Speech by Anton Borg, president of the Malta Chamber of Commerce, Enterprise and Industry, on occasion of a special Council meeting with the Prime Minister
I start by thanking you, Prime Minister, for accepting our invitation to this special Council meeting of the Malta Chamber. We genuinely appreciate the opportunity to have a frank and open discussion with you and your Cabinet ministers.
There is no doubt that amid a very turbulent international climate, our economy is currently experiencing strong economic growth overall and in particular in certain sectors such as tourism, real estate, manufacturing and the scientific and technical sectors. The resilience of our economy is acknowledged by the European Union as well as by major independent credit rating agencies. However, as the Chamber is always very quick to remark, our buoyant momentum must not be taken for granted. Indeed, we are experiencing a very unique Presidential election in the US, uncertainty in Turkey, continued turmoil in Libya and a looming Brexit in a European Union that continues to be battered by terrorism at its core. All these and other factors could affect our economy which is open and vulnerable to external shocks.
Around this Council table we have discussed and supported various strategies taken by your government in the interest of consolidating the economy - not least in meeting external challenges as well as in promoting Public Private Partnerships. Not only have we supported this approach to the extent that we have directly participated in new partnerships with government, but this Council has declared its willingness and is looking forward to take on new challenges in this respect.
Prime Minister, our Council is also appreciative of your stance in tackling issues related to income distribution and poverty. As you are well aware, we have supported the Active Labour Market Measures taken in this country with a view to ensure social justice between those among us who, on the one hand, genuinely cannot contribute to our country's productive capacity and those who, on the other hand, have for many years, simply opted to try and live on free lunches.
Your bold approach in implementing "Make Work Pay" reforms driven by the Employment and Training Corporation is delivering tangible results and these are being reflected in our national employment statistics. The Chamber wholeheartedly supports the new direction taken by the Corporation in this regard and the complementary re-branding exercise which reflects the revolution in the organisation's approach towards tackling a perennial problem of abuse.
We are also satisfied to note that this culture of abuse is being tackled in a sensible and reasonable manner that supports a positive culture change on the part of a small section of our population. Of course, besides, the "Make Work Pay" approach, the positive results registered were, no doubt, supported by the situation of excess demand for labour across all categories of employment which has necessitated an influx of foreign workers. In the process, those who do not want to work as a matter of choice are being exposed. Social justice necessitates that these people should not be supported by those who work and give their honest contribution to the country's economy.
In this vein, Prime Minister, our Council also supports your government's outlook in tackling poverty - a problem which we acknowledge to be real but which we calculate to be contained to a manageable number of workers. We commend you in your stance which has, so far, refrained from taking the easy solution and submitting to the popular call of raising the minimum wage. It is unrealistic to assume that the minimum wage can be altered in isolation as doing so will, undoubtedly, trigger a realignment of all salaries across the whole economy. The minimum wage is, of course, not the sole determinant of competitiveness but it must be treated with utmost caution as altering it may lead to far-reaching effects across the economy and can affect our socio-economic balance. Even so, we strongly believe that any benefit will be short-lived and calls for further increases will be repeated in no time landing us in a dangerous vicious circle.
Our Chamber is appreciative of your government's support in the preparation of a technical report on mitigating the competitive pressures faced by industry in peripheral and island regions of the European Union. A special word of gratitude is also due to the Deputy Prime Minister for his personal intervention. We recently met two of the distinguished professors who have been engaged to undertake the study. Together we have charted the implementation of the study with planned actions and deliverables. We are confident of presenting the findings of the study to you in December of this year with a view for these to be in hand during Malta's Presidency of the European Union and in time for the review of State Aid Regulations in 2018.
On the subject of Malta's Presidency, I am encouraged by the strong spirit of collaboration shown by your government towards our Chamber and the private sector in general. Besides your good self, Prime Minister, I must also single out Minister Louis Grech and Parliamentary Secretary Ian Borg for their kind support. We are looking forward to co-ordinating high-level talks at Castille later this year and indeed throughout Malta's Presidency with the Presidents of BusinessEurope and Eurochambres. This besides other initiatives we are planning through the Malta Business Bureau and with our kindred employer organisations.
Competitiveness Issues
Prime Minister, we are taking this and similar initiatives because, as you know, we are very protective of our country's competitiveness. If we are to guarantee continuous, sustainable, economic growth for our country, we must ensure that national competitiveness must remain a priority and this is why we are always there to champion its cause.
In our view, competitiveness is determined by cost-related elements and non-cost elements such as research and development, the country's reputation, quality as well as the constant upgrading of the country's human resources. All factors that contribute to our competitiveness need to be constantly fostered and nurtured.
With this in mind Prime Minister, in the interest of safeguarding and strengthening the economic achievements we are currently enjoying, please allow me to stress some concerns and recommendations in going forward.
This Council, and indeed the Maltese business community strongly feel that matters relating to economic and financial policy must be kept as distant as possible from political controversy to ensure that no investment or potential investment is affected by political uncertainty. This recommendation will undoubtedly hold more weight the closer we get to the next election campaign. We feel that both sides of Parliament should find more common ground on factors that shape our economic well-being and here, our Chamber is willing to play its part if you feel this is at all required.
Prime Minister, a strong economy depends on sound policy making, good governance and effective enforcement of the rule of law. You yourself are well aware of the Chamber's unwavering principles on such matters. All this, in turn, depends on strong institutions and an efficient and effective public service. Consequently, we recommend improved recruitment procedures when appointing top positions in order to ensure that our national entities continue to enjoy the required and deserved respect of the local and international business community. We feel that people should be appointed on the basis of meritocracy rather than on their political allegiance. We also strongly feel that once people are appointed to public office, they should behave apolitically at all times even in their own free time and on social media. This should be part and parcel of the Standards in Public Life which we hope to see enacted by your government in the near future.
Another recommendation we know that your government is actively working on is improving Malta's position in the World Economic Forum Competitiveness rankings as well as in the World Bank's list of countries for "ease of doing business". The country cannot fulfil its aspirations of serving as a hub for international commerce - particularly in the services industry - unless we can boast efficient processes for business and enterprise. As we have now formally entered into the pre-Budget Consultation process, we would like to remind you - and the Minister of Finance - to refrain from surprises in the Budget speech. In the past years, different sectors of the commercial community have suffered from lost business momentum due to new budget measures which caught everyone by surprise and which both the public and private sectors were unprepared to implement.
Prime Minister, please allow me to mention consultation as another area where our Chamber expects improvement. It is not acceptable for us to be completely left out of consultation processes about policy decisions that are crucial to business such as the future of Air Malta and the implementation of certain regulations such as those amending the billboards and advertisements and eco contribution regulations on the bed-tax.
In the latter case, the Chamber supports the principle of an eco contribution levied on tourist bed-nights. As you know, however, we had serious concerns about the manner of implementation of this law because our members and those of other affiliated Associations felt it was in breach of the Small Business Act.
As you are well aware, Prime Minister, we took our concerns to Court where our arguments were not accepted on the grounds that the SBA applies to "Government departments, Government entities and Government agencies" while the LNs we contested were issued by a ministry. This interpretation by the Maltese Courts effectively means that the spirit of the Small Business Act is being hindered because ministries have been placed above the law and can chose to consult selectively or even not to consult at all.
Our Council strongly believes that a proper consultation process is a non-negotiable prerequisite before any regulatory proposal becomes legislation. We therefore ask government to restore confidence in the SBA and its intended safeguards. For this to take place, the provisions of the Act must be correctly and consistently applied across all levels of the Administration with no exceptions and in all circumstances where regulations are proposed which can affect the business operating environment.
A final subject I wish to mention in my introductory speech is energy costs. Prime Minister, our Chamber is eager to resume discussions on our proposals for lower energy tariffs for business and industry. This, in the light of the fact that after the 25% reduction, our industrial tariffs - at 13c7 - remain above the EU-28 average level of 11c9 and are the fifth highest in Europe. These figures need to be taken in the context of energy rates typically representing around 4% of turnover in industry or 12% of overhead costs. Moreover, energy tariffs are among the primary considerations that foreign direct investors consider when choosing a location to set up their business.
Prime Minister, we empathise with your argument that businesses want stability in prices but in the current scenario of prolonged low-levels in the international price of oil, the term "stability in prices" needs to be redefined. We hope that our fresh round of discussions will lead to some concrete breakthroughs that will have a material effect on the operating costs and export competitiveness of our members.
Prime Minister, with my opening intervention, I have attempted to set the scene on the main messages we as a Chamber wish to convey personally to you at this juncture. We are experiencing a time when, due to the most unstable international scenario, we all acknowledge our country's remarkable general economic performance must not be taken for granted. On the contrary, our relative success must be constantly supported by the necessary conditions that safeguard our competitiveness in the years to come.
We believe this is the opportune time to invest part of the proceeds of today's relative success into our future because we believe it is also the right time for the country to take some further bold decisions to safeguard our future economic performances.
Our Council members today will elaborate on our views on a number of issues related to the competitiveness and sustainable economic growth in their areas of business. Prime Minister, I need not reiterate that our views are entirely objective and stem purely from our willingness to contribute towards the right environment for the private sector. If we succeed and grow, we can generate the prosperity that our people so rightly deserve.