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.

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.

No taxi stories this week!

This week has been interesting for me with several business opportunities presenting themselves. All have been in partnership with Latvians and it showed me that the crisis has not dampened the energy or enthusiasm of everyone for doing new things. I just hope we can make some of them work. Sadly another friend has lost his job.

Yesterday was a good visit to the Latvian Chamber of Commerce. With a thousand members they are hopefully part of the solution to a revitalised Latvia. But a look at their handbook shows the huge gulf between the very few large successful companies and the huge number of smaller enterprises with fewer than 30 members. The chief Zanete Jaunzeme-Grende was full of positive ideas and thinking. She has trips arranged to China and Scotland soon, so hopefully they will both bring something.

I have had discussions with four good consultancy companies from UK who want to bring their reform experience and expertise to Latvia. I hope that soon someone will realise their value and use them.

The number of beggars and bag people is increasing daily. Luckily the weather is mild.

Taxi! How much to the airport please? 100lats - cheap at the price!

Ten yours after the last "taxi war" there is taxi trouble again on the streets of Riga. The stimulus has been the production of a fleet of Air Baltic coloured taxis operating out of the airport and trying to deliver (for now) a service that does not cost and arm and a leg.

For far too long, Riga taxis have been ripping off tourists, charging criminal amounts for the short journey too and from the airport. This has not been helped by the appalling bus service. Thankfully the new Mayor of Riga, Nils Ushakovs cut the ridiculous baggage charge on the bus route. The idiot inspectors were pouncing on unwitting tourists and fining them, thereby ensuring that they never darkened the doors of a Riga hotel again. Now at last something sensible is happening. Hopefully the Interior Ministry, police and Riga council will settle any political differences they may have and get us a taxi service we can all afford to use. I suspect that this may take some time though.

Ushakovs also this week went round the Old Town night clubs and read them the riot act. We shall see how much effect this has. At least he is trying.

So now the summer sales have finished and the new winter clothes are in the shops. Some clothes shops have started to discount already and I have seen 70% off already in several places. Sadly I cant afford to buy everything I want! It is clear that we still have huge overcapacity. There are enough jeans on sale to keep all of India happy, and there are more badly made and expensive cheap-cloth suits than Latvia could ever want.

Flat prices appear to be dropping more slowly this month. One reason might be that there have been lots of moves into cheaper flats already reducing demand. The medium priced new flat owners (most with larger debts) are hanging on and trying to avoid the inevitable. But when the utility bills come in many will have to bite the bullet to get a tenant. A Russian firm has gone round offering cash for flats in our block. I guess they have gone everywhere. I forecast a spate of cheap cash sales in about two months.

I have seen another couple of businesses not taking credit cards. I wonder when un-taxable cash will truly become King in Riga (as it is already in the regions).

The anti corruption bureau is now also inevitably being squeezed for funds. I would have thought that this was one of the last things that should go. It shows that the government still has not got joined up policies. There are far less important things to cut than this, especially at the moment with lots of free IMF money sloshing about.

More beggars - but in town still no children. This used to be a feature in the past. I guess the police are stopping them. There is though a growing number of clearly homeless mentally ill people roaming the streets. They are a terribly sad sight as they drag dozens of full plastic bags around. Many of these people, and the normal beggars are physically handicapped in some way which says much about the social system here. We have so so far to go.

THE DOWNTURN CONTINUES - DOWNWARDS

Arriving back from work in UK this week I expected spring to be in full swing so it was a bit of a shock to see that it was still snowing. Topsy turvy weather this year to be sure. I also noticed near the airport that the buildings under construction for the new business park were now lying idle. They look like concrete half finished works of modern art. This is sad because I went to the RIXPORT opening only 6 months ago amid great fanfares, grand speeches, cocktails and free umbrellas.

On the tram Friday I noticed a few more shops had closed and for the first time in years there was a beggar trying to convince the hard hearted occupants to give a few centimes. He was out of luck. The bus to the countryside has also become affected by the crisis. The drivers now go so slowly to save money that you have plenty of time to admire the snow covered scenery and look for deer and foxes. The downside is that you have to listen to Latvia radio 2 for longer.

But all in all the population seems to be holding up well. The wit and humour written as comments on the Latvian Internet portals show that they are more robust than most. But any country that survived the Nazis and the horrors of Soviet occupation should be able to last through this crisis, even with a government that shows no sign whatsoever that it knows what to do.