One of the latest laws passed in Parliament is the Small Business Act (SBA) aimed at improving competitiveness and help nurture business grassroots. These issues will be discussed at a forthcoming event “Regenerating Entrepreneurship” at the Westin Dragonara Hotel next Wednesday, 6 July between 8:30am and 2pm. Parliamentary Secretaries Chris Said and Jason Azzopardi will address delegates together with many other high profile speakers from both sides of the political spectrum, the Malta Employer’s Association, GRTU, UHM, Employers Association and other unions, together with FHRD, Bank of Valletta, legal experts and a consultant who assisted the government in the drafting of the Small Business Act (SBA), among others.

Why the fuss about SBA when the entire nation has been focused for months on the divisive political issue of divorce legislation. This national issue was subject to an expensive referendum and although such issues are important somebody has to remain focused on the straight and narrow and while other EU countries are cutting public sector jobs and tightening their belts to cut debt we cannot ignore our economic destiny. It took Parliament almost three years to transpose the SBA law but now, thanks to the boundless energy of Dr Azzopardi (himself a young parliamentary secretary), the task is finished. Can we continue to ignore the plight of 85 per cent of our business community that brings home the bacon: not unless we act foolishly. Sadly, the “think small first” motto, which is the hallmark of SBA, is anathema to our domestic political psyche. Not so in Brussels, which reasons that assisting SMEs can act as a very potent cure to solve present and future job losses.

Adopted by Brussels in June 2008, the Small Business Act for Europe reflects the Commission’s political will to recognise the central role of SMEs in the EU’s economy and, for the first time, puts into place a comprehensive policy framework for the EU and its member States. The policy aims to improve the overall approach to entrepreneurship, and permanently anchor the principle to assist emerging small business starting from lightening regulation to educating public service attitudes in a constant drive to promote SMEs’ growth. Being fragile, they need all possible help to tackle the remaining problems that hamper their development. Does this sound a bit of déjà vu... yes we have heard the mantra repeated in each budget speech for decades. Too much talk and very little walk. Still, one admires the tenacity of Brussels which recognises the importance of independent companies employing under 250 employees: it is no exaggeration to admit the awesome statistic that SMEs account for 99 per cent of all European businesses.

They provide sustenance for 90 million workers. It is a pity that it took three full years for Malta to launch its own version… but never mind SBA is ready now so it is expedient to focus on how the government can make a successful implementation. To be fair, our SBA has gone the extra mile to introduce new concepts such as the College of Regulators and the Industry Consultative Council. These are new challenges for Dr Azzopardi to establish the collaboration of fellow ministries in Cabinet, to toe the line and assure that the SME’s test is faithfully performed. Simply put, this means that all laws from next week will have to be vetted for any negative impact on small business before they can be baptised and finally promulgated. But who is the champion in Cabinet who will harness rebellious horses pulling the political chariot with drivers belonging to the rabble of regulators in our fair land? It certainly calls for a politician blessed with nerves of steel. Back to Brussels that actively encourages Malta to help SMEs access Structural Funds. Access to credit is also high on the agenda. Will Malta’s version of the law be so empowering it develops “credit ombudsman”-type solutions to further facilitate the dialogue between SMEs and credit institutions? Dream on. Perhaps it is not too late to include a credit-ombudsman rank within SBA in the 2012 pre-budget document. This may ensure that small business engaged in exports qualify for the lower 15 per cent corporation tax where inconsistencies in tax treatment are removed so as to encourage cross-border joint venture deals. Why not intensify resources in Malta Enterprise budget to create one-stop-shops where SMEs can apply for ERDF and FP7 national and EU grants which are currently mired in bureaucracy imposed by the central controlling agency in Office of the Prime Minister. The latter makes applying for funds as painful as pulling out teeth. Such red tape and delays in settling on ERDF claims are not helping SMEs face globalised markets.

To continue improving access to global markets, Malta Enterprise is working hard to present a comprehensive strategy for generate the mood among businesses to join globally competitive clusters and networks. Such promises by our politicians have been made and preached many times before but good intentions alone will not bring food on our tables. Entrepreneurs need better access to finance start-ups, to invest and grow. This does not only mean giving tax credits, which can only be cashed one year later if and when the business registers a taxable profit. Start-ups also expect some risk taking by the State to launch access to loans and to venture capital funds, as well as targeted measures aimed at making skilled workers aware of the opportunities offered by small business. We need more ‘Jeremie’ schemes via more banks that are prepared to risk and assist future growth in the sector. Why is there only one bank in Malta which implements EIB loans? It is sad to read in the Central Bank review that banks traditionally preferred to lend millions to mega developers in building Mepa approved concrete jungles particularly the Portomaso cluster and lately in extending the muddle of flats in another high rise tower at Tigné Point but shy away from funding exporters unless they provide brick and mortal collateral. Will the stalemate in stumbling bank credit to SMEs ever change? Not so quickly… unless the SBA goes into overdrive. But we need not despair as only a few member States (Belgium, Denmark, Finland, Luxembourg, Germany, Poland, Slovenia, Sweden and the United Kingdom) have integrated an SME Test into their national decision making approach. Triumphantly, we note that The Netherlands is an exception to the rule... it gave an example of successful reduction of administrative burden so perhaps Malta can be encouraged to follow suit. Ironically, while Malta struggles to implement SBA, steps are being taken by countries to cut their deficits by imposing austerity measures. Typically, a debt-strapped Ireland is to launch a major initiative to attract international start-up talent in a bid to carve out a role as Europe’s Silicon Valley. Despite announcing the harshest public sector cuts in Irish history, the government fully confirmed its budget commitment for funding its development agencies to continue nurturing growth of start-ups.

Two years ago, Enterprise Ireland, the government-controlled agency (think of Malta Enterprise by comparison) invested €343m in start-ups and commercialisation of research. Now, in the aftermath of a banking collapse and with an IMF bailout, it nevertheless pursues a three-year strategy to attract overseas entrepreneurs. By 2013, the agency wants 10 per cent of its client companies to relocate from overseas, tempted by a combination of funding, mentoring, feasibility and access to an international business network.

The austere economic programme is aimed at winning back the confidence of global markets and as a pre-condition of the €85bn bailout by the International Monetary Fund and the European Central Bank. The bulk of that aid package will go to save the debt-ridden Irish banks. It launched changes in the income tax bands to raise €1.9 billion. It wants to trim waste and underemployment in the public sector. Ireland is talking a bold step to trim public service pay which will be cut by €1.2 billion and its staff reduced.

Back to the local scene, delegates at next week’s conference will be participating in the discussion on these topics and others troubling the survival of small business in Malta. With only four days to go interested participants should not tarry. Registration is on a first come first served basis and carries a fee of €41.30 (including lunch). Attendees will be accredited with 3.5 hours of structured CPE.

Interested parties should send an e-mail to [email protected] or call 2748 4375 / 21493041. Cheques payable to Risk Management Ltd − 35, Mannarino Road, Birkirkara.

Mr Mangion is a partner at PKF, an audit and business advisory firm.