In the 2008 general election campaign, the government had promised Maltese businesses that, if re-elected, the government would adopt “red carpet instead of red tape” approach to business activity.

It is true that the government, through a specially set up task force, had done a good job in preventing an exodus of factories from Malta to the Far East and other more labour cost-effective locations during the economic crisis and global financial meltdown that began almost with the new legislature.

But no matter how much the government insists that it is cutting red tape, red tape is still asphyxiating businesses and is perhaps not only responsible for dissuading foreign direct investment into the country but it is also hampering the success of home-grown businesses.

Now when it comes to international comparative reports, these sometimes fail to account for certain aspects of the local scenario and at other times the comparative, one-size-fits-all approach does not account for this particular country’s peculiarities driven by the size and composition of its economy.

But at other times there are comparative international reports that rely on local feedback from local businesses, and these tend to hold more water than reports that merely aggregate different data without delving too far below the surface.

Last week we were treated to one such report of the latter category, which was published by the World Bank and the International Finance Corporation.  This newspaper had reported the story exactly one week ago, and it did not make for pretty reading. 

Malta was ranked as the most difficult place to do business in Europe, and was placed as the 102nd most difficult place to do business out of 185 economies surveyed by World Bank and the IFC.

Access to credit, dealing with construction permits and red tape in starting businesses, obtaining electricity and enforcing contracts, according to the report, have made Malta one of the least business-friendly countries in Europe – and the world.

It was a rather sorry debut for Malta in the World Bank Doing Business rankings, and one that will no doubt cause the country’s economy a certain amount of harm.

For not only are the findings somewhat more than concerning from the point of view of local businesses, but the authoritative annual report is also used by countless corporations and business when taking the very delicate decision about expanding overseas.

The Doing Business report sheds light on how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations. It measures and tracks changes in regulations affecting 11 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and employing workers.

And out of the economies of 185 countries analysed by the World Bank in terms of the ease of doing business in them, Malta is ranked in a most dismal 102nd place. Greece, in a far better 78th place, was the second-most difficult place in which to do business in Europe. Denmark, in global fifth place, was the EU’s easiest. The majority of EU member states rank in the global top 50 and as such are apparently at least twice as easy to do business in than in Malta.

In the wake of the report, the government had leapt to its own defence, listing out a number of new foreign businesses that have set up shop in Malta and citing report from the European Union and the World Economic Forum, which t eh government says have shown progress in Malta’s competitiveness.  They point to the Business First initiative and the simplification or removal of trading licenses for some categories of businesses, effective as of today as matters that have been ignored by the report.

That may be true but it is highly doubtful that even if such initiatives had been factored in that they would, in themselves, elevate Malta’s dismal ranking.

The area in which Malta performs worst is in ‘Getting Credit’, where it is placed 176th. Those faring worse than Malta in the area were only Syria (176), Djibouti, Madagascar and Sao Tome and Principe and Tajikistan (all at 180), and Palau (185).

Malta is 167th on the list when it comes to dealing with construction permits, 150th for starting a business, 121st for enforcing contracts and 111th for getting electricity.

There are myriad accounts from businesses about such difficulties which cannot be denied, nor can the government deny that such hurdles exist.  Just ask anyone who has applied for credit or for any of the necessities for opening and running a business. As such, the government is either burying its head in the sand or it is seeking to bury the problems that businesses in Malta face.

After all, among the Malta contributors are the country’s top law firms, as well as top architectural, construction, shipping and audit firms and government bodies such Malta Enterprise, the Malta Environment and Planning Authority, the Freeport Corporation, the Inland Revenue Department, the Customs Department (within the Finance Ministry), the Land Registry, the Occupational Health & Safety Authority, Enemalta, the Malta Financial Services Authority and one of the country’s major banks.

Instead of issuing outright denials that basically accuse the people at the World Bank of being wrong, one would expect the government to, of course point out where it believes the report has gone wrong, but to also say where it has gone wrong and to say how such persistent shortcomings are to be addressed.