Stockmans sale - hope or dispair?

The huge numbers shopping in the "madness days" sale in Stockmans this last few days tell a tale. What that tale is though is unclear. On one hand it may be a sign that the recent election has brought hope of a recovery. Certainly the idea that a Dombrovskis-led coalition of virtually the whole Parliament, including the minority speakers is unusual, outside of Finland that is - where it is normal (and very successful) business. But apart from this step into the political unknown, it is hard to find evidence of solid improvement. More on this later.

Of course the sale may just have been a welcome relief from the rather bleak couple of years that many have suffered. Sadly another hard winter looks to be on the cards for many with heating bills likely to just as bad again. Coming back regularly from Bulgaria that is in much the same state, I see many similarities with excessively large cars living side by side with beggars. But there I have seen many horses and carts on the roads, they seem to have disappeared here!

But has Riga started to show signs of improvement? The signs here are mixed. But I do feel that there has been no more general downward movement over the summer. Flat prices for rent and sale continue to fall steadily despite the bizarre "talking up" of the real estate companies trying to get investors onto the hook. The number of beggars and visible alcoholics is growing slowly but steadily - sadly too many of them are dying young and unnamed as the monthly newspaper reports show. Shops are still closing regularly but Latvia is showing amazing robustness in this regard as new shops, bars, clubs and cafes seem to open immediately. Only a few places seem to stay stubbornly closed, and I suspect that the owners are simply asking too much rent.

Sadly "service" still sucks in Riga and is a common comment from tourists. Typically, museums close when people want to visit - as I found to my cost when my mother and sister came recently. It is also noticeable that shop prices have started to creep up again. This is foolishness as those who charge too much will be penalised by the public. One clothes shop I frequent was expensive two years ago but has managed to gather a great collection of clothes at modest prices and kept the look and feel of an expensive store. Their service is great too. It can be done. But I went to the chemists at Riga airport last week and the girl was seriously rude and offhand. It is so simple to be polite and helpful - it brings customers back. She clearly thought I was a tourist so it doesn't matter! Her mistake. Now she is immortalised as being rude in print.

But there has to be some change if we are going to make headway. Last year along with my business colleague Bill from UK we worked with the Ministry of Economy at Under Secretary level to help them understand how to use the European funds to create transformation using LEAN business processes. We wrote presented and ran seminars. We helped them produce a plan and helped them with the bill for Parliament. But at every stage they watered down the proposals so that responsibility would be transferred to LIAA and the associations and no one in the Ministry would have to do any work. We told them directly in print that their plan was wrong and would fail. Simply, LIAA and the Associations did not have the experience or capacity to do this work The measures were accepted by cabinet and two weeks ago the head of the Investment Agency LIAA Andris Ozols told me directly that the plan had failed and the money (a huge amount) had been lost with no effect. Last week I saw that the Associations had written to the PM for him to do something. They have short memories. I offered to help them for nothing and they refused. They deserve to fail. Reality has to be accepted sooner or later. The level of manufacturing and organisational knowledge here is low and will only be improved by purchasing skilled foreign help.

This week I am running a business forum in Riga (details on my website

www.latvia-business.com). What has amazed me is the number of my contacts who have changed jobs or their companies no longer exist. At least 60% of my business cards are now out of date and few of them are more than 2 years old. Many of the people are now abroad. It reflects a huge national change. We shall see in the coming months if this is change for the better.

Suddenly - nothing happened!

A month or more has passed since my last post. I have not written for several reasons. Firstly I have been working in Bulgaria fairly solidly, secondly not much has changed and thirdly I have seen few cameos worth recounting in print. Now I do not think that we are seeing a plateau in the crisis, more I suspect that much of the continuing movement is under the surface. There is no serious evidence of visible improvement although the international experts choose to say there is some.

So what do I see today. There are still plenty of people avoiding paying on the trams. The number of visible drunks is increasing in town as is the length of the food queue outside of the Russian Orthodox Church on K Barona. Some of those waiting are clearly more middle class than the usual crowd of last winter. I have seen a gradual reduction in cars parked outside our flats and a steady offering of parking places for rent. But these are small things. There are of course many winners in this game. Those who kept their jobs and the same wage are now much better off as clothes and food have dropped in price. The supermarkets are getting their act together and competing. That is good for all of us.

But through all this there has been a remarkable good humour. There has been no tension between the communities despite the crass language based acts of some of the politicians. I suspect the Russian speakers value the freedom in Latvia and the EU and realise that whilst there is much to be unhappy about here, there is also much to celebrate. We just have to hope that the Government finds the courage to reform badly run ministries rather than raise taxes to pay for them. But I am not sure they have the courage or the skill.

LATVIA - UPTURN OR FALSE DAWN

Last week I saw my first Porche driving through Riga for at least a year. It was as remarkable for being alone as was the tens of them that drove the roads 3 years ago.

I haven't written anything for months but quite simply, there has been so little change to report that it has simply not been worthwhile. But the signs of change are here now. The deep winter snow has disappeared leaving masses of litter, dog pooh and cigarette ends and spring has brought out the first short skirts. Riga transport is trying hard to repair the trams lines distorted by the winter snow and ice. People are eating ice creams already.

The real change is that new shops are opening up all over Riga. The price of renting property has dropped dramatically and it is now worth the gamble. The banks are also more willing to lend. The tourists and businessmen are still here and VAT is being cut for the tourist industry. The Nasty Party has left Government in a gamble to win popularity. We shall see in the October elections if they succeeded.

But not everything is going well. There are still nearly 30% unemployed, people are leaving the country in droves (or trying to), there are more beggars than ever - back to 2000 levels, and there are more flats than ever for sale and rent - at increasing cheap prices. But we have more severe cuts to come in national finances. Add to this the fact that the money from the EU and IMF has to be paid back sooner or later so we have to get more tax back to do this. But where will this money come from? Many companies I know are hurting because serious money for expansion and change is not forthcoming. Several commentators recently have highlighted the fact that there is no stimulus thinking at all in the government policies to get business moving. That is not to say they want lots of free money but just some sensible reforms to make life easier. I have been trying to open another company doing Health Tourism (www.baltichealthtourism.co.uk )and it still took 8 weeks to manage. The bureaucracy is mind numbing. Process still takes precedence over result.

The really good news is that prices have finally reached realistic levels and most of the stupid shops have gone bankrupt. But the national money is still at the wrong value, perhaps as much by 40%. I realise this completely after trips to Bulgaria and Ukraine in recent weeks. Their currency value is much more realistic than here.

We now have a long summer before the elections. I suspect a summer of nonsense. But there is no assurance that the Latvian public will vote for an honest future. Corruption is still endemic here and many people simply don't care. We shall just have to wait and see what sort of future the silent majority wants - but I will not hold my breath for a better future.