Malta’s economy is overheating and the time for incremental changes has passed, the Malta Chamber’s CEO has warned.
Marthese Portelli is adamant the country now requires comprehensive and immediate action to address its economic challenges.
“The country needs CPR. We need a government that connects, plans and reforms,” Portelli insists in an interview with Times of Malta.
In its pre-budget 2025 document published last week, the Malta Chamber of Commerce urges a shift in the country’s economic strategy towards high-value industries, improved governance, and more prudent management of public resources.
“We need to speed up the implementation process of all the decisions that need to be taken in the interest of Malta, some of which might not be exactly popular immediately in the short term but will be of benefit to the country in the longer term.”
“Malta is nearing breaking point, with full employment putting immense pressure on the nation’s infrastructure, particularly in areas such as traffic management and utilities.”
She says the Malta Chamber has long championed a transition from a labour-intensive economy to one focused on high-value industries.
While the influx of foreign workers has been necessary in certain sectors, Portelli contends it has done little to enhance the skills and expertise crucial to building a high-value-added economy.
To tackle these challenges, she advocates a sweeping overhaul of the education system, a stronger emphasis on digitalisation and automation, and a more strategic approach to attracting highly skilled foreign workers.
These measures are essential for Malta to reduce its reliance on population growth and move towards a more sustainable economic model.
The Malta Chamber is critical of the government’s handling of third-country nationals (TCNs – foreign workers from outside the EU) in the labour market.
In its pre-budget document, the Malta Chamber calls for a more selective approach, proposing caps on TCNs in certain industries, particularly those already facing oversupply, such as construction.
While acknowledging the need for TCNs in essential services and sectors such as tourism, Portelli warns against an unchecked influx that does not significantly contribute to the country’s skill base.
Portelli also questioned the government’s financial strategy, expressing concern over proposed tax cuts that the prime minister has described as historic.
“I just hope it will not just be another handout sent by post, first of all, because it is totally environmentally unsustainable, and also because we believe that if we need an impetus in spending power, it needs to be given gradually through salaries paid per year.”
She cautions against implementing these cuts without a clear plan to fund them, particularly in light of Malta’s current excessive deficit.
“Such fiscal measures could jeopardise essential public services and infrastructure projects,” she says.
A key recommendation from the Chamber is for the government to shift its focus from recurrent expenditure to capital investment. Malta’s infrastructure, especially in energy and transportation, is in dire need of modernisation, she says.
The Malta Chamber is particularly concerned about the current energy distribution network’s inadequacies, which are stifling economic growth and hindering the country’s ability to meet renewable energy targets.
Portelli supports a gradual reduction in energy subsidies, even though the Malta Chamber’s members stand to lose. She advocates for the savings to be redirected towards supporting companies and individuals investing in renewable energy solutions.
She also raised concerns about the Planning Authority’s continued approval of permits despite evidence of oversupply, suggesting the construction industry needs to be realigned to meet the country’s needs.
Do we need more shopping malls?
“Studies show us we have an oversupply of office space and yet the Planning Authority keeps issuing permits for office buildings. The same applies to supermarkets and shopping malls. Do we really need more?”
Portelli also called for the revision of the Strategic Plan for Environment and Development (SPED) which is four years late.
“We have a version dated 2015 which states that the document should have been revisited by 2020.”
Governance is another area where the Chamber sees significant room for improvement.
“We have consistently called for greater transparency and accountability in public procurement, suggesting a public procurement outlook that would detail the government’s spending plans for the next six to 12 months.”
Portelli argues that such measures would reduce reliance on direct orders and ensure a more competitive and efficient use of public funds.
She reiterates the Malta Chamber’s call for a moratorium on new hotel developments, citing the strain on Malta’s infrastructure and the need to prioritise quality over quantity in tourism.
“In Valletta there are boutique hotels which cannot operate properly because of the inadequate distribution network. We have had boutique hotels that had to switch off their lift if they have a kitchen operating in full flow. Is this the product we are offering,” she asks.
Throughout the interview, Portelli emphasised Chamber’s commitment to ethical business practices.
She advocates for the introduction of a whitelisting system to ensure that government entities engage with reputable suppliers and a blacklisting system to hold defaulting contractors accountable.
This, she argued, would protect both businesses and consumers by promoting transparency and ethical standards.
Few proposals taken up
Last year the Malta Chamber put forward 219 proposals, but only four – or the equivalent of 1.8 per cent – were taken on in full by the government. Likewise, only 20 per cent of the Malta Chamber’s 2020 document on good governance has been implemented so far.
And yet Portelli does not feel discouraged. Asked whether her organisation feels it has the government’s ear, she says “we feel that government hears us but does not listen to us properly. Implementation is not exactly there.”
One of the problems recently highlighted by the Malta Chamber is the frequent turnover in CEO positions at major government entities.
Insisting that CEOs should be appointed on merit and competitively and transparently, just like in the private sector, Portelli argues that “every time the top management of a government agency changes, we have to start from scratch. We cannot afford to continue repeating the same things year in, year out while nothing gets done.
“The traffic congestion is one such situation,” she says. “Years ago, we presented the government with proposals, but the gridlock keeps getting worse year after year. It gives us the sense that for the government it’s just a matter of plug and play.”