Malta has been identified by the European Commission as a best practice country for Small and Medium-Sized Enterprises (SME’s), according to a statement by Jason Azzopardi, Minister for Fair Competition, Small Business and Consumers.

Dr Azzopardi, the only EU minister to be a national SME Envoy, was the keynote speaker at  the European Economic and Social Committee’s conference in Valletta last week entitled “Mobilising European SMEs policy for Malta: Lessons learned, current challenges and future opportunities”.

“Following the creation of the Small Business Act for Europe, the subsequent Small Business Act (Malta) resulted in many changes including the creation of the Enterprise Consultative Council and a College of Regulators. The government is working harder to create the best possible environment where our SMEs may thrive by offering various vital and important initiatives.”

Thanks to the Microinvest tax credit scheme, around 1,600 micro businesses (employing less than 10 employees) had benefited from up to €25,000 each in tax reductions, generating between them hundreds of new jobs and investing almost €37m in the economy. Microcredit, managed by the Bank of Valletta, had enabled 433 SMEs so far to take up around €40m in loans, with a 10-year repayment period at subsidised rates. This had generated almost €65m in investments in less than a year.

In addition, €42m in European Regional Development funds had been allocated by the government to hundreds of small businesses, facilitating expansion, innovation, start-ups, adoption of energy efficiency systems, export development and job creation.

“In 2012, for the first time in 10 years, our firms have exported more than they have imported,” the minister pointed out. “We also launched two major initiatives. We set up Business First (at Malta Enterprise, Pieta), a one-stop-shop involving 20 government departments and 52 government services, providing a full range of services within 10 days, which has already helped 12,000 enterprises save countless hours. We also removed the need for applying for a trade licence for starting a new business and only notification of the Trade Department is now required.”

Ludger Oldenthal, Head of the SME Performance Review Section at the European Commission’s   Directorate-General for Enterprise said that, “Malta, Germany and Austria are the only member states where SME’s are better off since 2005. 99% of EU’s businesses are SMEs, nine out of 10 with less than 10 employees. Yet they provide two out of three private sector jobs created 85% of the new jobs between 2002 and 2010 and account for 60% of the gross value added in the business economy.

“EU’s SME policy is based on subsidiarity, so EU’s role is limited to issues transcending national level, where EU action might give added value. Under the Small Business Act 2008, there have been 90 policy initiatives, five legislative acts as well as regular monitoring of implementation on both EU and member state level, accompanied by exchange of good practices and complementary support programmes.

“We received 1,000 replies to our consultation on ‘the 10 most burdensome pieces of legislation’ and are continuously monitoring SME start-up conditions and progress towards the three-day, €100 minimum capital goal. The EU SME Envoy network meets three to four times a year with stakeholders, with regional envoys to be appointed; they are the internal watchdogs for related EU policymaking.

“With 26 million unemployed in the EU, it has now been recognised that SMEs must be at the centre of policy, we must move on all fronts to improve their operating conditions – an overall strategic approach has been lacking. At the next European Council in March the Commission will present proposals on how to improve SME-related legislation.”

Joe Tanti, chief executive officer of the Malta Business Bureau, said that a recent study found that main problems facing local business included insularity, procurement, shortage of e-skills, EU directives, whether acquiring knowledge about them or their varying dates of entry into force in member states. Clustering for economies of scale is a promising approach for SMEs while a EU proposal for a ‘blue belt’ single market for maritime transport could be helpful to Malta’s trade as well as cross-country procurement.”

While existing financial support mechanisms for SMEs, including JEREMIE (Joint European Resources for Micro to Medium European Enterprises – based on use of EU Structural Funds) have been well received in Malta, further studies on local SME’s unmet financial needs were required.

Josef Vella, UHM secretary-general hailed the signature on 22 January by Malta’s employers’ and workers’ unions as well as the three political party leaders of the Active Labour Market Policy, dubbed ‘Jobs Plus’ – a UHM initiative. Improving labour market quality through training and education – funded not only by EU money but national resources – was crucial, while trade unions also supported the development of cooperatives and social enterprises, the focus of a new section to be shortly set up at UHM.

“Certain government departments or units have become cooperatives as seen with some small-scale services in Grand Harbour,” Mr Vella said. “We are seeing workers leaving traditional sectors and taking initiatives themselves. However, Maltese law requires a minimum membership of five persons to start a cooperative, compared to three in Italy – this should be changed. Also, applying for EU funds is difficult; we are not expert form fillers and need help for this.”