Government priority to competitiveness in power tariff review considerations

Parliamentary Secretary Edwin Vassallo said yesterday that the government was giving priority to ensuring that a review of power tariffs would have the least impact possible on competitiveness and the business sector.

Winding up a three-day debate in Parliament on the implementation of the EU's Charter on Small and Medium Sized Enterprises Mr Vassallo said an action plan implemented by the government last year had enabled SMEs to successfully make the transition to a new scenario where Malta was part of the whole European market and new procedures had to be introduced accordingly.

Indeed, the government was continuing to improve its services to SMEs. A mechanism had been created for this purpose within the public sector notably through his secretariat, the Commerce Division, Malta Enterprise and the various regulatory authorities.

At the same time the government was insisting that SMEs also continue to improve their own services to clients.

The government had managed to put competitiveness on the national agenda and this was a top-most consideration in the way a revision of the power tariffs was to be drafted. Indeed, he wanted to assure the commercial community that the government was seeking the least negative impact possible on the business community.

Mr Vassallo said the new action plan, which the secretariat had drawn up, was aimed at consolidating existing SMEs, promoting entrepreneurship and create new jobs.

Ongoing communication with the commercial sector was very important for his secretariat, which wanted to be as responsive as possible to the sector's needs.

There was no doubting that the commercial sector was growing, but rather than boast, what he wanted to do was marshal resources to bring about further growth.

Between December 2003-2004 jobs within the SMEs sector grew by 1,600 and the growth rate was faster in the year up to May.

It was important that everyone recognised the competitive ability of the people in the commercial sector. His appeal to all sectors of the public sector was to continue to raise the level of service it gave SMEs. Progress had been made in the synergy between the various departments and agencies somehow linked to SMEs and this process needed to be pushed further.

Bureaucracy had been reduced, but he sometimes felt like one was dealing with a cancer, cutting a tumour at one end only for it to develop in another. Nonetheless his secretariat had succeeded not only to reduce bureaucracy but also stop some new bureaucratic measures in their tracks.

Such legislative and regulatory actions had been complemented by improvements in industrial estates and industrial zones. Some Lm3 million had been invested in the industrial zones of Mriehel, Handaq, Mosta and Zebbug in the past three years. That money went for the surfacing of 60 new roads and the provision of facilities such as new power sub-stations. The challenge now was for these zones to be kept cleaner Mr Vassallo said he would not deny that rising prices, particularly the cost of electricity, was creating problems for businesses. His secretariat, while working to keep costs down, would also be closely monitoring the situation along with the various organisations which represented SMEs.

His secretariat also wanted to see entrepreneurship introduced in schools and, eventually at the university.

The bottom line, however, was that one needed to "humanise" commercial activity. Commercial activity should not just be about bottom lines but about the people who made up this sector. The government's activities were addressed as helping people, and businesses should likewise give due consideration to their clients as well as their social responsibility, Mr Vassallo said.

Earlier in the debate, Competitiveness Minister Censu Galea said the report on the implementation of the European Charter on Small and Medium-Sized Enterprises was a roadmap for governments to improve the business environment of SMEs.

The government had long acknowledged the importance of SMEs in the economy and sought to improve their conditions. A case in point was how bureacractic measures had been reduced in several areas, such as the issue of trading licences. A distinction had to be drawn, however, between the bureaucracy that was needed, and its wrong implementation. Sectors that needed to employ bureaucratic measures should strive to be more efficient. For example, it was illogical to require a person to fill in forms and applications even though his application would still be refused.

The EU report highlighted education, training and technology as being among the most important elements for SMEs to grow. The Nationalist Party was investing heavily in all three. Malta was undergoing a radical change in the use of technology and this needed to be exploited in the best interest of businesses, and in the long run, of the economy.

Much remained to be done, however. Internet access and e-business activities needed to increase. It was SMEs which would benefit most from the opportunities that e-business provided.

Mr Galea also referred to various initiatives by the Consumer and Competition Division, such as the opening of the 'Solvit' office and the European Consumer Centre, which has been introduced in Malta to help consumers when they transact in EU countries.

In parallel with these initiatives, the infrastructure in industrial estates and zones had been improved and new industrial zones were being set up for SMEs. However, such zones still suffered from the irresponsible acts of persons who dumped their waste wherever they liked.

Mr Galea also underlined the important role of the Malta Standards Authority to raise the standards of local products.

He said the government was aware that there was more work to be done, especially to reach the goals set out in the Lisbon Agenda on competitiveness. The Competitiveness Ministry would continue to work for the benefit of small and medium enterprises and the self-employed in a bid to register further progress in next year's report.

Education and Employment Minister Louis Galea said SMEs were working in a difficult and complex economic environment stemming from globalisation and new trade rules in an open market.

Europe now insisted on an economic model with a social dimension which, despite its own defects, created the most wealth, growth and a good standard of living while respecting the norms of democracy, human rights, the rule of law and individual freedoms.

The new scenario meant Maltese businesses were more affected than ever before by developments in the world economy. That included oil price rises and even the shortage of iron caused by strong demand in China.

Dr Galea said that one should not underestimate the importance of "traditional" small businesses. Although the economy depended heavily on activities which created added value, one had to strengthen small traditional businesses which could also contribute to the expansion of the economy.

That SMEs were on the government's agenda was underlined by the fact that a parliamentary secretary had been appointed for the purpose and the voice of the self-employed was considered when policy was planned. Dr Galea also underlined measures taken to reduce bureacracy.

Nationalist MP Robert Arrigo said the government's strategy was to ensure that small businesses in Malta could operate effectively without interfering too much in this sector. It was very positive that at present there were 16,000 self-employed in Malta the highest number for, at least, the past 10 years.

The new developments in the information technology and communications sector had contributed to the creation of more SMEs.

Mr Arrigo said he was concerned about the rising price of oil and asked whether this was going to affect Maltese SMEs. He invited the government and SMEs to examine the impact such an increase in price was going to leave. He also called on employers not to employ persons illegally.