It was quite instructive last Thursday to sit back at the Business Breakfast hosted by The Malta Business Weekly and watch the Prime Minister’s renowned ability to spin things so that they appear even better than they are.

In this case, of course, Dr Muscat had it all laid out for him. He unleashed on his listeners a raft of figures to show the economy is not just doing well but thriving too: a 3.5% growth in Q1, the second highest in three years, twice the European average and three times the euro area average. Obviously, much was made of the inversion of the unemployment trend where Malta had been sliding back over the past months in the lowest unemployment stakes and then, lo and behold, Malta shot back to the third lowest place in just one month.

There can be no doubt the economy is doing well: this is confirmed by rating agencies, the Commission and anybody who looks at the figures. It is mainly a retail-fuelled growth, about which later on.

Dr Muscat then hedged his bet by saying this is just not enough and we must do more. He is right.

It was in the warp and woof of his speech that the problems and limitations emerge, though I am not so sure he recognises them all.

That room high on Castile Hill must be seeing some stormy scenes. Dr Muscat expressed his frustration that so many agencies do well on their own but when trying to get them to work together, all hell breaks loose. You could say he bears the scars after 18 months in government.

His solution, born more out of frustration than from expecting things to change, is to create (yet another) coordinating agency, destined to watch it add to the miasma underneath.

The two delegations of the Chamber of Commerce and GRTU were there in force and pressed for all they are worth on what we can call the boat from Sicily issue. They have long been complaining that trucks entering by catamaran are not submitted checks while other imports arriving by sea are subjected to inspections. They are not sent to the Freeport where proper checks are made. It is one thing if a person, a family, cross over to buy things but this has now become big business, with containers being opened in private warehouses and the government being none the wiser (due to the groupage concept).

Dr Muscat admitted this is a problem and said the government is working tirelessly to sort it, although he excluded opening up every truck or container. He also admitted this is a clear case where the government is losing out on revenue and promised to tackle it.

The two delegations had more to say: GRTU brought up the 6/7 issue. In short, they claim there is a loophole in the law that allows a foreigner to recoup 6/7 of the investments made. Dr Muscat said this has been checked by the Ministry of Finances and they found it was untrue. The GRTU delegation, privately after the breakfast, came up with names to prove this has become widespread. How can one explain the number of Sicilian and Italian restaurants that have suddenly sprouted everywhere? A Sliema urban legend says not a day passes without a restaurant changing hands and being bought by a Sicilian/Italian.

In the context of an economy that is doing so well, and being retail-driven, it is surprising that retail sales have been decreasing. Dr Muscat had his own explanation for this but I am not completely convinced. He blames decreasing sales on people purchasing on the Internet (apart from people buying from Sicily). He said that he only has the Pay-Pal figures and these show that online purchases were €33 million in 2009 that rose to €66 million last year. And there are other means apart from PayPal.

He pooh-poohed attempts to point at a parallel decrease in exports by saying this regarded a small number of industries and I feel he is right.

With his hand-picked man at Malta Enterprise present, he announced a new body to facilitate those industries who want to grow and start exporting by providing them with expertise, trade contacts, R&D, and so on.

In an economy that is doing so well, it comes as a surprise to find the government is turning to outside agents to help kick-start the economy. There is no doubt that the past electricity tariffs, for industries, hotels and homes, were among the highest in Europe and I cannot understand how this was allowed to persist, how change was resisted and why nothing really structural (apart from the Interconnector) was done. How could Malta improve its competitiveness when it carried such a heavy burden? And that’s comparing Malta to the rest of the EU, whereas the EU is heavily uncompetitive when compared to the US.

Dr Muscat said his government is turning to non-EU areas to get more growth. He mentioned China and his impending visit and the signing of multiple MoUs which we will no doubt hear this coming week. But he warned against putting all eggs in one basket and pointed to the Gulf as another likely source.

I am wary of shortcuts in running an economy. The escamotages we have had in the past months are all expedients: IIP, the Chinese investment in Enemalta, now this massive multi-headed MoU. Understand one thing: this is all government-to-government (apart from the individuals paying handsomely to get a Maltese passport). We still have to see if these agreements stimulate cooperation and opportunities for the private sector to link up with the private sector abroad. So far, it has been mainly hopeful expressions rather than concrete results.

Unreported by many, Dr Muscat mentioned two possible sources of growth but he threw them almost as an afterthought, and while answering questions rather than in his prepared speech.

One is the Film Commission, hence his announcement that Ms Angelina Jolie is jollily commandeering Mgarr ix-Xini to shoot, hopefully, s blockbuster. And a film from China and, with any luck, one from Bollywood.

Secondly, he spoke about a new area of enterprise – logistics. This is a really exciting prospect and Malta is well placed to become a logistics hub. Ideally, there should be a physical link between the Freeport and the airport, and, as it happens, the government owns all that land that used to belong to Air Malta which can be turned into one or more Free Zones.