The attack on trucks, vans, cars going up to Sicily is not just an attack on Virtu Ferries and its catamaran but deeper down and aims to undermine and perhaps pull back the real gain of Malta’s accession to the EU – the reality of the single market.

Henri Saliba, managing director of Virtu Ferries was speaking in an interview he gave to this paper, an interview caused by various interviews to the media by the Chamber of Commerce leadership as well, and even more, by statements made to the Parliamentary Permanent Committee on Economic and Financial Matters.

But in truth, the attack has been going on for years, Mr Saliba said, pulling out cuttings of papers going back to 2006 and even earlier.

He does not mince his words – Virtu Ferries has changed the way trade is done in Malta and has offered to a huge number of new entrepreneurs an opportunity to try their hand at business and to set up themselves as independent traders. This derives from putting in practice the EU’s single market. This is very different from the scenarios that existed before Malta entered the EU, when importation was in the hands of a few big importers.

This in turn has drastically changed the ways of the Maltese economy basically by allowing and encouraging SMEs and sole traders to take the plunge and compete on a level playing field with the established players.

When Virtu had many times rebutted articles on the press which shed doubt on the Virtu method, it saw red when it found out (because it was not invited, though being a member of the Chamber) that a delegation from the Chamber and others had appeared in front of the Parliamentary Permanent Committee on Economic and Financial Matters and statements were made there that Virtu felt it had to reply to. It thus lodged a Judicial Protest rebutting point by point the allegations that had been made.

Before replying to what the delegation said, Mr Saliba pointed out that among the delegation, presented by Chamber president David Curmi as “an expert” and “stakeholder” was none other than Joe Bugeja, general manager of Malta Motorways of the Sea or as it is more commonly known Grimaldi, a direct competitor of Virtu. But Mr Bugeja was not presented as such by Mr Curmi: the committee’s members were left in the dark as to his conflict of interest.

Basically, Virtu operates in virtue of a Certificate of Authorisation, issued by the Malta Customs, as an EU Regular Shipping Service operating between two EU ports, where all the goods carried to Malta are destined to remain in Malta. In other words, this is a seamless inter-Union trade, regulated by Community rules.

In other words, it is as though the goods pass on a bridge between one country and another, as though goods pass a land border. In this matter, the same rules apply to shipping between Sicily and Malta as apply to shipping between the UK and France, or Italy and Croatia.

The EU rules in this regard are clear: there must be freedom of movement which can only be interrupted when there is clear suspicion of something illegal. Otherwise the right to freedom must not be undermined; borders that have been removed must not reappear under any guise.

This is not a privilege accorded to Virtu Ferries but to anybody who operates “a Regular Shipping Service”, which operates exclusively between ports situated in the Customs territory of the Community.

As a consequence, it is essential that disembarkation is rapidly carried out, just as if one had arrived by train or alighted from a bus.

This puts Virtu at a difference from other ships, especially the Grimaldi ones. First of all, these carry freight that may have originated outside the EU or that is destined to go beyond the Maltese shores. Secondly, the vast majority of containers on these ships are not connected to cabs whereas those on Virtu are all accompanied by a driver and ready to move out. There is thus no need, on Virtu, for a tug master to hitch to the container, take it out and hitch it to its cab.

In an interview which Mr Curmi gave to Vanessa MacDonald, Mr Curmi again repeated his claim that the government does not know what is being brought in. This, Mr Saliba countered, is not true. Virtu submits full details about vehicles carried and what they are carrying to the authorities at Pozzallo and in Malta. Ms MacDonald also saw copies of these cargo manifests and told Mr Curmi that, similar manifests were seen by this media house.

Virtu is also comforted by the fact that it has excellent relations with the VAT Department, Customs and port authorities both in Malta and in Sicily. Virtu also has an information sharing agreement with the Malta Police.

Later on in the same interview (The Business Observer, 5 June) Mr Curmi claimed that Virtu only declare goods carried as “general cargo” but again his claim was denied by Ms MacDonald who saw the manifests. To which Mr Curmi, somewhat lamely, said this is what his members tell him.

Besides, even Grimaldi carries general cargo. In this field, Grimaldi is far bigger than Virtu. Grimaldi carries some 33,000 units to Virtu’s 2,000 per year. Grimaldi’s operation is legal, but so is Virtu’s.

The EU rules also insist on limits. Inter-EU ports trade is aimed at individuals. As for tobacco and alcohol, for instance, the EU rules specify that these must not be over:

800 cigarettes

400 cigarillos

200 cigars

1kg of tobacco

10 litres of spirits

20 litres of fortified wine (sherry or port)

90 litres of wine

110 litres of beer

The rules also state: “If you carry a larger quantity of these goods, you may be questioned to check that you have no commercial intent.” If you carry a larger amount, you may be questioned, in other words, but the issue stops there.

Virtu carried out an exercise: considering that Lidl gets in around 50 trucks a week (most come by Grimaldi, which is cheaper, but perishable goods come by Virtu). It wanted to test the current opinion, expressed by the Chamber, that most of the cheap wine that has flooded Malta after EU accession is coming because people go to Sicily and come back laden with wine.

Instead, Virtu found that good and cheap wine can be found … at Lidl. It, thus, uncovered a secret: most restaurants are buying their wine from Lidl. The prices of Italian wines as sold at Lidl are so low it is not worthwhile buying from Sicily. Traditional wine importers are selling less because restaurants and the public are buying from Lidl and from other Cash & Carry’s around Malta.

The same may be said as regards the importation of furniture, which were called “fly by night” traders during the parliamentary hearing, as if they were doing something illegal. On the contrary, many times these traders arrive with the morning trip, their vans and trucks are branded so that everyone knows they are here. These companies are so big they command vast economies of scale and can thus offer furniture at vastly reduced prices, prices that no Maltese importer can compete against. Once again, this is the advantage of a single market and the competition it engenders and this must not be stifled.

Again, the proximity of Sicily and the ease of going there and coming back in just one day enable the Maltese traders to keep a low level of stock. When they find a demand, they can easily nip over to Sicily and get what the client wants, rather than keep stock waiting in a warehouse. This is just another example of a different economic style coming in, different from the ones that were prevalent in the past. The change has now come about and will not be reversed.

Furthermore, while, as said, Virtu’s prices are higher than Grimaldi’s since Virtu can only carry a limited number of trailers, high speed craft are comparatively more expensive to run, port fees are applicable on both services. But Virtu does not practice add-ons, the administration charges seen by this media house as practised by Grimaldi’s agent are claimed to be due to the paperwork involved, such as processing fees, survey charges, and document compliance fees, etc. Each item may be rather small but together they add up. Virtu does not charge any administration fees.

Furthermore, this newspaper was separately informed; in recent weeks that Grimaldi has announced to its customers an increase in the Bunker Adjustment Factor, claiming this increase is due to the higher prices of Brent. The way this increase has been worked out raises further questions: a difference has been established between the BAF increased on popular routes and those increased on the less popular routes. However, the demand for travel is inelastic – if you want to travel from this port it will not be price considerations that lead you to travel from another port. BAF is quite steep: it can be as high as one-half of the fare.

The arguments put forward by the delegation in its appearance in Parliament would seem to aim at introducing or re-introducing checks and controls in a far draconian way. But such checks and controls are illegal with regards to trade between two countries in the EU. And if these checks and controls lengthen the time it takes for cars and vehicles to be released from the catamaran, they nullify the advantage of Virtu of a 90-minute crossing and quick disembarkation.

The Chamber claims that some of those who are coming in are not paying Malta’s eco-tax and thus tax is being avoided. But eco-tax is not paid at point of entry but at point of sale. Even the goods imported through other carriers pay the eco-tax at point of sale, not at the harbour.

Another point that has been mentioned regards an alleged lack of a chill trail but the chill trail is not interrupted during the crossing by the catamaran: the refrigerated containers are plugged in to the catamaran’s electricity system. And the shortness of the trip and the quick exit on arrival help keep the products fresh.

There should not be this undeclared sort of war between the two providers. As explained before, there is enough work for both. In fact, as Stephen Parnis England wrote on the Freight Business Journal, there is actually a need for a second operator from the North.

Finally, there is a little-known or remarked fact that lies at the back of the popularity of Sicily with Maltese customers. The fact is that almost anything in Sicily is cheaper, sometimes by far, than the comparable prices in Malta. This is because the fundamental structures of the two markets are different as well as the economies of scale.

In Sicily, and Italy, the distributor gets a low margin mainly because of the high volumes that are moved. The high margin is that of the shop owners. One can say that the distributors get a 10% mark-up and the retailers get an 80% one.

Malta is exactly opposite. The retailers get to make a very slim mark-up while the distributors get the lion’s share.

That is why products in Sicily are far cheaper, especially when sourced at the distributor (grossisti) and mega-outlets level while at shop level the prices are comparable to those in Malta.

Virtu, in Mr Saliba’s view, has been the catalyst of this change in the Maltese economy: it has facilitated the emergence of a new class of entrepreneurs and a new way of doing business. Most will agree that it will be a pity if the clock is moved back to the time when a handful of importers controlled the price of goods and the consumers’ purchasing power.