There are three things that any business can do without. The first is economic uncertainty. The second is excessive bureaucracy and regulation. The third, unnecessary and inhibitive taxation practices.

Economic uncertainty impacts on business in a number of ways. Companies are cautious when it comes to risk-taking, decisions to expand or introduce new products are put on hold and medium to long-term plans are inevitably subject to review. In parallel, the consumer, sensing a possible negative period, holds back from spending more than is

necessary. The end result is a slow-down in economic activity and economic growth.

However, even when the economy appears to be picking up, issues of excessive bureaucracy and taxation continue to hamper business confidence. These two issues were recurring themes at the annual general meeting of the Malta Chamber of Small and Medium Enterprise (GRTU) last Sunday.

The GRTU has been complaining about excessive bureaucracy, regulation and taxation for over a year now and the introduction of new, indirect taxes, such as the eco-contribution last year was, for the chamber, the last straw. The GRTU has argued that its members were finding it difficult to cope in an economy that is still moving at a snail’s pace. The last thing they need are too many rules and increased taxes.

At the conference on Sunday, many businessmen argued that regulations and bureaucracy were distancing investment, instead of acting as a deterrent against abuse of the system – a valid point when one understands the make-up of the Maltese economy and the GRTU members’ large contribution to it.

Conscious of the growing dissent within the SME community, Prime Minister Lawrence Gonzi has announced that the government will be setting up a “Better Regulations Unit”. Operating within the remit of the Office of the Prime Minister, and led by the OPM’s principle permanent secretary Dr Godwin Grima, the unit will examine both new and previous regulations that affect business, with a view to updating older regulations to better suit today’s realities and to ensure that new regulations are as business-friendly as possible.

This is welcome news for SMEs and allays many GRTU fears that the government is not paying an iota of attention to their pleas. That said, it does not mean that the problems will be solved overnight. We are dealing with the problems of the private sector using public sector methods, and this is not always the quickest, easiest and most advantageous way to go about things.

Even here, however, the government seems to have understood this important point and that the direct input of the GRTU was necessary. The “Better Regulations Unit” will be run in collaboration with the chamber, and a representative from the OPM will be seconded to work with the chamber for a period of two years.

This is an excellent idea because it will give the government a first-hand knowledge and understanding of what the real problems are. It will also ensure that the channels of communication between the government and the chamber are open and frequent – something that has not always been the case.

Hopefully, the unit will be more than just a “regulator” of the regulations and really will work to ensure that regulations guarantee fair competition in the marketplace, while older regulations are tweaked to minimise the burden of bureaucracy.

We could add another role for the unit. More often than not, government departments are oblivious to what is happening outside their own little patch. The unit should be in regular contact with various departments and public entities to inform them of any changes, even before they are issued in a legal notice or government announcement.

With regard to taxation, the Prime Minister said that a group of experts is examining the tax burdens on businesses and to see how investment in the country can be stimulated. The group’s findings, he said, will be published in a report in June.

Both initiatives are steps in the right direction but it is extremely important that any changes are not cosmetic and of little effect in the long-term. On the other hand, SMEs need to be proactive and not expect “Big Daddy” to do everything for them either.