Imports of key commodities to Malta from Ukraine and Russia are critical, with certain products highly exposed to shortages and price hikes as a result of the war, the Malta Chamber of Commerce has warned.

The manufacturing sector is particularly vulnerable, the chamber warned, as Russia’s invasion of its neighbour causes major disruption to world economies.

Foodstuff manufacturers are now highly exposed to shortages and price hikes due to their concentrated reliance on Ukraine for items like rice starch, which is entirely imported from the war-torn country. Other products Malta imports from Ukraine include oats, maize starch and crude sunflower-seed oil, each making up over 80 per cent of total imports.

Manufacturers involved in packaging are also “at risk” due to their reliance on Russia for their supply of kraftliner, uncoated paper and paperboard, according to the exercise conducted by the Malta Chamber, in collaboration with the National Statistics Office. This was carried out to ascertain the degree of exposure of Maltese trade flows to the ongoing crisis in Ukraine. It found that the risk of compromised supply is especially concerning for hydrocarbons, cereals and grains, with risks also on the export side.

Tables showing the imported and exported products that are most at risk. Source: National Statistics Office

On the importation front, the statistics show a secondary impact also on Malta-based importers of finished and semi-finished goods, especially with regard to foodstuffs such as pasta and confections.

Malta-based manufacturers involved in the production and exportation of welding machinery, small unpowered water-going vehicles and garments are particularly at risk of losing a significant proportion of their business activity, the Chamber warned.

Machinery and apparatus for welding to Russia make up 98 per cent of the total exported from Malta, the statistics show. The conflict, the harsh sanctions and the freezing of economic relations with Russia mean that Maltese businesses will need to identify alternative avenues of supply to continue serving their clientele and maintain their revenue streams, the Malta Chamber said.

The war is developing to coalesce with the ongoing global supply chain and the European energy crisis to further threaten and hinder the viability of trade flows, while also contributing significantly to inflationary pressures that are already aggressive in their own right.

Chamber president Marisa Xuereb

“The Maltese economic sector that will be affected the most by the ongoing conflict is manufacturing, which is being hit on both the importation and exportation front,” chamber president Marisa Xuereb said. “This industry is already being hard-hit by supply chain issues and the Ukraine conflict is simply exacerbating matters,” she said.

Xuereb called for three instruments that could significantly aid Maltese industry: the introduction of temporary state aid concessions targeting the most affected industries; liquidity assisting instruments such as grants and subsidised loans; and the establishment of a common purchasing facility to assist in the procurement of these key imports from alternative sources.

The Maltese economic sector that will be affected the most by the ongoing conflict is manufacturing, which is being hit on both the importation and exportation front- Malta chamber president Marisa Xuereb

NSO data on imports to Malta from Russia and Ukraine last year showed these amounted to €53 million, for anything from live insects and handbags to wheat and plywood. Of these, €47.5 million worth were from Russia, with the remaining €5.9 million were from now invaded Ukraine.

In 2021, gas oils from bituminous minerals from the Russian Federation amounted to almost €36 million, making up 29 per cent of total imports. Motor spirits and antiques followed, with imports amounting to €3 million each, according to the NSO statistics. They show Malta turned to Russia for anything from kraftliner and uncoated paper to frozen herrings. Over €700,000 worth of wheat and the same amount for fish were imported from Russia last year.

Maize starch imports from Ukraine totalled €1 million, with roughly the same amount spent on varieties of sunflower oil. Wires and cables from Ukraine added up to over half a million euros, as did inflatable vessels and motorboats from the country. Washing and air conditioning machines, fuel wood and pneumatic tyres were all imported from Ukraine last year.

Printing components are imported from both countries, as well as clothing and accessories, wooden furniture, swivel seats, electric water heaters and a whole range of other products.