Malta’s politicians are more conscious than the average citizen that the country is labouring under pressing problems, which include a structural deficit of long duration, massive national debt, the servicing cost of which currently exceeds Lm70 million per annum, and a government that has been spending far in excess of its revenue.

These problems are interlocked, and it will take time and sacrifice for the economy to extricate itself from its predicament.

As it happens, we are fast approaching a decisive general election that is bound to be a distraction from the over-riding and more immediate battle for survival.

Malta’s survival depends on its ability to earn its keep in a globalised world, whose markets are under pressure, and where competition is becoming, if anything, more intense. For Malta, this is a do or die battle.

Unless we maintain and enhance the flow of our foreign earnings, our economy will stall and decline. In past years, Malta’s economy has not managed to take off and gather enough momentum.

Looming crisis

Unless there is a turnaround, a crisis is looming. The situation calls for the urgent and undivided attention of all concerned.

The most immediate challenge is for the national frame of mind to focus on the essentials. The first is that we must have the ability to compete, if we are to achieve growth by enticing new investments, and to hold our own in the world’s markets.

New investment will be attracted in sufficient quantity if it could operate with profitability. No Maltese goods and services will sell unless they are competitive in cost and quality.

The iron laws of the market impose their imperatives from which the social partners cannot shirk if they are to survive. This emphasises the necessity of relying on advanced technology to boost productivity, on judicious restructuring exercises, the elimination of restrictive practices and on reducing the cost of government.

In all these areas, the exigencies of survival are reinforced by the persuasive pull of enlightened self-interest and every minute counts.

Pressing challenge

In this regard, the spirit of enterprise is not enough. It must be bolstered by consensus among the social partners, a willingness to take risks and a political will at government level.

Economic growth is the supreme and pressing challenge. But, even before that, it is important to safeguard and enhance what has been achieved, and which underpins the existing economic framework.

There are two areas of vulnerability to which the Maltese economy is immediately exposed.

The local manufacturing sector that produces electronic components and related goods generates the lion’s share of total exports and a massive proportion of our imports. Malta is therefore exposed to the vagaries of demand in the communications equipment and apparatus sector, and to the threat of competition from emerging countries like China. Over-reliance on the performance of this sector poses a potential threat that is largely out of our control.

Our tourism sector, on the other hand, falls more directly within the range of our potential to safeguard it.

In the last few years, this sector has been in decline, notwithstanding the active intervention of the Malta Tourist Authority and the Government. Government targets have not been achieved and millions of liri have been squandered.

The tourist industry is a strategic sector and a linchpin of our economy. It has been struggling to keep steady on uncertain feet. The negative trend has yet to be, somehow, arrested.

Urgent questions

Urgent questions call for urgent answers. Has Malta been overused and has it lost its attractiveness? Is it out-pricing itself as a Mediterra-nean resort? Is the Mediterranean region losing its appeal in the face of competition from other exotic parts of the world? Has Malta suffered from environmental damage to the degree that the tourist industry is beginning to suffer the consequences?

Malta, like Cyprus relies on its tourist sector as an indispensable engine of economic growth, and cannot afford to relax on the engine’s maintenance requirements.

In the past, Malta relied largely on tour operators for volume. Air Malta was, and will continue to be, its standard bearer and foremost vehicle. Low-cost operators could be induced to operate to and from Malta in increasing numbers, thereby generating additional tourist movement. Should the Malta tourist industry opt deliberately for mass tourism or niche tourism, or can this small island sustain both simultaneously?

Above all, is the Malta tourist sector sustainable only if the product is enhanced to offer value for money?

The more one thinks, the more questions pop up and they must be answered. Close examination of the performance of our competitors in the region will be of help.

When all is said and done, competitiveness is illusory without sustainability. To be competitive, a tourist destination’s development must be sustainable not just economically, and not just ecologically, but culturally, socially, even politically.

We have invested much and made significant progress while the going was good. Times are getting harder, and there is a long way to go.

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