The government should extend assistance to all businesses at all levels because the oxygen supplied by support packages is running out and the risk of further redundancies remains, the president of the Chamber of Commerce, Enterprise and Industry has warned.

In an interview, David Xuereb said businesses had helped the country grow through the taxes they paid over the past years, so they now deserved to be assisted by the government coffers to help them retain employment.

He said this was the number one concern for the chamber and all its proposals so far were not about retaining or protecting turnover but the retention of jobs and keeping redundancies to a minimum.

When asked why they needed to be helped once they had it good for so long, Xuereb defended the request for assistance and the misconception on profits.

“When companies profit, as they did, such profits are typically reinvested back into the business to grow that business.

“This is the reason why the Maltese economy has grown so fast, thanks to tax paid as a result of success but also a result of reinvestment of profit into the business. If profits were retained by businesses, then the economy would stagnate,” he said.

“So, of course, there is a need, at this point in time, for the government to support businesses through its coffers.”

After the first package of assistance was announced, the chamber had estimated redundancies at around 50,000 to 55,000 but this estimate was slashed to 23,000 after the second package. However, there is fear that redundancies will increase because of serious concerns by businesses and because the help given so far was not enough.

'Oxygen is running out' 

According to a recent survey, only a quarter of businesses said they were confident they would return to the pre-COVID-19 level after the pandemic is over.

The oxygen they were supplied with is running out and further measures are required

“The oxygen they were supplied with is running out and further measures are required. Businesses took the opportunity to stop and think and many of them managed to come up with different solutions to keep going while retaining employment. The help was great but not enough. We expect more measures to benefit more and more businesses, which were left out. Real estate and those selling wines and spirits are just some examples. There are many, many more,” Xuereb said.

The banks must ensure that liquidity reaches businesses while keeping the cost of borrowing low. Furthermore, banks should not unnecessarily withhold loans for projects.

Most companies were operating with a few weeks of liquidity, so timeliness with providing liquidity was of the essence, Xuereb noted.

What the Chamber is seeking

In this extraordinary situation, he said, the chamber was also suggesting the relaxation of rules of insolvency, enabling business owners to focus on salvaging their businesses without fear of eventually being accused of wrongful trading.

Moreover, it was proposing that rental fees payable to Malta Industrial Parks are waived and those to the Lands Authority suspended, with suspensions applicable also to sub-leases. On commercial rents, an equitable system was being proposed between landlord and tenant stipulating that, during the crisis, the rent is reduced by a pre-determined percentage and, if not paid, it becomes payable in full.

Xuereb said that, during the lull, companies should take the opportunity to reskill and retrain their staff. Malta Enterprise should tap into and possibly increase funds for this purpose.

He said the tourism and retail sectors were the hardest hit in his view, with a knock-on effect on other ancillary services such as hotels, English language teaching schools, taxis and so on. When other non-essential services and non-essential retail outlets were closed, these were impacted too.

“Certainly, the economic mood and the ability to keep afloat start to become more difficult. People were focusing on trying to stretch themselves to retain employees or to try and reinvent themselves. However, the biggest effort over the last couple of weeks had been focused on the need to preserve business.”

“We put in so much work, expressed opinions and made suggestions to the government on how we are actually going to ensure our businesses are preserved and not only weather the storm but, more importantly, to be as strong as possible to be able to jump at the first opportunities as soon as all this dust settles,” he said.

Planning for the future

And while some businesses are not seeing light at the end of the tunnel, the chamber is. Seeing growth after the pandemic, it has put together a think tank where the best entrepreneurial, business and economic minds on the island are sitting together to discuss life after COVID-19.

“The effect of this pandemic is going to be long driven. The vaccine will terminate this uncertainty but it’s going to take some time for it to find its way to the market,” Xuereb said.

“In my mind, it will be way beyond the end of this year. So this team is looking at the crystal ball, which is rather foggy, but trying to see what lies inside that. Twelve people literally thinking outside the box.

“The think tank is supported by a number of thematic roundtables, about 50 or 60 people contributing to these roundtables.

“Again, the very best in the industry all contributing to see what there is at the end of this famous tunnel and how we going to reverse engineer it.”

He said the chamber was encouraging members to draw up new business plans and invest in good governance within their own firms so that, once the pandemic is over, they can hit the ground running.

“We are putting together what we hope will be a resilient business community not only to take on this particular major shock but rather inspire a culture of stopping to think, to rejuvenate, to restructure, to re-engineer, to upgrade its equipment and come out of this stronger than before,” he said.

“We’ll be on top of the game and, therefore, ahead of our competition if we manage to do that. And this thanks to COVID-19.”