Opposition calls for better support services for industry

Members of the opposition yesterday called for better support services for industry and greater efficiency at Malta Freeport during the budget debate on the Ministry for Economic Services.

Dr John Attard Montalto, opposition spokesman on economic services, said efficiency at Malta Freeport was still too low at 17-18 container moves every hour. It should be 30 moves an hour, as it was in Asia, despite inferior equipment.

"We can raise production if we offer sensible incentives to the workers based on the number of moves," Dr Attard Montalto said.

The freeport's hinterland also needed to be better exploited, in association with a strategic partner in the warehousing sector, ideally accompanied by a feeder service.

Dr Attard Montalto said an advantage Malta had over competitors was that it offered factory buildings to investors and not just land. He would urge the government not to raise factory rents because they were a valuable incentive.

The opposition, he said, had not opposed the Business Promotion Act, but a Labour government would amend that law to introduce new, more imaginative incentives to attract foreign investment.

Dr Attard Montalto said the opposition was against the merging of Metco, the MDC and IPSE because, while coordination between the three was important, they had different roles and they should therefore remain autonomous. Keeping them autonomous would enable them to better focus on their respective roles.

Dr Attard Montalto also underlined the importance of support services for industry. It was useless having attractive incentives if the power supply was not reliable, if there was a skills shortage or if bank interest rates were not reasonable.

The banks in Malta needed to be flexible in today's highly competitive environment. Industry needed help, not "call-ins," and the banks should exercise a sense of responsibility unless they wanted to kill the goose that laid the golden eggs.

The government clearly could have done more to direct the educational sector to the needs of industry, particularly in the middle management and technical sectors. He felt that MCAST should study the requirements of industry and draw up tailor-made courses accordingly.

The government, he added, should also forge a closer partnership with institutions such as the FOI, the GRTU and the Chamber of Commerce, as well as the trade unions. It was better that all agreed on changes which the industrial sector needed to keep ahead of the competition.

Dr Attard Montalto praised Brandstatter's move to Hal Far and welcomed the work being done in that industrial estate. Indeed, the upkeep of all industrial estates should be improved.

He observed that Malta's domestic exports had dropped in the first nine months of this year while emerging economies were registering fast growth. All this showed that Malta should seek out more areas of activity, markets and joint ventures, such as with China, where industry was taking giant steps forward.

Dr Attard Montalto said the crafts sector in Malta was massively under-utilised. He reiterated his appeal for Fort St Elmo to be used as a crafts village, a move which would also lead to the rehabilitation of the fort and serve as an attraction to tourists in Valletta.

Malta needed to make use of all its resources together and not in isolation. To give another example, Malta Drydocks should increasingly focus on cruise liner repair.

Malta also needed to cut its bureaucracy because this was a disincentive to industry. The Planning Authority should not be insensitive to industry's needs. He knew of cases in the past when the PA's unreasonable objections had cost Malta foreign investment.

Malta, he said, needed trademen's parks for SMEs of the kind started by the Labour government, and they needed to be backed by a proper infrastructure, including roads. Unfortunately not much had been done at Luqa in this regard.

Turning to parastatal companies, Dr Attard Montalto said such companies still had an important role in the country, although efficiency needed to be improved. The government should not replace the private sector or compete with it, but, rather, it should act as the regulator. Nonetheless, some of the parastatal companies had a strategic role.

In the case of the non strategic companies, such as Interprint, wouldn't it have been better if it was integrated with the government to become the government printing press, instead of competing with the private sector?

Sea Malta, on the other hand, was providing an essential service and the government should continue to have a controlling interest in it.

While some non-essential companies could be privatised, the interests of the workers should always be given top priority.

Concluding, Dr Attard Montalto called for Malta to be creative to better exploit various sectors and seek out new ones. The former, he said, included the film industry, where Malta had a future. Another was the cruise liner industry.

Dr Louis Buhagiar (MLP) said the budget was not tackling the economic problems Malta was going through.

It did not include new measures to attract foreign direct investment. Indeed the tax burden would rise by Lm26 million. Prospects for job creation next year looked dim.

Dr Buhagiar said an FOI survey had shown how industrialists had a low opinion of service providers, primarily Enemalta, the Water Services Corporation and the MDC despite their central role in the industrial sector.

The large number of power cuts was unacceptable after so much investment had been made in the power sector. The chairman of Enemalta had said that another combined cycle plant was needed for greater generating capacity, but the budget did not provide any funds for this new plant. Neither were there new funds to improve power distribution.

Dr Buhagiar recalled that Malta had given the go-ahead for the use of its continental shelf for a gas pipeline between Libya and Italy. The government, he said, should have held negotiations so that the pipeline could be deviated to Malta, rather than having another gas pipeline from Sicily to Malta.

Intervening, Economic Services Minister Josef Bonnici said both options were being studied. The pipeline between Libya and Italy would be 40km away, in international waters and there may be technical difficulties for Malta to link up directly with it, although the possibility was still being studied.

Dr Buhagiar said it was laughable that, according to the government, Enemalta would absorb the newly imposed VAT on gas and power, when it was in such dire financial straits. The people knew that eventually they would end up shouldering the burden. This measure amounted to a shifting of part of the government's deficit from the government to Enemalta. This was also a measure aimed at aligning Malta with the EU acquis.

Another farce in the budget was the reduction of taxes on cars that operated on electricity, when there was only one such car in Malta so far. Why hadn't the government further reduced duty on solar heaters? The reduction of duty on energy efficient appliances was welcome.

Dr Buhagiar criticised the government for putting the cart before the horse in the water sector. Excessive investment was made on reverse osmosis plants before progress in the distribution sector. Now the RO plants were working at half their capacity but there were no funds for much needed storage capacity to take water from Pembroke RO plant.

Turning to Maltacom, Dr Buhagiar said consumers were not being well treated. There had been billing problems, and now bills were being issued in quick succession over Christmas. Maltacom was seeking to reduce tariffs for overseas calls while restructuring connection fees and the tariffs for local calls. He hoped this indecision would not last long, and consumers would not suffer.

Notary Joe Cilia (MLP) said budget measures for SMEs announced last year had not been effective. Indeed, 95 per cent of SMEs had not been eligible for them because they employed less than the minimum required employment level of five persons. The measures announced in this year's budget extended eligibility to SMEs having a higher turnover, yet the same SMEs would remain excluded because the employment threshold had not been lowered.

Dr Cilia observed that half of the import levies had now been lifted, but had consumers benefited? While prices were supposed to have gone down, they had actually gone up.

The Labour MP said the budget measures that made VAT penalties more reasonable were welcome, but it was an admission of the mistakes made in the past which had compounded the problems of small businesses.

The government was saying that tax refunds would be quicker for SMEs employing at least five people. But surely those employing fewer workers also had a right for government efficiency.

Ms Marie-Louise Coleiro (MLP) said consumers had, at least, the right to basic needs. But under this government the cost of living had soared, with new measures being taken without prior assessment of their impact. The Retail Price Index had risen by 10 per cent in four years, according to official figures, while cost of living increases amounted to a disproportionate flat rate of Lm6. The elderly only got Lm4. Now the EU was only offering a seven year transitional period before the introduction of VAT on food and medicines. That would further compound the situation of the 15 per cent of the population who risked poverty, including 55 per cent of single parent households.

Ms Coleiro complained of lack of law enforcement and inadequate training of inspectors on market surveillance. Yet funds for training would decline further next year, she observed.