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Wednesday 17.01.2018 | Name days: Tenis, Dravis

Latvian Traders Association President: no support for local traders

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Baltic news, News from Latvia, BNN-NEWS.COM, BNN-NEWS.RU, Henriks Danusevics

Henriks Danusevics

Henriks Danusevics, the President of the Latvian Traders Association founded in 1912, is an optimistic lobbyist, however he told the business news portal BNN long-term stagnation expects the commercial sector, as foreigners own the leading supermarket chains and the government is carrying out a short-sighted tax policy.

Why did cash registers re-programming to 22% VAT cost as much as four million lats?

Re-programming of a single cash register costs up to 40 lats. We are in cash register service contracts we hope the State Revenue Service (SRS) will abandon this year, but they are tarrying. If we pay subscription or a particular service bills in a competitive environment, tariffs will become more reasonable.

Why did such low cost stores as Lidl not enter Latvia, if in 2005-2006 they had already bough building plots of land in Liepaja, Riga, Rezekne and Olaine, willing to build a logistics center.

Latvia is too small and they have other key markets where to develop. The pragmatic management of the German Lidl was right in concluding that it is more profitable for them to invest in Sweden, Ireland and Belgium. Consequently, they sold their properties to Estonians in 2007, thus stopping their operations in Latvia. No new market players can be expected.

To what extent will traders profit (margin) drop, given the tax rise, fuel, electricity price gains and the minimum wage increase to 200 lats?

The profit share of traders shrank in 2009 and 2010, but the existing profit is stable, as all costs saving measures have been carried out. Now the price fluctuations depend on the actions of producers and the government’s tax policy. Traders are no longer to boost prices due to people having more money or the competition weakening.

Your December 31 announcement on 2011 bringing stagnation to the commercial sector was quite shocking. Why did you say that?

We should realize the government is acting out those positive achievements of their tax policy. Actually, there are no reasons for not believing stagnation has already stricken the commercial sector. That is the common opinion of traders. I do not see why they should do better tomorrow. Dreams and the Minister of Economy Artis Kampars inspiring stories of boosting export is a complete bluff. Export markets success will not promote the average income level of households, neither will VAT rise facilitate business, instead reducing the purchasing power even more. We depend on primary commodities discounts and best offers a lot, because people try to save on everything. No one is carrying out comparative analysis of foodstuff, thus people do not get to know most often cheap products are of low quality. The government’s shortsighted raising of taxes is wrong, because it hinders the national economy development in a long term. The Traders Association believes tax burden should have been shifted from the workforce to the capital, without raising it.

On December 17, 2008, you compared our state to a train throwing out everything possible just to keep going, but the tax rise is like a stop crane that is already turned down. Do you still think like that?

Unfortunately, neither I, nor many other businessmen are informed where the state can head with a stop crane that is already turned down. We see no ways of getting out of the shadow zone expansion and the deadlock.

You are encouraging Latvian traders and producers to collaborate more.

Yes, we are. We have repeatedly proposed the Ministry of Agriculture, The Latvian Federation of Food Enterprises and the association Marketing Council that collaboration mechanisms should be developed between small/medium size producers and small/medium size traders, instead working only in their own interests. New programmes could support small producers in logistics and marketing campaigns. The Agriculture Joint Consultative Council is trying to maintain tense relationship between Latvian producers and traders by making use of it in their political and subjective interests, although the state should support local traders selling locally produced goods. Currently there is no support for local traders, we are repeating all the time the leading supermarket chains are owned by foreigners. It is only normal various chains offer different assortment, thus providing consumers with more choice. There are only two supermarket chains of national importance in Latvia – Maxima and Rimi/Supernetto, where cartel agreements are not possible as the Competition Council is watching them. Latvian food producers have always bullied traders, in case they are not satisfied with something. We, traders, have never had problems in pointing at the price surcharges formation.

Why wasn’t the Institute of Commerce educational program for small traders approved?

The only project we have submitted for small traders training has been refused. Funny, we cannot get why. We asked the ministry why huge individual applicants are supported, while a planned project for small traders is not. After the refusal, we no longer have money and human resources to develop a detailed training programme. Such an education programme would promote small traders competitiveness with supermarket chains management resources.

Will chain stores survive, if 100 thousand more people leave Latvia this year?

I do not know. That is the issue that the number of customers is constantly dropping. With working age population leaving, there is also growing pressure on salaries. When the crisis stroke traders had a chance to reconsider their costs and ways how to operate more efficiently. Less profitable stores were shut down, instead launching new ones capable of managing greater customer flow. Luckily, placement services do care for our evaluation of the unemployed training quality.

Will credit cards PIN codes introduction starting from January 1 reduce their theft and fraud causing losses to traders?

This is completely in the interests of banks. It boosts queues in supermarkets. It has become worse, because the banks are less responsible before traders. Nothing has changed regarding credit cards processing tariffs transparency and fairness. First of all, we want to find out whether our achieved Maestro and Visa tariff cuts in EU are in force also in tariff fixing in Latvia. Secondly, we believe there should be equality, because purchases not exceeding five lats cost us ten santims for the telephone connection, thus we should be righteous to set a minimum sum up to which we refuse accepting credit cards. Or banks service transactions up to five lats free of charge, at the expense of big purchases.

What to do with expired goods – give them to the homeless as in Great Britain or sell at a 70%-80% discount to the needy?

Coffee, tea and other foodstuff can also be consumed after they have expired. If some organization had wanted to obtain expired goods from traders for charity purposes, they could have proposed law amendments a long time ago. According to our calculations, the national programme of providing support to the needy in a form of food cost 30% more in the centralized procurement, compared to the costs if the food had been packed by local traders – for retail prices. That’s an absurd! Because cereal stocks in Sweden were purchased for this money in exchange for food packs. Moreover, traders would have ensured transporting to distant rural areas as well.

What would you say to a business astrologer, forecasting one chain store will leave the Latvian market in the autumn of 2011?

That’s pure fantasy. Of course, theoretically, a chain can change hands, but bankrupts are not expected. No huge chain store has gone bankrupt in the past fifteen years, they only change their positions, for example, Royal Ahold ranked as the 8th or the 9th after slipping several positions.

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