Meet the new buzzword: “competitiveness”. At a time when so many EU countries are experiencing sluggish growth or, as in Malta’s case, facing a recession, governments are trying to lift the mysterious veil concealing the myth of competitiveness. This is the new quest for the Holy Grail.

Politicians have been waxing lyrical about the golden path to achieve better results but really and truly the journey is long and the rewards are elusive. Globalisation has sharpened competition and, as a general comment, it can be said that, due to the effect of globalisation, organisations in all areas must compete to deliver value.

Many ask what Malta Enterprise (ME) can do to lift the country out of its comparatively low standing in the global competitiveness index? The answer is simple: there is a lot to do both by the private sector and at state level. The elusive answer is to cut down on bureaucracy which, by EU rules, has to be trimmed down by 15 per cent next year. For the cynical, the answer may be that the decision by ME to renovate a reception and administration block (costing €4m) in the precincts of a sprawling geriatric hospital was a false move. Rumours have it that meetings with potential foreign entrepreneurs are being held outside ME’s headquarters, mostly in hotel lobbies.

But to continue on the subject of competitiveness, there is no magic solution to reduce the amount of hard work needed to improve operational efficiency and our comparative low standing. It is a good idea to stop and ask ourselves what constitutes competitiveness and for this purpose we can define it as a quality usually equated with solving macroeconomic issues (such as changes in interest rates, inflation or taxes) or microeconomic issues (such as a low quality of entrepreneurship and excessive bureaucratic regulations on business).

Both macro and micro issues need to be effectively tackled in the best way possible. To respond effectively to the exigencies of global market, firms need to develop a range of export capabilities in the areas of technology, marketing, management, human resources and finance, and continuously upgrade them over time. However, nurturing competitiveness – particularly for export markets – also has to involve both governments and trade support institutions in a cohesive partnership. Only this way can a coherent competitiveness strategy, tailor-made to national circumstances, be born.

This has a major influence on the creation of business competitiveness in a globalised environment. Now more then ever, there are powerful factors that are driving globalisation such as falling trade barriers; fast-paced technological advances; declining communications and transport costs; international migration; and highly mobile investment. The cliché goes that during a recession, firms are facing many demands pointing them to improve their value chain. At this stage one can comment that adding “value” is the ability to meet or exceed the needs of customers, and to do so efficiently. Firms have to deliver value to their customers by way of services or products and countries have to deliver value as business locations.

Reading textbooks about competitiveness, we recall authors telling us that a close and active business-government partnership is the linchpin of a well-managed national competitiveness strategy. Is this happening in Malta? Not to a great extent, with the exception of the tourism sector under the baton of Dr De Marco (a charismatic tourism minister). In the manufacturing sector the medicine needs to be better focused, considering that our trading partners in the EU are facing higher unemployment and national deficits. So is there a solution in sight? The answer is that we must break the traditional protectionist approach, which pontificates that business only focuses on increasing profits, while government formulates and implements strategy on how to win votes. With an election looming, is the Cabinet bothered about how to improve competitiveness and try to spur growth so that in the third quarter we can recoup the drop in GDP registered in the first half of the year? Sadly, it looks as if it is each to his own at Castille.

Yes, accessing new resources and markets while mitigating the risks of intensive competition calls for a new kind of relationship between business and government. In this context, PKF (of which the writer is a partner) has been awarded a contract to exploit the wonderful powers of IT technology while building an interactive website to promote competitiveness. The promoters of TuneMalta wish to play a leading – albeit not a dominant – role in running a reliable competitiveness strategy. This initiative is co-funded by a grant to improve competitiveness paid out of the European Regional Development Fund. (ERDF) This forms part of the Competitiveness Grant Scheme, being an enterprise support incentive under the Malta Enterprise Act.

As a tool to promote competitiveness, TuneMalta has conceptualised a number of initiatives including an interactive website, the holding of international conferences, seminars, newsletters and podcasts which it is hoped will succeed in improving the status quo of its members. There is a section that invites entrepreneurs to join as ‘Preferred Partners’ in order to boost their international competitiveness. This includes relocating to places where labour costs are lower or investing in higher intellectual property to improve deliverables. Other steps are assistance in networking and BtoB internationalisation and networking: one-to-one knowledge sharing, clustering, partnership development, deal groups creation, etc.

The aim of creating TuneMalta is to help its members reach the objectives of the renewed Lisbon Strategy, which aims to stimulate growth and employment in Europe. One of our targets is the launching of a Competitiveness and Innovation Framework Programme CIP. This has been adopted to cover the six-year period 2007-2013. The programme supports measures to strengthen competitiveness and innovation capacity in the EU. Without appearing to be blowing our own trumpet, we can safely say that, as the promoters of TuneMalta, we hope to improve the levels of competitiveness of our preferred partners. This is a concept that acts as a tool in the hands of the preferred partners enabling them to take advantage of new horizons and markets.

It comes as no surprise that the challenge facing business entities is how to design and implement supportive policies and strategies to tackle competitiveness. As the tempo of exchange traffic increases, so does the possibility of valuable information that can flow free of charge between participants. The promoters of the website have extensive experience in promoting their expertise in diverse sectors such as consultancy on remote gaming, legal concepts of gaming regulation, taxation models for gaming operations, promotion of tax shelters for a number of sectors, aviation sector, attracting hedge funds domiciliation, captives, PCCs and ICCs to Malta etc.

For a broader picture of such initiatives go to www.tunemalta.com The site makes comprehensive use of Web2 technologies, such as podcasts in five languages (Italian, Russian, French, German and Polish), blogs, public video and image links, third-party content sites and more. These techniques are all used in TuneMalta to maximise its effectiveness via links to other social media such as Facebook, Twitter, etc. Such links are instrumental to encourage members to talk to each other in a fast and confident mode.

Typically, we see how data exchanged by preferred partners is encrypted for maximum security and confidentiality. By providing a user-friendly IT delivery platform across many sectors, any preferred partner who signs up can freely access a wealth of useful data in the Competitive Strategies corner. It intends to inculcate a culture among its participants to use the latest concepts covering a variety of business topics in the newsletter.

Members will be encouraged to follow a code of ethics that helps govern morality and acceptable behaviour that TuneMalta hopes will be acceptable and followed by all.

Finally, it should be pointed out that fine-tuning operational skills are the “core competences” that a preferred partner is encouraged to nurture for a sustainable growth strategy. Core competencies are the capabilities that are critical to a business achieving a higher competitive advantage. The starting point for analysing core competencies is recognising that fierce competition is as much a race for competence mastery as it is for market position and power. Therefore, ideally the goal is to focus attention on competencies that really affect competitive advantage.

It is to be hoped that this article has succeeded in partially lifting the veil of secrecy that covers the myth of competitiveness. Enquiries can be submitted to Audrey-Ann Cassingena on [email protected] or by calling 2133 5715.

George M. Mangion

www.tunemalta.com

The writer is a partner in audit and business advisory firm PKF