Malta performed worst in the macroeconomic environment, labour market efficiency, and innovation “pillars” of the report. Do you agree with this assessment and what steps do you feel are needed in these areas?

The Malta Chamber agrees with the assessment. In fact, it consistently states that there is clearly no room for complacency as the main fundamentals can exert negative repercussions on the country’s competitiveness through a potentially higher tax burden.

It is for this reason that in its Economic Vision and ahead of the 2015 Budget, the Chamber is proposing measures that enhance national competitiveness and consolidate public finances.

The Chamber regards innovation as a key component of competitiveness and in an effort to rectify the country’s slow progress in this regard, it has proposed the creation of a research and innovation hub for applied research on productivity; the establishing of Malta as a living lab centre and the creation of innovative financing vehicles to complement traditional credit channels amongst others.

At a macroeconomic level do you share the WEF’s poor opinion of Malta’s low level of saving, as a % of GDP, and its high level of government debt, as a % of GDP? Do you think that more needs to be done here or is the government currently implementing the right measures?

The Malta Chamber has long advocated the need for fiscal consolidation as a matter of prime economic priority. To this end, it is encouraged by the recently enacted the Fiscal Responsibility Act although it is disappointing that this piece of legislation does not elaborate on the plans to combat fiscal evasion.  The Chamber insists that fiscal evasion needs to be effectively addressed in order to ensure social justice, fair competition and macroeconomic stability.

Data clearly shows that Maltese citizens are saving less.  This means that in the long term there will be more people relying on public resources for their welfare. Malta is one of the few countries in the EU that does not encourage voluntary savings. Demographics are clearly not helping us. With most of us expecting to live for more than 20 years in retirement one can be young without money but one cannot be old without it.

Examining “Goods market efficiency” Malta is again ranked poorly for the number of procedures to start a business and the number of days to start a business. Do you share these concerns and, if so then what should be done to address them?

The Chamber is not surprised with this score that also reflects that from the World Bank (Ease of Doing Business Ranking).  Despite several attempts and initiatives Government bureaucracy remains most problematic and needs to be addressed.  We know, for instance, that it takes several weeks to register a VAT or an Inland Revenue number.  Local authorities must address these issues in a timely manner as is being done in other parts of the world that have realized that no one owes anyone a living.

Ranking “Labour market efficiency” Malta scores badly for the number of women in the labour force, as a ratio to men.  What more needs to be done to address this?

Despite its positive attempts, Malta’s overall female participation rate remains lower than average.  This means the economy is not firing on all cylinders because certain productive resources remain idle.  Besides, the effective measures taken thus far, most notably in the field of child-care provision, the Chamber continues to strongly propose the extension of school hours across the board in order to facilitate matters for working parents.

In the pillar of “Financial market development” Malta is scored badly against the “Legal rights index”. Are you confident that suitable legislation exists to protect investors and other market participants?

In the light of continuous developments at EU level, the Chamber believes regulatory safeguards are in place to protect investors’. We are aware of the recent introduction of new EU legislation aimed at enhancing investor confidence including the updating of the Depositor Guarantee Scheme and the MiFID 2 Directive.  In the light of these rapid developments, it is crucial that banks are given the necessary time to absorb and adjust to the new regulatory environment to ensure that financing flows to certain SMEs will not be negatively affected.

The WEF invited respondents to select from a list (below) the five most problematic factors for doing business in their country, and then rank them between 1 and 5. In the same way can you select your five most problematic factors for conducting business in Malta, ranked from 1 (the most problematic) to 5.

1) Insufficient capacity to innovate 2) Inefficient government bureaucracy 3) Inadequate supply of infrastructure 4) Inadequately educated workforce & Poor work ethic in national labor force 5) Restrictive labor regulations

On Thursday the government also published its pre-budget report. Do you agree with the government’s analysis?

In general, the Chamber notes that the Pre-Budget document reflects the Chamber’s proposals.  In fact, the Chamber’s input to this year’s Budget process is two-pronged and is aimed at strengthening the sustainability of public finances and safeguarding national competitiveness. 

With regard to the former, the Malta Chamber is proposing that Government addresses the abuse in undeclared economic activity/social benefits; eliminate wastages, bad planning and mismanagement of public resources.  Its proposals in this regard are driven by the overriding principle that wealth creation must precede wealth distribution.

Equally important is the safeguarding of national competitiveness to promote continued economic expansion. To this end the Chamber is advocating the elimination of self-inflicted bottlenecks to growth such as – amongst others - energy tariffs, transport costs, labour rigidities and the outdated COLA formula.  From a non-cost point of view, the Chamber is proposing certain competitiveness- enhancing measures in the areas of training and education; RTDI; and access to finance.

Is there anything that you would like to see the government include or change in its final budget?

Yes.  As happened last year, the 2015 Budget is being drafted under an excessive deficit procedure, which understandably leave less room for maneuverability.  This renders competitiveness all the more important because higher economic growth is needed to increase financial leeway.  Therefore, the Chamber would like to see effective action in relation to the reduction of commercial energy rates, creation of effective market surveillance mechanisms, the implementation of measures to reform COLA, investment in the area of training and education and finally giving Research and Innovation top priority.