While Malta is still registering the highest levels of state aid in the EU25, it has also registered among the sharpest falls in state aid levels, according to a European Commission scoreboard published this week.

Malta – along with the Czech Republic, Cyprus and Poland – in fact saw the sharpest decline in state aid dished out last year.

The country, however, still had the highest share of state aid, at 1.77 per cent of gross domestic product, compared with the EU25 average of 0.42 per cent and the EU10 average of 0.52 per cent of GDP.

But, the Commission points out referring to Malta, “Most of the aid measures in question are either being phased out under transitional arrangements or (are) limited in time.”

Total state aid for industry and services in Malta has fallen significantly – from e172 million between 2001 and 2003 to e112 million between 2004 and 2006 – due mainly, according to the Commission, to the phasing out of pre-accession measures.

Out of a total of e115 million in state aid distributed last year, 74 per cent went to the manufacturing sector and a further 19 per cent went to agriculture. The remaining three and four per cent went respectively to services – including the tourism, financial, media and culture sectors – and the transport sector.

In terms of state aid to shipbuilding, Malta’s aid to the Drydocks made up 10 per cent of total shipbuilding aid granted by member states last year, which amounted to an estimated e213 million. Malta’s aid to the industry accounted for 10 per cent of the EU total, compared with Germany’s 38 per cent of the total, which was the EU’s highest.

As a total, Malta’s share of horizontal aid distributed was comparatively low at seven per cent as against the EU25 average of 85 per cent and the EU10 average of 78 per cent.

Sectoral aid, meanwhile, comprised 93 per cent of Malta’s total state aid. The Commission explains, “The low share of horizontal aid (and thus relatively high share of sectoral aid) in Malta can be explained with a tax relief measure under the Business Promotion Act. 92 per cent of state aid went to the manufacturing sector, while one per cent went to services. In terms of horizontal objectives, three per cent of Malta’s total state aid went to training, three per cent to miscellaneous objectives and one per cent to SMEs.

Of the aid awarded to horizontal objectives, Malta, at 19 per cent of all horizontal aid, had one of the highest percentages falling under block exemption regulations (BER) aimed at aiding SMEs in the manufacturing and services sector, as well as training and employment.