Speaking at the opening of a one-day seminar on SMEs and EU enlargement, Mr Fenech spoke of the important role small business play in the development of a sound economic future.

The seminar is part of a project coordinated by the University of Perugia, Italy, which is focusing on the economic and administrative challenges SMEs face in an enlarged Europe and proposing ways of overcoming them.

The project evolved from the idea that EU enlargement requires harmonisation of the legal and contractual instruments for business organisation and international trade, said Mr Fenech.

“SMEs are an instrument of growth and competitiveness, by means of farming out and sub-contracting” he said. “93.4 per cent of enterprises in the 10 acceding countries, including Malta, are micro-enterprises, that is, they are made up of 10 or less employees, and therefore this makes SMEs key actors in the development of entrepreneurship,” he continued.

Mr Fenech noted that SMEs are at the heart of the Lisbon agenda, which aims to make the Union the most economically sound bloc in the world.

In his introductory speech, University of Malta Economics Department head Lino Brigulio said that the success of SMEs in Malta depends on an appropriate business culture and the current emphasis on competitiveness calls for a change in attitudes.

Maltese business has depended on a protective regime which constructed barriers that inhibit competition, said the professor. The new entrepreneur must be more flexible and take decisions more quickly.

“Success will depend on the ability to discern changes and adapt to them quickly through pro-active adjustment,” said Prof. Brigulio, claiming that small firms are more likely to fit into this new structure.

The professor said that the survival of small firms depends on their ability to exploit the advantages of smallness, rather than their ability to elicit protection from the government. Since Malta’s accession into the EU, this is even more important, he concluded, because in Europe, the philosophy of competition prevails and is constantly being strengthened.