In today’s dynamic world, competition in all sectors and at all levels is tough, and inevitably, will be more so in the future. For a competitive Malta to survive, it must essentially be able to produce goods and services that not only meet the test of international markets but also maintain and increase the real income of its citizens.

Undeniably, the high dependence of the Maltese economy on exports is conditioned by the relatively very small domestic market. Without exports, producers would have to rely on the local market only, and as a result income per capita and employment in Malta would be much lower than their current levels. Furthermore, Malta, like other small states, is not able to influence international prices and the only option open to it in order to export its products is to become always more competitive. Our logistic position entails high costs in transporting merchandise and importing raw materials. These considerations leave no option for the present Government but to continuously strive to improve our island’s competitiveness, principally by enhancing productive efficiency, if it is to succeed economically.

One must always bear in mind that Malta competes on two levels i.e. against other countries (a) in Europe and (b) the rest of the world. In the most recent Global Competitiveness Report produced by the World Economic Forum,[1] Malta was ranked 41st out of 148 countries, with data mostly pertaining to 2012. When compared to other small island states, Malta did relatively well, better than the neighbouring island state, Cyprus, which ranked 58th. Compared to the other EU member states, Malta ranked 14th among 27 countries. Yet, the vision of our Government is that of being the best in Europe and therefore hard work lies ahead.

When respondents were asked by the compilers of the Global Competitiveness Report to select the problematic issues for doing business in Malta, the highest three scores received related to “inefficient government bureaucracy”, “access to business financing” and “inadequate supply of infrastructure”. Most of the low scores for Malta related to the operations of the Government. Relatively bad rankings were received with regard to favouritism in decisions of government officials, burden of government regulations, government debt, quality of roads, quality of electricity supply, transparency of government policymaking, number of procedures to start a business and number of days to start a business.

Other low scores were also associated with private business. These included reliance of professional management and willingness to delegate authority efficacy of corporate boards and degree of customer care. However, other aspects of the economy were assigned good scores, including financial market development, and technological readiness.

The above are all issues that must be tackled, the sooner the better. It is no coincidence that in its electoral programme the Labour Party insisted that, once in Government, it would work for economic growth that reaches everyone also through the prioritisation of government spending, measures aimed at cutting down bureaucracy, start up tax credits for small businesses, the Family Business Act, incentives to reinvigorate the property market, investment in the maritime industry to establish Malta as a Mediterranean Maritime Centre, more opportunities in the educational sector, incentives to attract high- quality tourism and investment in higher-tier manufacturing. Furthermore, this Government set up the Global Residence Programme, a programme aimed in boosting the property market while attracting foreign income towards Malta.

A big emphasis has been placed on the reduction of costs and namely the reduction of 25 per cent on energy bills and five per cent on water bills and cheaper planning tariffs. Most of the above have already been put into practice during the last eight months. Meanwhile, the Government continues to work on improving and strengthening relations with countries within and outside the EU. In fact, Malta Enterprise shall be working in conjunction with the Ministry for Foreign Affairs and our diplomatic representatives so as to build a fully-fledged network that will serve as a platform to promote and assists Maltese businesses to tap international markets. We want our embassies to not only be responsible for diplomacy but also to transform into hubs for the promotion and facilitation of international business.

Way back in 2003, during a national conference on a competitive strategy for Malta, the participants, who represented all the social partners in Malta and civil society, agreed that the fostering of competitiveness is to a large extent an enterprise issue, and it is the individual firms at the micro level that need to be competitive in order to enhance national competitiveness. However, the public sector has a major role to play, not least of which by placing competitiveness on top of the policy agenda, and taking the lead in removing bottlenecks and excessive, no value-added bureaucracy whenever these occur. The Government has already introduced various initiatives to address these issues also working hand in hand with private stakeholders in various sectors.

Competitiveness has economic, social, political and international dimensions and involves many players in the economy. In order to increase prosperity, Malta must nurture its existing businesses and at the same time attract global customers. Our population is ambitious, well-qualified, hard-working, flexible and skilled. The Government is optimistic that with hard work and a proactive approach it can steer economic growth to the benefit of everyone.

edward.zammit-lewis@gov.mt

Edward Zammit Lewis is the Parliamentary Secretary for Competitiveness and Econmic Growth.

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