Thursday, November 26, 2009

The Seychelles Column - By Christopher Gill

Why The Downturn Will Last For Ten Years With Parti Le Pep (P.P.) - External Factors Part II

This article is the second of two articles to explain to the people of Seychelles, business community, and the outside world why the economic downturn in Seychelles will last 10 years or more under P.P.

World Financial Crisis-USA

Not long after the Government of Seychelles defaulted on the interest payments of the Lehman Brothers Bond of US$ 245 Million in August 2008, the World entered into a financial crisis that took down financial house giant Lehman Brothers and numerous other companies. Those that survived were bailed out by the United States Government or they were significantly downsized.

The sub-prime mortgage crisis in the housing sector of the United States collapsed at that time, and instantly over a few months, as much as US$ 840 Billion disappeared from the US Economy (Economist Magazine). This took the total amount of money in circulation in the United States back to Year 2000 levels. In other words, the US economy downsized by eight years overnight.

As this downsizing took effect, the auto industry came to a skidding halt. This hit the big auto makers like GM, Ford and Chrysler. The vanishing of money sent property prices spiralling downwards. Factories came to a standstill and unemployment started to climb. Today, it is beyond 10% and still climbing. The initial predictions that we were in for a short term recession in the early days of the financial crisis vanished quickly. In fact, the USA is in for a long term, deep recession that will likely last many, many years. The fall out has been the worse downturn since the Great Depression.

For a country to come out of recession, it must have productive capacity to come out of troubled waters. The USA has that. With interest rates by the FOMC set at .25% or less, the US Dollar now lower then the Euro at 1.0- 1.51, the USA is poised to climb back out of the hole it is in. In Florida, property prices are coming back as Europeans start to reinvest taking advantage of the fire sales and great exchange rates that will not last forever. If the USA will take 10 years to get back to 2008 levels of growth and economic activity, what makes JJ Spirit think that they can register a grand success in only 12 months of Economic Reform after an undeclared bankruptcy in October 31, 2008?

They are lying to us of course, to fool us into believing they are doing great deeds. People of Seychelles remember what I always say: “Oen your eyes, do not be fooled by P.P......Communists always try to fool their People to stay in power.”  

World Financial Crisis- Europe

As the USA went through a rough unprecedented downturn, Europe, our main tourism market, was not to be spared. While the USA has one Federal Open Market Committee (FOMC) to make decisions and negotiate directly with the White House and Congress for a solution and bailout package, the European countries that make up a common market, may have a single currency, but they have to lobby each other for consensus to do anything. Hence they lack the ability to rally and take measures to lessen the financial crisis. In Europe, it has been bad. Productive capacity has dropped to -15.75% this year alone. If Industry drops, there is less money in circulation, Europeans will not travel on long hauls, as the feel good factor has gone. Beware!

Bad Loans = Bad Banks-Bad Structure

As European Banks lent out money to former communist countries of the eastern block and those loans were inadequately secured, and these new republics approached default status, IMF had to come in and shore up their debt servicing to keep many European banks above water.
In the UK, a property bubble burst dropping real estate prices by as much as 60%. The market has stabilized, but nothing near to 2008 levels. It will take years for recovery, unlike in Seychelles, where according to Mr. James Michel, one year has done the trick. That in itself is a trick.
People of Seychelles do not be fooled by Communists.

In the United Kingdom, banks fell to the road side and the Government had to intervene in banks and take over ownership in institutions like Northern Rock, Lloyds of London, Royal Bank of Scotland, etc.... the fall out affected the feel good factor Britons enjoyed for years, and curbed travelling to our destination.

In Europe the close connections between banks and industry worsened the crisis, because the banks’ close relationships to industry inhibited their ability to raise funds on the open market to meet immediate liquidity shortages.  Collusion covered bad debts and bad deals. The problem is deeply rooted. In Seychelles, our Central Bank had no problems according to Mr. President.

The European Central Bank dropped interest rates to 2% and 3% respectively over the last 2 years. This had resulted in overly cheap credit facilities that translated into real estate bubbles, credit bubbles, a boom in consumer spending and consumers taking their trips of a lifetime, in some cases that meant a trip to Seychelles. Hence the progressive numbers in 2007 and 2008 with corresponding top revenues, before the crisis hit home turf. It had nothing to do with STB, that did practically nothing to market Seychelles in those 2 peak years.  

Most affected by this downturn will be the EU countries with large deficits such as France andItaly, our 2 primary markets. Both have very active banks in failing emerging markets of former communist countries. The French and Italian banks are heavily exposed.

The crisis in Europe is a long term protracted crisis that will last for years. When growth rates of 2% or 3% are applauded, when GM executives cheer a US$2 billion plus quarterly loss, when loss of production is as high as -15.75% in a single year, you don’t have to be a genius to figure out just how long it will take for Europe to get back to 2008 levels of growth. That is, after it overcomes the bailout of these banks and other key industry players. Stake a claim of 12 years since Europe will not recover until the United States markets recover.

In Seychelles, according to Mr. James Michel, the man who told us we had paid off all our debts after visiting the Pope, Seychelles has turned things around in only one year. The People headlines 3 weeks ago declared: “SIKSE”- SUCCESS!  Success indeed a la communism!

The Dubai Financial Centre Bust

Four hours of flight time from our shores, the Dubai Financial Centre vision (proposed replacement to New York and London) has come to a standstill. Buildings built under the Islamic Bank finance schemes stand incomplete in the financial centre. The World’s tallest building the Burj Dubai sits unfinished and unoccupied. The non-moving cranes have become part of a stark landscape. Instead of seeing thousands of working getting on with the work of the day, you see one here, and one there. Roads are incomplete. The dream is lost in the sands and the only positive is that traffic jams have become less frequent.

The real estate bubble in Dubai has burst. Property values have shattered. Five star hotel rooms in the best hotels in the World can be reserved online for US$ 100 per night. You even get free breakfasts and transport to and from the airport. Marinas are full of boats with “For Sale” signs.

Retails sales have slumped in Dubai to all time lows of -35%. Emirates is experiencing a drop in activity by -30%, officially, perhaps more. They angle the best possible news to a bad situation, but nothing like what JJ Spirit is telling the People of Seychelles today, that the worse is over, we have been through the toughest storm etc....”

The worse, Mr. President Michel Sir, has just begun!  Right under your nose, while you attend high-profile evetns like the Abu Dhabi Grand Prix, or while you continue to spin tales and tell the world that Seychelles is sinking due to Global Warming.  But Sir, with all due respect, granite islands do not sink.  But we are sinking indeed from hot air, but it has nothing to do with global warming!

Wasting Resources - Wasting Time

The most valuable commodity in life is time. As Seychelles goes through her worse financial storm -4% GDP in 2008, -8% GDP in 2009, -12% and counting, an unsustainable debt portfolio exceeding US$ 850 Million, President Michel is busy flying around to unknown markets, trying to establish new routes for Air Seychelles in countries wherein their citizens do not care much for sun, sea and sand, like China and Korea.  Mr. President waste time, limited resources to establish vague markets when our main market, Europe has a GDP of US$ 14.91 Trillion (2006). Is that not enough market for Seychelles to cultivate and to continue to focus on?  Again, does it take a genius to figure that out?

He rushes off to give a speech on World food requirements at an FAO conference attended by ministers of agriculture and secures some fertilizer and seeds for Seychelles for another year of planting.  That is, if we still have farmers on the blocks.

Mr. President is off to Lebanon for a meeting with its President to secure a dubious award, likely organized by the one investor we have in common with Lebanon: Alwaleed Bin Talal, owner of Raffles, and part owner of Four Seasons Seychelles. He is a dual citizen of Saudi Arabia and Lebanon, and a main investor in Lebanon, as in Seychelles.

What does Lebanon have in common with Seychelles aside from a few ladies that went there in the 1970’s and 1980’s as maids? Most if not all, have already come back and do not want to go back.
As there are no loans to secure, no money to collect, Mr. President spends his time travelling, instead of attending to managing the economic and social crisis in Seychelles that is engulfing us all.  

When he returns, he does a little photo prop in a district or holds up the World Cup as if he is the new Maradona!  But for us, we are financially excluded from benefiting from South Africa World Cup promotions because we have been late to make deals and establish flights to Cape Town or Durban for years. Air Mauritius flies to these cities 3 times a week by the way.  Again, it does not take a genius to figure out that an affluent South African market is right under our noses, pretty much our neighbour. Mauritius have been tapping this market for over a decade while we stand still.

At WTM, Seychelles was re-launching the UK market.  AGAIN! Air Seychelles will start a direct flight. AGAIN!  And a new marketing campaign has been re-launched.  AGAIN! With new staff.  AGAIN!  At least Alain St. Ange reaffirmed that the UK market is an important market for Seychelles.  Though someone else may have said the same thing before. How many times will Seychelles re-launch critical markets for Tourism that had already existed?  Why do we abandon our markets? How much time and money have we lost over the years as a result of this market abandonment, relaunch programmes?  Something wrong with our leadership (geniuses), don’t you think?

Where Is The Much Touted Foreign Direct Investment (FDI)  

Remember when Mr. President told us his Government had secured US$ 2 Billion in Foreign Direct Investments (FDI)?  Most of that money is history. It is gone indefinitely. This money will be gone for 10 years or more. Why? Sure the world recession will linger for years. Sure no one will invest in a country whose debts are not sustainable. That will take us to 2027 at least. That is 17 years Mr. President.  Not 1 years as you infer.Why do you continue to misrepresent our true financial reality and mislead the People?

Seychelles as a remote emerging market, with an ongoing, revolving IMF Stand By Arrangements, will not be able to attract Foreign Direct Investments for many years to come with P.P.  running the country. The World knows our finance and our debts have been mismanaged. Our portfolio is upside down. Our credit rating is Selective Default (SD), and we have the worse credit rating in the World under P.P. and the stewardship of Mr. President Michel. Who will take the risk now? 

Only a strategy of 100% debt forgiveness, once in place, will be able to attract FDI within a short period of time as opposed to 17 years from now under P.P.

People of Seychelles, open your eyes, see our reality for what it is, and do not let P.P. and Mr. President Michel fool you. If you do, we will move to the status of Lesser Developed Countries (LDC) and debt forgiveness will be at hand anyway.  But it will be painful for you and even more painful for your children. To achieve this status with P.P. in place will mean great, great suffering for the People of Seychelles.

Somalia Pirates Factor

This issue is our Achilles heel. The piracy activity in our region is a US$ 450 Million business per annum for the pirates. It is a pillar of the Somalia economy. Over 100,000 ships have to traverse through the Gulf of Aden each year. As long as the World community ignores the suffering on the ground in Somalia, piracy will continue. These people have no intention to stop hijacking ships and taking hostages. Do not let P.P. fool you into believing the hijackings are over. They are not.  They are attacking boats in our waters as a matter of routine now.

The escort of ships through the Gulf of Aden is big business as much as $3 Billion per annum and this industry will continue to grow. It is a growth potential business for Seychelles security companies, but Mr. President Michel ignores that, even though the opportunity rests right under his nose. Seychelles is ideally positioned to offer escort services as a business venture to ships making the trip through Gulf of Aden, or at least from the Mozambique channel northwards.

As we remain idle and wallow in our economic sorrows because of mentally defeatist resigned leadership, Israeli private security firms are making a mint of money in this new industry. They are quickly establishing themselves as security escorts with 5-6 men per ship, earning a minimum of US$ 1,000 per day per man, for trips that can last up to 15 days.  Do the numbers P.P. This is serious business and it is happening right under our nose, in our waters. 

If Israeli private security escorts start making money, some of it will find its way to the Jewish lobby Political Action Committees (PACs) in Washington D.C. They will prevent and pre-empt President Obama, and any other US President down the road, from intervening on the ground in Somalia.

Without a ground solution, this piracy issue will not go away for us here in Seychelles. It will whittle Seychelles down over the next 10 years if left unfettered. If Seychelles maintains -8% for 10  years, it will bring our economy to -80% in 10 years.  Possibly, our own people might turn to piracy, and instead of “taxi pirate”, we would have “Bato Pirate”.

Mr. President Michel would have done the direct opposite of what he promised under his election promise “STRATEGY 2017”. Instead of doubling GDP in the positive in 10 years, he would have reduced GDP by almost 100%. Unfortunately, he has already shelved this little book. We no longer hear anything about it.

Perhaps it is a good time for Mr. President to think about how Seychellois companies can get involved in the security escort service for ships, to guarantee safe passage. Remember that old saying you revealed to us at Providence when fuel prices were US$ 150 per barrel in 2008: ”People of Seychelles, we must learn to think out of the box”. Well Jack, start thinking or we will all become “Jack in the Box”; no disrespect intended.

But the sooner you cut into the Israeli action, the better off Seychelles will be, because they already have it in for us, since you have made friends in Lebanon, and you wine and dine with the grand sheiks of the World, on the World stage, without regard for the consequence and retaliation Seychelles will face. 

And instead of creating a new “TAZAR” special force in your little Army to supposedly fight piracy, how about using the current personnel who watch over you, ex-President Rene, Ministers, wives, mistresses and other important P.P.s at night, and send them out to fight piracy and earn the country money instead?  Food for thought Jack, and money for our coffers too! After all, if our Police Force is doing such a great job of patrolling our neighbourhoods, why are you high-level guys so worried that you have to have Kalashnikov-toting guards watching over you when you sleep at night?  If you need them so badly, what about the safety and security of the rest of the Seychellois public? Or are we second-class citizens?

World Tuna Stocks Dropping

This year we are experiencing a drop of -53% in Tuna Fishing due to piracy interference. This is an incredible drop in turnover for Seychelles. The numbers just do not make sense at this time. Perhaps by year’s end, we will get the figures right.

World Bluefin Tuna is almost extinct. Not found in Seychelles. Yellowfin/Albacore Tuna is a threatened species, as is Big Eye, and other species found in our waters. The situation is alarming, because in the good years, when we could have maximized the benefit of the resource, we did not. Instead, we offered cheap licenses, built the most funky tuna-boat in the history of boat-building, and built infrastructure for a canning business, instead of focusing on added value products like tuna-loins. Now it appears it is too late to cry over spilled milk. Perhaps we will have a decline for a few years, then after the piracy abates, the tuna will be back.  Or maybe IOT will just shut its doors and move the factory elsewhere where labour is cheap and abundant, and where the Government does not interfere and where utility rates are not exorbitant!

In that time, Seychelles will need to focus on added value. For that to work, you need direct flights to markets that offer top prices for your products. Mr. President, that would not be China, Sir. It is Japan

Coincidentally, they do love the sun, sea and sand. They are the ideal Asian market to develop with a direct flight, if you can ever get the hotel and service product right for that market. The flights that bring fresh tuna to Japan, could return with tourists. It would be a complementary exercise. This is much more profitable than exporting coconuts on Air Seychelles for IDC.

Don’t Count Mauritius Out

Our neighbour Mauritius is a member of SADC. They have angled Seychelles out of competition for hub positioning to SADC markets and the region. Recall well, when Mr. President visited Mauritius as Mr. Paul Beranger’s guest and did the parade thing. He told us he was going to make Seychelles a regional hub. What happened to all that talk, was his attention diverted to Asia, the Grand Prix, now Lebanon?  

While Mr. President travelled the World and watched the Grand Prix races, and dined in fine restaurants of Asia, Mauritius set up a regional hub second to none, creating a pivotal new economic pillar for itself with its SADC status.

While Communist China was asked to build a National Assembly on Ile Du Port for Dr. Herminie, Mauritius asked them to build and expand a new Airport worth over US$ 100 Million. They are doing it.  While China gives us a grant of US$ 6 million for our new Supreme Court Building, Mauritius’ Judiciary arm is functioning flawlessly with Mauritian judges.

With 15% Business Tax plus Ebene Cyber City Centre, and its cultivation of the Indian business market, which is experiencing unprecedented growth of 8% plus per annum GDP, Mauritius has invited Indian subsidiary companies to set up shop and business in Mauritius, and to use Port Louis as a base to access SADC markets free of taxes.

Business in the Mauritian offshore, transhipment base is booming. As Tourism slacks, the SADC market access business is booming, hence offsetting the down fall in Tourism revenues due to the extended downturn in Europe.

Now, why did Seychelles not take the lead over Mauritius? Simple.  It is because you cannot teach P.P. communists anything.  They will not learn and they have no capacity to learn because brain power is sorely lacking.  Because free thinking, smart thinking let alone future thinking are not their thing.  Remember their great visionaries and architects!  Where are they now that they have bankrupted us?  Counting their millions I’m sure!

People of Seychelles, P.P. SPUP and SPPF have let us down. As our neighbours’ economies flourish, ours continue to decline.  As their people are employed, ours are getting the sack and returning to the P.P. masters or their District Administrators for a social handout.  Mr. President and P.P. has counted us out of the SADC markets in any material manner, for not just 10 years, perhaps now for 100 years.  Because for every opportunity we lose to our neighbours, it is an opportunity lost for Seychelles and our people. There are no second chances here.

People of Seychelles, unless you want to see 10 years or more downturn in our beloved country, we have no choice but to throw the P.P. out. The sooner we take steps to correct this “sleeping on the job” error.....or I should say, travelling on the job error, the better it will be for our young nation.  The case for change has never been any stronger than now.  And our so-called leaders are not about to wake from their slumber.  Let them sleep and dream of their millions and their worldly luxury travels while we take the reins of our country back.

May God Bless Seychelles And All Freedom Loving Seychellois! 

Christopher Gill

Saturday, November 21, 2009

The Seychelles Column - By Christopher Gill

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Why Seychelles Downturn Will Be With Us For A Very Long Time With P.P. (Parti Le Pase)

Parti Le Pep (P.P.) has launched a propaganda blitz to ease the minds of Seychellois to make them believe that the Economic Reform is a success and that we are on the road to prosperity. The propaganda is so successful that it has gripped even the best business people in the Country, let alone the simple ordinary Seychellois.

In this special supplementary article, I take this propaganda machinery and half truths apart to help those in business come to grip with the big picture. Those that are part of productive workforce must take note because it concerns your future as well, regardless of political party affiliation.

From Bankruptcy To Reform Economic

I have already written about October 31, 2008 when Seychelles went to her knees and Michel announced the “Economic Reform” Programme under the aegis of the IMF in the form of a Stand By Arrangement for $26.75 Million, which was to be disbursed over two (2) years.

The term “Economic Reform” was only a term to hide the fact that Michel had driven the Seychelles to bankruptcy (faid). Most recently, we have gone through one (1) year of reforms, many structural matters have been addressed by the Ministry of Finance to bring the Government of Seychelles policies in line with IMF recommendations. This is all good and necessary, although long overdue. What P.P. should have done when it was SPPF over 32 years, it has done in one (1) year alone.

This has included abolishing currency control rate regimes, cutting expenses, firing thousands of Government workers (most of them from the opposition), cutting loans which go unpaid while interest goes up, privatization of old state monopolies and industries (most of it going to party stalwarts such as the milk, juice and water factories), increasing PUC utility rates, and shutting down white elephants such as the Coetivy prawn farm and Barbaron Orchd Farm, two infamous ideas of Albert Rene and Mukesh Valabhji. The new tax laws will take effect in 2010 according to World Bank recommendations and IMF pressure. These are all good moves to try to put order into the government house. But they are not the signs of “reform”, they are the signs of a bankrupt government of failed ideas.

Grace On Debts

Seychelles under the leadership of Faure and Afif has successfully negotiated some grace period to restructure debts and hold off repayments. This is good and necessary as any Bankrupt government would seek this request. A solvent Government would continue to make payments and service its debt. But of course our poor bankrupt Seychelles under the PP Michel administration is not solvent according to Messrs. Faure and Afif and even good friend Mr. Peter Sinon of African Development Bank.

In that time of course, Mr. Pierre Laporte has been brought in to float the Rupee, and he has. Is the rates indicative of its true values? No. The Seychelles Rupee has gained on hard currencies like the Euro and US Dollar because of deflation and lack of demand for hard currency. The economy has shrunk. In the case of US Dollars, the Seychelles Rupee gained 70% in just one year, yet the economy shrank. Instead of the 1989 movie “Honey, I shrunk the kids”, Mr. Michel and Mr. Laporte have now given us a new comedy: “Seselwa, I shrunk the economy”!

As demand for hard currency stifled in the market, Pierre Laporte had to intervene in the market, buy the Euros and US Dollars from the commercial banks to keep rates palatable. Had he not done that, the Seychelles Rupee would have become a moon-currency. This allowed the Governor to build up a reserve of over $134 Million about 1 ½ months imports to Seychelles. He has a very long way to go.

As he is building up reserves, interest on commercial debt is ticking and increasing. Interest rates at commercial banks are too high to encourage any economic activity beyond survival mode. Growth under this situation is out of the question.

P.P. Is Not Counting New Debts Signed

Our country is sinking with over $850 Million in external debt and another four billion rupees more in local debt. To keep this country afloat, P.P. is not counting and announcing the new debts it signs. Afif says the debt has gone down to $760 Million to mislead the Public into believing everything is a grand success. It is not. In order to fool you, he counts the $70 Million or 45% Paris Club write-off before it has been completely written off. Remember that only 22% has been written off. The remaining 23% may be written off in six (6) years, that is, if we stick to the IMF reform signed by P.P., advocated by Mr. Danny Faure, and applauded by Mr. Michel.

The total IMF obligations undertaken, plus last week’s World Bank loan exceeds US$69 Million. All to be used used to keep Seychelles afloat. The interest on most of the commercial debt is 10% per annum. That is roughly US$ 50 Million per year on commercial debt that Afif and Ministry of Finance do not count when they talk about external debt portfolio. Domestic debt at SCR 4 Billion is a story in itself lest we forget!

Business Must See The Failure

People of Seychelles, People in business, People with real estate in Seychelles, hear me out. This debt is unsustainable. When something is not sustainable, it collapses.

IMF said Seychelles collapsed last year. We are still in collapse mode. There is no success story this year, next year or in Ten (10) or Twenty (20) years under P.P. Our bankruptcy is here to stay!

This year property values have slumped by 60% and sales are still not happening in the local market. When a market drops over a short term by 30% it is a bubble burst effect. In Seychelles we are undergoing a bubble explosion, resulting from the collapse of 2008 that went undeclared.

There are few properties that are holding value and resale value. Property is the basis of national wealth, but P.P. never figured that out. Hence, values are depressed not only because of market forces, but also because of poor, antiquated legislation and restrictions on alienation and property use, that protect fruit bats over humans.

By being left footed on property issues, P.P. today, has pricked a hole in the life jacket that could have saved Seychelles if we had our act together. Instead, they get desperate and seal deals for SCR 1.00, without building a proper real estate tax base focused on growth that can reduce taxes for everyone else, while increasing revenue for the Government.

We will never be able to educate P.P. on how to do things as they still have the Communist mentality for us while they think Capitalism for their own pockets. These P.P. people are beyond help.

Our only hope is a strategy of debt forgiveness in Seychelles. This is it! No other option. I am dead serious about this proposal.

After that, we use our energy to rebuild Seychelles, make it the shining star it was meant to be. Our children will thank us for it, instead of cursing us for doing nothing.

We must now work towards it.

More Incredible Propaganda To Fool Us

In our national newspaper, the Nation, the government goes out of its way to fool us again. In Nation, Wednesday, November 4, 2009, vol. XXXII NO. 212, headlines,” in bold face: President Addesses Special CBS Event- ECONOMIC REFORM FOR THE FUTURE OF OUR CHILDREN. What are they doing in State House?

This economic reform has nothing to do with a better future for our children. The economic reform is about our children repaying the debts created by SPPF for over 32 years. It is about our children repaying the debts the Michel Administration created, the debts the Rene Administration created. The debts of a Communist Party!

Seychelles National Debt For Our Children

My son is 9 years old this week. Pierre Laporte says we will have a grace of five (5) years to repay loans and on the obligations. As these obligations tick interest, who will pay the interest?

It is not Rene, he is too old to pay any interest. It is not Michel, he will be too old to repay interest. It will be you and me.

In five (5) years, my son will be 14 years. He will be too young to pay interest. But in another five (5) years, when we start looking at principal debt repayment, my son will be old enough to repay the debts France Albert Rene created and James Alix Michel endorsed with pen, silence and signature. This is why I write. I will do more if called to do so.

Dear People of Seychelles, today, the debts we are talking about are the debts the next generation will inherit. Our children will repay the debts. This is not about their future as James Michel tries to fool us into believing. This is about our children assuming today’s debts, in the future. If you love your children, love your family, then you must wake up from this hypnotic sleep P.P. has put you under.

By the time they start to repay the debt, the houses built will be falling apart. The roads built will be falling to rubble, many are already. The electricity grids will be on brown out and black out scheduling. We are heading for a real social disaster. Make no mistake about it. And not even another US$70 million loan to PUC for new generators will help us as it just be more debt burden for you, me and our children!

“Leve Debourye” Program

To get us up on our feet, to move again, and get on to the productivity path, the P.P. has created a campaign called: “Leve Debourye”. The inference in the campaign is that Seychellois do not “Debourye” or hustle in English.

Never has a campaign slogan printed on T- shirts insulted the intelligence of a nation so much.

This campaign focuses on increasing work productivity in order to generate economic prosperity and hence, increase our bottom line as a Nation: increase our GDP. This year we are (minus) -8% according to the last IMF statement.

To repay our debts and make them sustainable, we must generate 10% GDP per annum every year. This is a huge challenge today. Why? Because Seychelles lacks the available productive capacity to field a functional workforce that can achieve 10% GDP.

What is Gill saying? Well put another way, we have too many drug users and drunks in the country that is actually preventing us from succeeding as a Nation.

According to CARE the main anti-drug NGO, on the low scale, we have 9800 drug users and addicts in Seychelles today. On the high scale, we have 18,000 (32% of population) drug users and addicts.

According to NDEA, we have 3000 heroin users. Scary isn’t it?

Michel Blames Patients For Downturn

If Michel Administration is asking 18,000 drug users and addicts to “Leve Debourye”, then we have a serious problem down the road. President Michel and his team of communist propaganda spinners at State House are ignoring the lack of productive capacity by thinking drug users and addicts can just get up and get to work. These people are unable to maintain employment. They are unemployable. When they come for an interview, we smell the drugs or alcohol on them, we see the needle marks, we see their blood shot eyes. This is why they do not get hired.

These people are sick. They should be patients. Before you get anything out of them, you need to heal them. Any other policy is just a joke and the hard working People of Seychelles will pay the consequence of this bad policy and joke P.P. is playing on us. Stop playing politics with our unemployable people P.P. Help them in a real way and this starts with rehabilitation. But where are the centres to help those porr lost souls? And remember, we still have to learn of one Escobar that has been caught. I wonder why?

People of Seychelles, open your eyes. SPUP, set your grandchildren free. SPPF, set your children free. P.P., give us a break as your communist antics and slogans have no place in a country that needs to “Leve Debourye”. We have been doing that for years, while you have been spinning lies and misrepresentations upon a people and filling up your own pockets at the detriment of our nation and future generations. Even to “Leve Debourye” you spin a lie! Shame on you!

$30 Million From Abu Dhabi

Recently, Michel squeezed US$ 30 Million from Sheik Khalifa of Abu Dhabi UAE while he sipped tea and at crumpets at the Yas Marina Abu Dhabi Grand Prix Formula One race. SBC announced immediately that because the economic reform is a success, we will be investing US$ 30 Million into Ile Perseverans Housing Project. This project was to build 5000 houses in 2000 and it is now 2009. Nothing is complete, not even electricity grids, sewer, roads, houses.

Ten years late. The next project will be 25 years late.

To restart this project is putting bad money into a bad idea. We are bankrupt. Our debts are unsustainable, which means for a long time, we will not be able to borrow money as a sovereign state. Therefore, after giving away mega acres of prime state land for one rupee to the Sheikh instead of selling the land outright, after removing our proud coco-de-mer immigration-customs stamp from passports, after bending over backwards to accommodate our new “friends”, after giving duty-free tax exemptions on imports to his new-found friends, we now have to tell our children that our country needs hand-outs from rich Arabs in order to start let alone finish any capital projects for our country. There goes our sovereignty once again while the begging bowl gets larger! Shameful, shameful, shameful!

Finance Money Factor

Without financing at reasonable rates, commercial interest rates will kill growth industries that are much needed to remove us from the stagflation predicament we are now in and to create new jobs for our children leaving school.

Pierre Laporte has focused on inflation reduction and has allowed growth industries to suffer at the expense of curbing inflation. Hence, inhibiting the opportunity for us to reverse the deflationary cycle we are now in. The banks now hold our economic jugular for future growth.

Thank you Mr. Laporte. Thank you Mr. Michel. Thank you P.P.!

How Will Next Year Be?

The question is not whether we will do well next year, it is rather, how much more will we lose from the -8% this year. Will Seychelles economy shrink another -8% in 2010?

If not, how much will it shrink?

Unless the debt is serviced, we will continue to shrink. The debt is like a cancer that eats the body of a human being. Ignore it, it will grow. Attack it, it will become smaller, perhaps. The bigger the debt, the less likelyhood you will get your economy back on track. As you fail, IMF will give you another Stand By Arrangement (more debt) to keep you alive.

Pay Down The Debt P.P.

Having said that, P.P. should have been brave with all the money it gets in donations to PAY DOWN THE DEBT, especially the commercial debts. This would show a great amount of good faith to the Creditors and it may open up negotiation space for additional debt reduction based on early settlements which could be negotiated. It would take pressure off our children tomorrow and off us today. It would prevent bankers from saying Seychelles is high risk so we charge 18% for a commercial loan while you need to include your grandmother’s farm as collateral and Granpa’s watch as a guarantee!

Find Another Option For Ile Perseverans

The houses at Ile Perseverans should be given to any Seychellois, that is in need and can provide a bank performance on completing the houses on an “as is” basis, and add 20% for infrastructural contributions. Those that cannot afford it, need to save to afford it. Those that cannot save, need to get a guarantor to vouch for them.

Government can encourage creation of civic groups to promote self-help programs to finish these houses. As a family or person helps to finish one house, they earn guarantee credits to the extent of their labour input in helping their neighbours complete a house. They can work after hours, if they have to. Surely Seychellois can “leve debourye” and mix cement and paint houses and get the carpenter Uncle or Electrician cousin to assist at this time. In return, a beautiful home with pride and “sweat equity” included. Is this so difficult a scheme that P.P. cannot think of it?

Seychelles today, needs to use cash very wisely but it must boot strap these houses into functionality and get them occupied. People need houses to allow their dignity to flourish. Jimmy Carter, former USA President, has done that throughout the world with his NGO Habitat For Humanity.

In the Western Pacific, it just so happens that a Seychellois, is building houses under this program by the hundreds every year. His name is Peter Gill, Jr.

This is not time for Government to go back to the drawing board, to handle a project in the style and fashion that led to their bankruptcy. Wake Up P.P.!

How many times will you bankrupt Seychelles?

I will address external factors that are real, next week. That will explain why we are in for at least a ten (10) year downturn under the P.P. “ economic reform” as we know it now.

Unless we have critical changes from them that are meaningful, we will have to throw them out at the next elections in order to survive. Be it SPUP, SPPF, P.P., SNP, NDP or whatever other party or name comes next. So keep an open mind as it will be the key to our survival. Remember, we hard-working “leve debourye” Seychellois are used to that. After all, we have been doing it for 32 years.

Fortunately for us and unfortunately for those 15 clueless P.P.’s, throwing them out will be easier than teaching them how to function in a limited environment wherein resources are very limited.

And one last word of hope for all you faithful readers. Instead of blaming the Opposition for not uniting or doing nothing, remember that it is P.P. who bankrupted our country, and not the Opposition. Remember that it is P.P. at State House with a majority in the Assembly, and not the Opposition. Remember that it is P.P. people who are rich today while our country has unsustainable debts. So point the fingers in the right direction. To Parti Le Pep (PLP) which today should stand for “Parti Le Pase”!

May God Bless Seychelles and All Freedom Loving Seychellois!

Monday, November 16, 2009

The Seychelles Column - By Christopher Gill

Air Seychelles, Boeing 767-300ER

Air Seychelles Seeks Bail Out

Air Seychelles has gone to its major shareholder, the Government of Seychelles in search of SCR 30 Million to bail the company out of projected budgetary shortfall for 2009. The move would be normal in normal times, but today, the main shareholder, Government of Seychelles is bankrupt itself and under IMF Administration. Air Seychelles cannot get an overdraft without a guarantor signing off.

The Seychelles Government itself is currently maintaining an unsustainable debt portfolio. It has sought IMF Administration and signed a second IMF Standby Arrangement for US$ 34 Million which will last for another 3 years. Successive IMF Administration Standby Arrangements are very likely for a number of years, if not decades. The World Bank recently assisted Government of Seychelles with a US$ 9 Million loan assistance program, the repayment of which will take 25 years.

Air Seychelles for its part, secured three additional planes this year while the world went into a deep recession and air travel dropped to all time lows over -20% as the European industrial output dropped by -15.75% this year.

As Europe’s recession deepens, trips to long haul destinations such as the Seychelles will be curtailed. Hence as we have seen much of this year, the planes Air Seychelles acquired on lease are now parked most of the time in the permanent parking zone of the Seychelles International Airport.

What airline company in the world today can afford to lease planes and park them for a year, without placing them into a proper business plan of operation? How can any CEO or Chairman of any airline company justify this type of fat riddled business program?

21 Century Business Models

Business today is about maximizing our resources and putting them in play. As a business gets maximum output from its assets, it spreads its cost base and becomes more profitable. These planes need to be up in the air, flying with passengers.

But Colonel David Savy has told us that: “Air Seychelles flies planes, it does not book hotels or do marketing for Seychelles”. This statement demonstrates the closed state of mind of a pilot who thinks his job is to take a plane to the air, then land it, and whether or not he has passengers is not his problem. This is why Air Seychelles is asking the bankrupt Government of Seychelles to foot a SCR 30 Million bill for basically, an overdraft. This is bad business practice, unless you are a moderate Communist.

What is The Money For?

The money is not for new planes. It is not for parts to keep the old Boeing 767-200 safe. It is not for marketing to put passengers on board and keep the passenger loads above 75%. The money is to be used to:

1. Reconfigure and redesign a business class seating arrangement. This is when business travellers are travelling now at an all time low, causing airline companies like British Airways that rely on that market segment for its profits to suffer a 240 Million Pound Sterling loss this year. Unprecedented in recent history.

Without regard for market forces and market indicators, Colonel Savy loves to spend money on refurbishments. Remember the renovation of the new office in Victoria? Well, according to Marie Lise Potter, Leader of Government Business, he wants to refurbish that office again. But tourists do not come from Victoria, they come from abroad. If we are short of them here, we should be spending extra money we cannot afford to spend in places that will increase the passenger load capacity for Air Seychelles. But Government asks no questions and baby Colonel Savy moves along. Even the Board of Directors of Air Seychelles is made up of members of Colonel Savy family. They will not question him.

Remember the US$ 1Million spent on the water fountains and bamboo wall paper for the VIP Lounge at the Seychelles International Airport? Air Seychelles never recovered this money. It was wasted. Pearl Class is regularly full of free fare passengers from Government, leaving little room for real paying passengers. These are the seats that are supposed to bring in the profits. Instead, they bring in the fat cats from shopping trips overseas, to refuel on nice little luxury items that please their hearts. Most of them pass through the VIP lounge anyhow!

2. The money is also to be used for completing a building at the Cargo Terminal that Colonel Savy is supposed to use as his office in the future and terminate a lease from his wife’s family in town. Why does not Air Seychelles get one of those low interest loans from one of the commercial banks in Seychelles to complete the remaining SCR 20 Million of construction works? A steel prefabricated building would have been a third the cost and look 100% better with a little glass finishing. The building would have been up and finished in half the time as well, if the plans were done right.

The reason why Air Seychelles has not gone to the banks has been expressed by Colonel Savy himself. I only repeat it. The banks want Air Seychelles to have the Government of Seychelles guarantee the loan (overdraft) and the company needs someone to vouch for its credit worthiness in performing on a Euro 3 Million loan.

Colonel Savy says to us that the Government of Seychelles cannot take any loans as it is a requirement of the IMF that they must have loans approved by IMF before proceeding.

Hence, the Parti Le Pep (P.P.) Government weasels around this condition, and drafts an appropriation bill, in the form of a supplementary budget for SCR 230 Million, and gives Air Seychelles SCR 30 Million to meet its overdraft requirements. Wise communist business style indeed!

What Is Wrong With Pierre Laporte’ Advice?

Why does Pierre Laporte tell us to go get loans from the banks to stimulate the economy and Air Seychelles does not do the same? Mr. Pierre Laporte has said that the interest rates at the banks are favourable. However, they may not be for long since we are now in the peaks and valleys of macro finance on a day to day basis.

The Seychelles Rupee gained 70% on the US Dollar in 2009. This is such an amazing feat that Bloomberg and Reuters are now comparing the Seychelles Rupee to the US Dollar regularly, and also to the Brazilian-Real and Mexican-Peso. But they also know our credit rating is SD (Selective Default) and that our economy collapsed last year. They are poking fun at Pierre Laporte and his funny rates. They just do not mention his name. But we do.

How To Save Air Seychelles

The best way to save Air Seychelles, with the resources we have as a country, is to tap into the no nonsense human resources we have in business and get them on the Board and shake it up.

How can Air Seychelles do without advice from real sensible business people like Mr. Alan Mason, Mr. Marc Houareau, Mr. Radley Weber, Mr. Freddy Karkaria, Mr. Louis D’Offay, Mr. Guy Savy of Bird Island who once operated a small domestic airline, and perhaps some other DMC operators that can help keep the seats full?

The airline business is not some mysterious business or more complicated than running a Tata bus line, except the engineering is aerospace not automotive. That is done mainly overseas. But the business thinking, the ideas, that make things happen for us all, come from the brain, not from the family bloodline.

This is the fundamental error Albert Rene and James Michel made when they argued against Mancham building the international airport. Simply put, Mancham was visionary while the other two were busy coming up with communist ideas and taking over the country by force.

Mancham did not put his family in place to run the show at the airport. He put the best man. People of Seychelles must learn this lesson, for it is the cause of our downfall, year after year. Today Air Seychelles borrows from a bankrupt government to keep afloat. This for me is shameful and inexcusable, even if it is “entre nous”. Air Seychelles should never have faced bankruptcy or even a shortage of cash with a product like Seychelles as its prime destination.

Be Prepared For Worse

With Etihad Airlines from Abu Dhabi coming, there will be greater market share loss for Emirates on this route. Emirates had been building its share against Air Seychelles loss. Although Air Seychelles has battled, Etihad is now taking on Emirates. They smell a weakening competitor. With their oil reserve cash, they are buying new planes from manufacturers and have the money to finance worldwide expansion in 3 years.

Michel’s Promises Will Finish Air Seychelles

Meanwhile, President Michel is asking so much from these people in UAE in the form of favours, and giving land for one rupee in return. But Air Seychelles will be wiped out not by my little article, or the little cartoon another Seychellois did, nor by the commentary by Volcere in Weekly, or Ramkalawan in the National Assembly, nor by the demoralized Air Seychelles staff.

Air Seychelles will be wiped out as we know it because in the good years, Colonel Savy made money and did not invest it right. He invested in lounges, changed the decor, and the money was spent badly. Now he borrows to buy a US$ 3.4 Million Twin Otter when our outer islands are under pirate threat and when the load factor to Praslin is at an all time low and flight frequency has been reduced.

I will confirm the real price in a follow up article. My “Cousin” works in the factory, another exile Seychellois, this one building planes for Seychelles. Air Seychelles will be wiped out because in the bad years, Colonel Savy did what he did in the good years: squander resources.

Michel will allow Air Seychelles to lose market share in exchange for some crazy “Don Quixote” windmills that will never work in Seychelles, a little renovation at the hospital which our own Government should have funded had we planned and budgeted properly instead of doling out Social Security money to win elections or build District Administration buildings that are never used or create prawn and orchid farms that cost us millions of dollars that we did not have. Desalination plants were just the cream on top of the already bankrupt cake.

Is Air Seychelles Bankrupt

Whether Air Seychelles is bankrupt or not is irrelevant. If it is, it is only sad for us all. If it is not, it will be soon under this kind of infantile leadership. Remember the other two supposedly smart Savy brothers also bankrupted IDC and STB as well, so it is only a matter of time. But take heart my friends. Those employees at Air Seychelles must not think that they will be out of a job. They will not. You will have jobs. Read the next section.

New Opportunities

The Airport will still have to function, and a professional ground crew operations company hopefully not managed by Savy will still have to hire you in that sector. Those engineers that have trained and under the constraints we operate under will also find employment in aerospace engineering in Seychelles. Planes will still come to our country. In fact, we may have more than ever, instead of less if we turn over the management of tourism and the airport to professionals. Cabin crew will have options to work with other airlines and the mistreatment will stop as will the complaints. Your pay will increase as countless cabin crew on Emirates Airlines from Seychelles have demonstrated.

Remember, at one point we had British Airways and Air France flying Boeing 747s twice a week to Seychelles, and other airlines such as Air India, South African Airways, Aeroflot, Alitalia and more.

Most airlines literally took off never to return because Albert Rene promised them that they could repatriate their earnings in foreign exchange and of course this never happened. So the key is in marketing the Seychelles destination like Alain St. Ange is doing so that we can get more major airlines to fly into Seychelles.

More airlines will mean more tourists to Seychelles because airlines do not just fly planes, they also market destinations. This is what Colonel Savy misunderstands as his role in the larger equation, as per his profound revealing statement. More tourists mean more jobs for ground crew, hotels, excursion companies, restaurants and so forth. Time to put the Savy legacy behind us once and for all.

Time To Retrain Skills

If you do not want to be based elsewhere, this is the time to stop complaining and retrain your skills. But get moving fast. In this economic downturn you can expect the worse. If you do not retrain your skills, do not blame Colonel Savy for that. Blame yourself. The downturn will last for many years, unlike Party Le Pep (P.P.) would have you believe. It is over and things will get better. Do not get caught in P.P.’s trap. And let Michel promote Savy to a Brigadier in his armed forces if he wants.

Downturn Will Last Many Years. Is Air Seychelles Ready?

“Entre Nous”, in USA it is expected to last 7 years. In Europe, with burst in manufacturing bubble (-15.75%), high Euro (Euro 1.00 = US$ 1.50), lack of reorganization of financial system, it will last even longer. So you can imagine what we are in for in Seychelles, with a bankrupt government, an IMF plan, a population on drugs between 9800-18000 according to CARE.

P.P. will revamp the tax system according to World Bank and IMF instructions. They will drop business tax from 40% to 20%. While this is good, it won’t be enough to generate new business, create employment let alone create enough wealth for our country. Mauritius business tax base is 15%. We must do better to compete, if not, we play catch up and lose as usual.

Without new businesses to generate enough taxes to run the country, the Government will continue to tax the same businesses and the tourism industry to death. As we are taxed to death, naturally, we will die.

What is needed in Seychelles is a program to jump start new investments with the corresponding productive capacity building of the Country to be increased in order to generate a minimum of 10% growth per annum. This is a great challenge that will require a change even in the political system to be achieved, let alone our social and economic priorities. This is the real battle field we must face.

This will allow us to pay down debts in reasonable time. P.P. does not have an answer for this in 2009 let alone 2010. So do not be fooled by optimists that believe their time on earth is shrouded in an inherent right to succeed in this economic atmosphere. We are in for a real down turn in 2010 and beyond.

It is true some market segments will do better like those that provide essential goods for living at better prices than the Ramadoss milk and juice factory, or STC for rice, etc.... but that is not a growth sector that creates wealth. It is only a survival sector. This will not create new jobs. In fact the poorly structured businesses will fail, because their model for growth is outdated and belongs to the Rene-Michel communist one party state era.

As this sector becomes the only viable sector, more and more people will join it and it will become more competitive. Large companies built on the communist model of business will of course fail. Do not hold your breath to think this will not happen. It is already happening around us. Reminds one of the NYS failure!

Hotel Industry Needs You Badly

Today, our hotel industry has at least 500 slots available for guest hostesses, front desk assistants, managers, and so forth. Your experience in dealing with passengers is a 100% boost to you getting a job. With that experience and corresponding dedication to the industry, your pay will be increased as well. With you in the industry, we will not have Filipinos or Mauritians greeting our tourists when they arrive at our hotel resorts.

A New Beginning For Us

All is not lost. Think of it as a new beginning. In life, we all have new beginnings. As Christians, the power of renewal in our hearts and minds keeps us fresh as we face the struggles of life and the great challenges the evils of Communism and cronyism bring into our lives.

Finally, at Air Seychelles, remember well, the Berlin Wall fell to the ground 20 years ago. The dominos have all come tumbling down. According to the East Germans, no domino should be spared in this human experiment of failure. They must all come down, just like the NYS and SMB failures came crashing down. If you do believe a domino will be spared, then you still believe in the tooth fairy!

When the domino falls, do not blame us who expressed opinions over the domino and exposed the truth. We were not the CEO or Chairman and we are not on those Boards either. Be brave and blame yourselves, blame the moderate communists. Because all of us who speak the truth and expose the evil in our country pay for our flights from our own pockets and do not fly Air Seychelles for free. And we do not send our furniture and private goods via free Air Seychelles cargo either.

May God Bless Seychelles and All Freedom Loving Seychellois! Christopher Gill