit of Lm143,000 last year, and a similar profit was expected this year.

There was no denying that there were postal problems in December and January, but the current situation was far from being disastrous.

According to international standards, a postal company was considered efficient when at least 95 per cent of mail was delivered a day after it was mailed.

In January, Maltapost failed to reach those standards, with a rate of 88.5 per cent being achieved. But in February the rate was 96.7 per cent and since April the rate was about 97 per cent of mail delivered the next day.

One had to call a spade a spade. The situation was bad over Christmas, but it was now good and complaints were very few. Nonetheless, one could not not expect complaints when delivering 48 million postal items in a year. Nonetheless, there was still room for improvement.

Dr Gatt also gave a detailed explanation of what led to delivery problems over Christmas, saying a reform process involving manpower and practices had been completed late and matters had not settled down by Christmas time. As a result some staff, such as supervisors, had lacked experience. Productivity had been low and staff had mistakenly been allowed to take leave. The service had also not worked on Sunday.

There had also been external factors, such as late domestic mailing and late arrival of overseas mail.

The lessons had been learnt, as evidenced by the current 98 per cent efficient delivery, Dr Gatt said.

All in all he thanked the UHM and the Maltapost management for having successfully managed the reform process.

He stressed that the governemnt was not terminating its management agreement with Transend, as the opposition's motion said. The plan had always been that the management agreement would run for three years, after which Transend would stay on as a shareholder. That was what was happening, even though the management agreement had been extended by six months. The agreement had taken its natural course and there would now be a transition to Maltese management.

Dr Gatt said that despite the achievements of the past three years, it was well known that the volume of mail was decreasing and Maltapost needed to create new revenue-generating activities in order to survive.

The company needed to further update its practices, focusing on the customer and new products.

The company had to work with an eye on making a profit, because it could not fall back on state subsidies. It also needed to keep in mind that competition could be introduced in postal services.

Maltapost needed to make better use of its strengths, which were its extensive network all over Malta, its home delivery system and its national infrastructure.

The company could perhaps be more greatly involved in e-commerce activities, door-to-door deliveries and home delivery services as well as data input. It could also sell financial products in synergy with financial service providers, while not becoming a banker or an insurance company.

Interjecting, Labour MP Joe Brincat suggested that an arrangement could be made for Maltapost to receive payment for other organisations, such as the Inland Revenue Department.

After mentioning the possibility of a second strategic partner for Maltapost, Dr Gatt said the company could use its network for certain banking services, such as the encashment of pension cheques, particularly where there were no bank branches.

Clearly, he said, the company should operate on four main principles - it should be self-sustaining, it should be a public service and not just a commercial company, it had to have a professional and effective management which shouldered decisions and it had to have a working environment which was conducive to good industrial relations.