Seychelles Budget Disaster For 2015

Minister of Finance Mr. Pierre Laporte turned up to the National Assembly in his long sleeve purple shirt, reserved usually for funerals one week late, but with a budgetary mixology of disaster all the same, much like the 2014 Budget , the 2013 Budget, and the 2012 Budget. Under his leadership, the Ministry of Finance is on a one way track with blinders in place, in a multi facet ever changing and complicated World. He may just be leading us to a disaster-ous result.

Albert Einstein Said Something About This Budget

Albert Einstein the World’s greatest scientist ever (E=MC2-basis formula for the H-Bomb), is credited with saying: “Madness is doing the same thing over and over and expecting a different result”.

Each year Mr. Laporte submits a Budget with added taxes and each year, Seychelles under performs, and our people suffer, our business community suffers. Each year we get poorer and poorer. Each year, our Seychelles Rupee, devalues more and more at the official indicative rates.

The Weaker Seychelles Rupee

Today, the Seychelles Rupee weaker than in the era of Black Market, which Mr. Laporte is credited for ending, but the Black Market has crept back in his Basket of Currencies and Indicative Traders Rate Averages. If it looks like Black Market, it smells like Black Market, acts like a Black Market, it is probably a Black Market.

In spite of his initial success, it seems Mr. Laporte has gone fixated on doing the same thing over and over, expecting a different result.

Each year, Mr. Laporte has increased taxes over and over again and again, expecting that the Seychelles economy will flourish and not implode. Yet year on year, implosion and now collapse is evident everywhere around us. Vehicle owners and future purchasers are feeling robbed by Mr. Laporte.

Failed Politicians Take Advantage of Opportunities Created By Mr. Laporte

Some old time politicians want to take advantage of this situation to gain some credibility. Hand over your Fat Cat salary-pension (scr. 60,000.00) which is part of the SCR. 1.5 Billion in salaries, if you want us to take your seriously, Kalawan.

Tourism on The Edge Facing Failure

As higher taxes destroys the Tourism Economy in 2015, remember well the words of Chairman Emeritus SHTA Mr. Louis D’offay:” increase of VAT to 15% will kill the Tourism Industry- 2008.

Back To Basics 

Seychelles is not an export economy where we export goods of high infinite demand that the World will pay at any price, and in return money will flow into our economy like magic and we will all be really the richest people in Africa and Europe. In turn we will be able to fund near 800 Million into a failing hospital, pay education ministry to run failing courses and produce failures as pupils. Fund a Police Force where officers are trained for three months and expect crime to be low. Make the cost of living high, salaries low for the majority of ordinary workers, and expect that criminality will not be high, but low.

This is the dream world some officials live in. What makes Seychelles different from Somalia? Nothing, it is just a question of time and degree. We are on our way.

Seychelles Is A Tourism Based Economy

Seychelles is currently a Tourism based economy, wherein we must lure visitors to our shores with a compelling sales pitch every year that is believable and affordable to convince them to get on a plane, sit in an economy seat for 12 hours to come here. Tourism accounts for over 60% of our receivables and near 40% of our total employment of Seychellois Nationals. Tourism employs only 4,800 GOP.

Ministry of Finance Needs A Reality Check

We live in the era of European Recession which will last from 10-15 years ( Germany the engine of growth for Europe will have a GDP of 1.7% in 2015), South African Economic Collapse (ZAR 15.0- Euro 1.0, Gold prices are crashing from $1,700.00 an ounce to $1,100.00 an ounce today may reach $500.00 an ounce if Oil drops to $ 45.00 per barrel), Asian frugality ( we are now looking to the China Market to save us, they pack their noodles for food and they happen to be the most indebted country in the World[256% Debt/GDP Ratio] in other words, we are banking on a TIME BOMB, plus, manufacturing is slowing down at the last quarter, when it should be picking up), Middle East financial crash from the crash in oil prices worldwide( from $116.00 per barrel for sweet crude to $54.00 and still dropping, due to deflation worldwide, lack of Demand, and excess Supply from USA who is now producing on par with Saudi Arabia). The price of oil is expected to drop shortly to $40.00 per barrel, creating a gross imbalance in fiscal commitments by Gulf States and their receivables, which will cause them to tap into reserves to survive the crash. Any country tapping into reserves to meet Budget fiscal requirements will curb travelling, and curb super yachts, curb donations, particularly to micro states that eat pork, bacon, and boudin for Christmas.

High Fuel Prices

In Seychelles the price of fuel remain high at Scr. 21.00 per litre. No reduction. No reality check, as our competitors drop fuel prices to correlate with the reality of the new order.

Mauritius Quickly Drops Fuel Prices

This week, Mauritius whose prices were on par with Seychelles in fuel, 22.00 per litre, reduced its cost per litre to Scr. 15.00 and further drops are on the way.

The Grand National Deception

This single national deception is tantamount to discovering a cure for all Cancer and keeping it to yourself. This is what the Minister of Finance and SEPEC is doing on the issue of fuel prices.

 The price of oil has crashed on the World market, and SEPEC and Ministry of Finance keep the price of fuel in Seychelles high, thinking it will mean more easy money for their Budget needs at the expense of allowing a more affordable cost of living for ordinary Seychellois and better value for money for our Visitors to our shores.

There Is No Such Thing As “Easy Money” Mr. Laporte

This cunning and short sighted strategy can work only for 60 days. Soon Mr. Laporte will learn that the Tour Operators (remember those French Operators whisked to Seychelles for the mother of all meetings with Five (5) Ministers- they are waiting for results) who legitimately complain about VAT, high excursion fees, high taxis fees, will simply stop selling Seychelles, and our receivables will not be -20% like in 2014, or -10% like in 2013, but rather, -35% in 2015 and yes, perhaps worse.

Air Seychelles Will Suffer, Suffer, Suffer

Air Seychelles needs to prepare itself for the 25% load Factor hell on the Charles De Gaulle-Mahe route on each flight, credit to Mr. Laporte’s ministry not rising to the occasion to give us a Budget responsive to reality and not his government’s wish list.

Do Not Piss Off Your Cash Flow Mr. Laporte

The  World is not creating new Tourism partners, except for now, New Free Cuba, who is now a main competitor and emerging market, that will yes, suck us dry even more, along with Madagascar( saw more French Tourist in one Restaurant then in all of Praslin two months ago) , La Reunion ( one flight every half hour), Mauritius (Airbus 380 twice daily plus 30 Emirates A-340-400 flights per week) , Maldives( a little bunch of rocks making a lot of noise) , and probably, St. Marie ( off Diego Saurez, that is becoming a Tourism Market in itself) where the bones of the first Seychellois rest in a pirate cemetery and Humpback whales that visit the region yearly. Four Star hotels go for $120.00 per night per couple inclusive. At nnperson per night.

South African Market In Cardiac Arrest

The South African market was already in cardiac arrest before Mr. Laporte presented the 2015 Budget. The 2014 and 2013 Budget was enough dosage to kill this market. Ministry of Finance cannot blame the drop of this market on David Germain, who is doing an excellent job with near no Budget for marketing. The problem rest with us in Seychelles: (repeat twice) “We Are Too Expensive For South African Market”.

By mid 2015, with the increase in levy of 20% on alcohol, increase in total VAT on a tot, added cost to carry the 20% on hotels, and a tot roaring at Scr. 150.00 a glass, the South African market will be dead.

Poor Air Seychelles Takes It in The Pants Again

As the South African market dies, poor Air Seychelles, the prodigal Son of Seychelles, will take it in the pants, with empty seats most of the year from Jo’ Burg. Load factors will crash, Air Seychelles will come running to Mr. Laporte for another $10 Million to keep flying. Eden Island will panic because no connecting flights to Jo’Burg and their sales, re-sales will crash. Does Ministry of Finance start to get the picture?

By mid year, will it all have been worth it to play with tax on a little rum? Afterall, no government in the World has ever been able to legislate morality or cronic disease like alcoholism. A drunk will drink until he decides he wants to change. Taxes do not change the pattern, they just resort to cheaper drinks, and in the meantime, the children that rely on them suffer, then they fall back on Mr. Laporte’s laps at the Social Security office, asking for support. Is the picture getting clearer now? 

Economic Sustainability Comes From Growth Not Taxes

Listening carefully to Mr. Laporte, I get the impression that he equates “Economic Sustainability” with collection of taxes. In University we were lectured in Economics 101 and even Finance 101, that: “economic sustainability rests squarely on creation of economic growth/wealth”. In turn, the government levies on the wealth through taxes. Without economic activity, there cannot be any taxes paid on time, or paid at all ( Greece Syndrome).

Where is The Beef?

Supporting the social programs of free medical ( in spite of proper AUDITS of Scr. 780 Million) , free education( in spite of 32% single course pass rate or total failure) , policing ( in spite of it being a total joke by now) , road maintenance( where?)  , subsidies of $ 5 Million and $ 10 Million to Air Seychelles, owned by Etihad, in spite of saying, it will never be done again, can only come from: 1. economic growth and 2. begging. Begging is getting harder and harder, so naturally, the focus needs to be on economic growth.

This means at the very least, do not mess with what is producing revenue for the country: Tourism. At the very least, try to help it, where you have hurt it, with over taxing ( VAT 15% on a room, when our competitors charge only VAT 7% at most), making fuel prices reflect its true price (SCR. 14.00 per litre, to give each operator from Taxi Driver, to Boat Charter, Game Fishing operation a fair chance to participate in the economy).

Put simply, unless Mr. Pierre Laporte amends his room tax and Food and Beverage Taxes, in 2015 adjust fuel prices to reflect reality, Tourism will implode for Seychelles, and it will not come back ever again, in our life time, as we knew it to be once upon a time.

The Blue Economy- Fish

The Blue economy means Fish! It does not mean oil. Mr. Pierre Laporte is guilty of misleading the Public into believing that there exist high probability of success for extraction of oil offshore in Seychelles for a profit at today’s international market prices and existing excess supply worldwide.

Offshore Oil- Hic!

Offshore oil exploration is viable only when oil prices internationally exceed $80.00 per barrel. Today ,People of Seychelles, that includes Mr. Laporte and the entire National Assembly of Seychelles, we are looking at the reality of $45.00 per barrel oil. This means if you do some simple math, you will conclude, that offshore exploration in Seychelles is about to shut down, if it has not already, not the other way around.

 Respect has a multiplying effect when we are intellectually honest with our community.

Fish Economy

High PUC Bills Kills Fishing

Fisheries cannot work without cheap access to chiller time to store fish, prepare fish for export. PUC guts Fish companies like Oceana Fisheries, and Sea Harvest to the amount of Scr. 500,000-Scr. 1 Million a month in electricity bills.

This makes the Blue economy just talk. It explains why these companies change hands often.

High Interest Rates Kill Fishing

Additionally, interest rates at banks for boats are too high at 18%. Moreover, we no longer have a viable labor force and foreigners will have to be imported to fish in Seychelles.

EU Has Free Hand For Cents per kilo

In the TUNA sector, PL has allowed the EU to corner the Seychelles into a mea culpa, mea culpa situation, wherein Seychelles receives only Euro 3 Million per annum for an industry that produces over $350 Million and employs 1500 Madagasy and Thai workers. Where are the revenues? There are none, the IOT is an offshore business, on shore, this is PL style.

China Invest In Fisheries In Mozambique

In the meantime, the Mozambique Government and the PRC have rail road the PL government in fisheries and have built a $450 Million fishing port, to fish in our waters, take our fish, and send the talk about the Blue Economy to be confined to conferences. They will convert the blue economy in the region into hard cash, by the hundreds of millions. China will not have trouble finding top USDOLLAR for Seychelles caught fish.

Growth 3%

If staying the course for three (3) years, increasing taxes, has not produced growth beyond 1.8% in any given year, what makes Mr. Laporte think that he can do it in 2015 and achieve 3% when IMF in its most optimistic prediction said growth will be 2%? I don’t know. Maybe Mr. Laporte is courting Russian investors, to do this fancy dance, but as of today, the Ruble Crashed on collapsing oil prices.

Growth rate in Seychelles as it has been in 2013, and 2014 will be minus 2 or minus 3%. Why? Read on.

Where Are The Direct Flights?

It is noteworthy to Mr. Laporte and all Seychellois, that what was making the Tourism Industry work well in 2008 was the 6 direct flights from Paris, and 2 direct flights from Heathrow. This allowed visitors direct access to a holiday fast and this allowed them to maximize their time in the sun.

Once the direct flights were cut, Seychelles Tourism Industry was on a challenge to climb Mount Everest with a dangling rope (called Hub and Spoke) and knickers called Etihad, to cover our *** while Air Seychelles faced Bankruptcy from mismanagement.

Hub and Spook!

The Hub and Spoke regime has never worked for Seychelles. These airlines just cannot coordinate with the Industry to adjust seat availability, ticket cost, with the seasons.

Hub and Spoke regime has produced a hit and miss in revenue for the Tourism Industry. Some months good, other not too good. In between we register losses and Minister Laporte thinks we are stealing money, when in fact we are all going bankrupt.

Start Walking Man Get To Know Your People

 Why does he believe this? He stays in his office or on a plane in first class, and does not come out of hiding to visit with the common man driving this Tourism Industry, which he expects money revenue from each month.

Without direct flights, at affordable fair rates, Seychelles cannot remain busy all year round. In addition, direct flights must have a solid 12 month marketing campaign in place to entice visitors to Seychelles.

While this is in play, the PL must get their act together, lower crime, get serious on Education, stop playing with lives, get serious on the cost of living for Seychellois and Visitors alike. This is how Tourist will come back to Seychelles, and Seychelles will make a fair living off the revenues of Tourism.

Financial Sector- Offshore

Dead!

World Trade Organization Membership

Kills Farmers and not necessary for a micro state.

Deferment Program For Construction

If ever the career of a man was tied to a bad idea, this is it. Who in the world will risk building in a depressed economy, faltering currency, on a defer payment of VAT 15% incurred on goods at the time of building. Most projects take 24 months to complete. This means at the end of 24 months, the investor, after shoveling out millions into  a project will have a hefty VAT bill to pay with penalty if everything is not going so well. Without direct flights to Seychelles, and numerous faltering routes from key markets like South Africa, La Reunion, Madagascar, Tanzania, who on earth will take this risk? Most buildings are due for renovation in 5 years of opening. This is perhaps the most hair brained idea I have ever heard, to be applied seriously in a micro economy that is isolated, and just the shipping time from supply markets is 90 days. Come fellows at Finance, get serious. You are giving your Minister a bad rap.

Taxes, Levies, Excise Tax Anything Nice!

If ever there was an invention that touches people’s heart, cuddles their senses, and captures their imagination for opportunity, ignites their passion for excellence, it is the automobile.

Minister Pierre Laporte decided to tax it more, even though he wants productivity to increase in the country. I just don’t get it.

If you want someone to work hard, give him a fair shot to own a car. Don’t take it away from him.

If you want someone to be creative, give him an opportunity to drive a man made creation. Don’t take it away from him.

All this taxing overnight, has a one party communist taste to it. I do not see the BMW’s and Lovely sedans Ministers drive going on auction.

In my view, nothing offends an average citizen working hard , trying to come up in life, then an unreasonable tax burden and is excessive, and insensitive.

Minister Laporte needs to reconsider this, along with the rest of his “Budget for Disaster”.

The Grinch stole Christmas, I wonder who will steal 2015?

Have a splendid week!

Sesel Pou Seselwa!

May God Bless All Freedom Loving Seychellois!