Bill to facilitate granting of trading licences

A Bill to amend the Trading Licences Act, currently being debated in Parliament, aims to facilitate conditions for retailers, Parliamentary Secretary Edwin Vassallo said.

He said the Bill was administrative in nature but included a new definition of a trade fair that would cover both the exhibition of goods and their sales. Another amendment was intended to help regularise certain trading activities that so far were not regulated.

The Bill provides that it shall not be lawful for any person to open or keep any commercial premises unless he holds a licence from the regulatory authority. It shall also not be lawful for any person to organise and hold a commercial fair from any premises or any street without the licence of the regulatory authority.

Mr Vassallo said that slowly but surely the government was succeeding in cutting down bureaucracy, although there would never be enough of such cutting down.

The commercial sector was continuing to grow and such an important source of employment should be accorded all the recognition and cooperation it deserved.

Joe Mizzi (MLP) said that apart from trading licences there were other bureaucratic problems that made it difficult for traders to expand their business, the Mepa process being one of them.

It was not always true that increased competition made for lower prices. One aspect of competition was that big firms could form an unofficial cartel with the result that the smaller businesses would eventually disappear.

Mr Mizzi spoke against the privatisation of Sea Malta, saying it had an important role for Malta's international trade. If operation of Sea Malta's routes were discontinued, Maltese importers and exporters would have to use alternative routes at resultant greater costs.

Businesses, Mr Mizzi said, were closing down not only because of bureaucracy but because jobs and investment were declining and the people had less disposable income as a result.

Seeking to solve these problems was more important than simply amending the system of trading licences.

It did not make sense that the VAT Department could take possession of a businessman's assets because he could not pay his dues on time. If anything the department should let the businessman hold on to his assets so that he could work towards paying up. This was exactly the sort of arrangement that the government was trying to reach with importers of medicines to whom it owed millions of liri.

Labour MP Roderick Galdes insisted that the Mepa permit consideration process needed to be reviewed. Current proceedings were too lengthy and inconsistent, he said, and they were disheartening traders with long delays even when the proposed developments had no impact on the environment. He also called for an easing of change of use provisions. Such provisions needed to be made realistic in line with changed circumstances for the businesses involved.

Mr Galdes said it was becoming increasingly difficult for street hawkers to operate, especially as they could not be within 75m from a shop.

The Labour MP said SMEs needed to be supported, through reduced bureaucracy from government departments. The government needed to clearly identify the needs of the businessmen and create the right operational framework.

Joseph M. Sammut said there was lack of coordination within the government and between the government and the people to the business sector. The people felt the government had not delivered on its promises to the business sector. The sector was suffering serious cash flows problems but the government was continuing to impose burdens. Within the government itself, it appeared that no debate was held on amendments to the VAT Act which gave the VAT Department special privilege on hypothecs to collect overdue money. This was a measure which reflected government privilege and had raise the ire of the banks which would be expected to call in their lending since they no longer enjoyed the security on loans they had before. All this would further fuel stagnation and uncertainty.

Dr Sammut said one agreed with measures to improve the issuing of trading licences, but what was the purpose of this Bill when the trading sector was stagnant? Could it be that unemployment was growing and the government wanted more workers to become self-employed? Could there be demand for trading licences from foreigners wishing to work here as self-employed and the government wanted to ease procedures?

Dr Sammut said trading licences should not be issued haphazardly at a time when the sector was stagnant and there were cash-flow problems. Those seeking to become self-employed should be helped to understand what they were going in for. He felt that one should consider conducting a study on whether trading licences for particular business should be issued on the basis of population density, as was done in the case of pharmacies, although one had to respect the principles of competition.

Dr Sammut said that providing trading licences or new areas for industrial activity was not enough. The government needed to create a better climate for business including clear direction, certainty, easier access to credit and an educational set-up that helped business.

It was indicative that trade fair exhibitors had reported a drop in business this year. Indeed, the drop in business activity was also noticeable in restaurants, tourist areas and even in the way several outlets have moved their sales forward.

Uncertainty was created when the Inland Revenue Department persisted in claiming overdue tax that went back 20 years when the prescription period had lapsed.

Dr Sammut said the economy needed to be boosted through improvements to the tourist product, including better cleanliness, and better marketing.

The government needed to tackle the problems that were leading so many firms to close down their business or lay off workers.

Dr Sammut said the economic regeneration plan penned by the Labour Party would set direction and instil the certainty which the business sector and the country needed.

On access to credit, Dr Sammut said credit was the cornerstone of trade. One could not tell the banks what to do, and the new amendment on collection of VAT would not help matters. But when new businesses were viable, one should consider a scheme of assistance from Malta Enterprise.

The government needed to consider the needs of those self-employed working in the agriculture sector.

Concluding, Dr Sammut noted that rather than imposing new burdens on the private sector, the government needed to tackle corruption and inefficiency, such as the way no tough action was being taken against an employee of the VAT Department who, since 2002, had not issued any assessment or appeal decisions, a situation that had cost the department thousands of liri in lost revenue. This person was undergoing proceedings before an internal disciplinary board and he would be transferred elsewhere, as if nothing had happened.

Joe Cassar (PN) said this bill built on legislation enacted two years ago which had improved the way trading licences were issued.

The opposition was obsessed that the Nationalist government was doing everything wrong. Yet official figures showed how the number of self-employed was continuing to grow. All statistics showed that the sector had progressed.

Unfortunately, the government was blamed for whatever happened. When licences were not issued, the government was accused of bureaucracy and when these were issued it was accused of issuing permits haphazardly.

Dr Cassar welcomed the fact that regulation on hawkers was being improved. It was also a good thing that the head the Licensing Advisory Committee would not necessarily be a civil servant.

The main idea behind the Bill was to make for a simpler and less bureaucratic process for those who wanted to start a business. When matters were simplified, people were encouraged to observe the law since it was easy for one to regulate oneself and be protected.

Opposition leader Alfred Sant said Parliamentary Secretary Edwin Vassallo might be doing his best for small businesses, but he lacked political clout. He said the government in general needed to set economic direction and strengthen the network of micro enterprises while investing more in industry and tourism.

The Maltese economy had the highest inflation rate and the lowest economic growth rate in Europe.

He said the government should not continue to impose more costs on businesses and a strong attempt should be made to reduce bureaucracy and excessive regulation.

He recently visited Ta' Qali crafts village and was shocked at the terrible state it was in after so much talk on its rehabilitation.

Clearly, SMEs should not be regarded as a sector bent on tax evasion. Most small businesses obeyed the laws and deserved assistance. Unfortunately, for many of them less, business had declined so much that they were only working part-time.

What the business sector needed was confidence and flexibility to enable them to get going again, Dr Sant said. A full report will be carried tomorrow.

Other speakers will be reported tomorrow.