Speech by Anton Borg, President, on occasion of a Dialogue Session for members of the Malta Chamber of Commerce, Enterprise and Industry with the Prime Minister.
I start by thanking you, Prime Minister, for, once again, accepting our invitation to this open dialogue session. We genuinely appreciate the value of granting our members the opportunity to have an open and frank debate directly with you.
Before giving you and our members the floor, please allow me to elaborate briefly on some points which are currently of special interest to our Chamber and the general membership.
We would like to emphasize, Prime Minister that our views are totally apolitical and aimed at achieving the right socio-economic balance to breed confidence and stability.
Within our apolitical status we take it upon ourselves to champion Malta's quest for continuous improvement in competitiveness and economic prosperity. However, we need to ensure that, like the Malta Chamber, all other stakeholders understand the value and importance of being competitive because it is not always clearly apparent that we are all on the same side on this account.
Competitiveness issues
If we are to ensure continuous, sustainable, economic growth for our country, national competitiveness must remain a priority and the country must at all times seek to enhance it. In our view, competitiveness is determined by two main elements which are cost and non-cost related. Cost related elements such as wages, energy costs and internal transport are determined by the country directly. Therefore, it is imperative that we avoid situations whereby any erosion of national competitiveness is self-induced.
On the other hand, we must also concentrate on non-cost elements like research and development, the country's reputation, quality as well as the constant upgrading of the country's human resources. These are elements that need to be constantly fostered and nurtured. Malta cannot afford to ignore warning signs that may have a bearing on its competitiveness such as its position in the World Economic Forum Competitiveness Rankings as well as in the World Bank's list of countries for 'ease of doing business'.
Whilst remaining ever optimistic, our Chamber 1ecognizes that the biggest threat going forward would be for Malta to be complacent and to deny that more needs to be done. As the Chamber recently stated, sometimes within the laurels of success lie the seeds of the greatest
failures and we must not allow our relative success in the past, and, may I add, the current success too, to fog our vision towards the future.
There are clearly areas that need immediate attention and some decisions which require strong political courage. Allow me to elaborate on some of these important factors:
Energy
When originally announced, our Chamber had publicly congratulated Government for the reduction in industrial energy tariffs as a move in the right direction. However, it is felt that circumstances have now changed to the extent that, ahead of the last Budget, we once again called for further reductions.
Prime Minister, we empathize with your reasoning that people and businesses want stability in prices but on the other hand, the current tariffs are based on oil prices of over $100. This Tuesday, as you know, oil prices briefly fell below the $30-per-barrel level and are predicted to continue to fall even lower. Consequently, in our view, the term "stability in prices" needs to be redefined.
There needs to be a structure of bands whereby energy prices are reflective of material changes in the price of oil but without necessitating change in energy prices with a change of a few dollars in oil prices.
Whereas we are also fully aware of Enemalta's financial situation, we feel that further reductions are justified to protect Malta's export competitiveness position, particularly in price-sensitive sectors such as manufacturing given that electricity typically represents around 4% of turnover or 12% of overhead costs.
Moreover, energy cost is amongst the primary considerations foreign direct investors take into account when choosing a location to set up their business.
We fear that further erosion of Malta's limited cost advantages together with the high significance of energy in the production costs could lead to investment decisions that are detrimental to our country and favourable to alternative, lower-cost locations.
A final note on energy... The authorities told us that they were making their internal calculations and hinted that they would consider our proposals positively. This was a few months ago so the calculations should by now have been concluded and we therefore look forward to resume discussions.
Healthcare
Prime Minister, allow me to touch upon a sensitive matter from a socio-economic perspective and I refer specifically here to the national healthcare system which, is unaffordable and does not adequately reach its objectives.
Besides, it does not give dignity to the patient in need. From our point of view, it is most unfortunate that concrete action on addressing the situation is rendered impossible by political sensitivities.
Testament to the failure of the current system are the unrelenting efforts of the President of the Republic in reaching out to the generosity of the Maltese people to provide financial support to those in need of life-saving treatment. Under the circumstances, such efforts are proving providential but it also means that we have rendered the persons in need of life-saving treatment into beggars. The country must address the sustainability issue directly and ensure that suffering individuals are able to obtain the necessary support from a structured system rather than from ad-hoc charity efforts.
It would seem that in quantifiable terms, the annual financial requirements being catered for by the Malta Community Chest Fund are in the region of €4 to 5 million. It would seem unreasonable to think that the country cannot find this amount of money to ensure better dignity to those in need. We believe that this amount of resources can be freed up from the
existing system and we have gone on record several times proposing concrete recommendations.
Our proposals are based on applying the benefits of "prevention is better than cure" to the national healthcare system. Of course, if the country frees up resources to, at least, afford a widening of the medicine formulary to include important and advanced drugs, it would be keeping patients healthier and reducing their need to seek urgent attention at Health Centres and bed-nights at Mater Dei.
Besides, the Chamber has also gone on record suggesting other measures that enhance people's awareness about the value of "free" health care services they are entitled to. We must all be aware that there is a cost to our "free" healthcare, and this needs to be paid by every taxpayer. We are confident that the culture of appreciation will increase with the introduction of "phantom billing" indicating a breakdown of costs incurred in the delivery of the treatment or service to every patient.
We appreciate that this recommendation is extremely sensitive from a political point of view but we strongly believe that the healthcare sector in Malta must break away from the political arena and step up to a higher level of maturity, responsibility and consensus. We have gone on record to propose the setting up of a bi-partisan standing committee on health under the chairmanship of the President of the Republic. Sadly little to no progress on this matter has been achieved.
Abuse in Free Movement of Goods
Prime Minister, the business of over half of our membership continues to be severely undermined by the matter concerning the un-level playing field which exists with regards to the sea borne importation of goods. The situation that continues to be condoned by the competent authorities is one of erratic and inconsistent enforcement of importation regulations, coupled with an inadequate structure to enforce the same regulations. This creates a channel for abuse by those who choose to circumvent rules and regulations and operate below the radar.
Our Chamber has pinpointed - even in Parliament - where the situation lies together with some plausible solutions. As you are well aware, Prime Minister, besides unfair competition, this situation contributes to the serious and undesirable consequences of huge tax leakages and unnecessary compromises on consumer health and safety.
We acknowledge that your Government is acting on this matter to which there are no easy solutions. At the same time however, you will appreciate, that our Chamber can no longer accept the serious damage being inflicted on our bona fide members while the Authorities continue to promise solutions that ultimately never materialise.
Time and again budget speeches have promised lasting means to solve the matter in the form of market intelligence units, "Guardia di Finanza", mergers between Tax Revenue Departments and, most recently, the strengthening of the Economic Crimes Unit within the Police Force. This notwithstanding, the real problem continues to persist to the detriment of our members and to the benefit of only those who choose to circumvent the rules.
Ultimately, the Chamber believes that only strong political determination will solve the problem. Clearly, this determination has unfortunately been lacking for more than a decade and as a result, the country has been powerless before those who choose to abuse the system. We want to make it clear that we are not seeking any protectionist measures here. What we are after is a liberalised commercial environment that is regulated in an equal and fair manner. Our laws must seek to protect the just and punish the abusers - not vice versa. The time has come for the country to rise above this situation which is both untenable and unacceptable.
Opening of bank accounts for foreigners operating in Malta
Another issue that is affecting our members in several sectors is the serious difficulty they encounter when opening bank accounts for foreigners wishing to operate in Malta. We are, of course, aware that these difficulties are mainly generated from heightened compliance procedures related to international money laundering regulations which our banks must adhere to. This has resulted in over-bureaucratic procedures to filter prospective clients. We are actively consulting with the banking community on finding practical solutions to solve this issue.
At the same time, we feel that the support of the relevant authorities in this regard is crucial because we believe the status quo could be detrimental to our country's aspirations to serve as a hub for international business activity in many sectors particularly in financial services.
Public Private Partnerships
As the main promoter of the national and private sector interests, our Chamber has consistently believed in the merits of capitalising on the joint strengths of the private and public sectors. To this end, we were particularly pleased with the approach adopted by this Administration in rendering Public Private Partnerships a more widespread practice in the Maltese islands. This is in line with one of the recurrent themes in our Economic Vision for Malta 2014-2020 document where we recommended the setting up of Trade Malta and other similar set ups.
Based on the success of Trade Malta which commenced operations mid last year, our Chamber is actively considering similar partnerships with Government on other sector-specific projects aimed at consolidating Malta's position in certain centres of excellence.
Conclusion
Prime Minister, with my opening intervention, I have attempted to set the scene on the main messages we as a Chamber wish to convey personally to you at this juncture. We are experiencing a time when due to the most unstable international scenario, we all acknowledge that our country's remarkable general economic performance must not be taken for granted.
On the contrary, our relative success must be constantly supported by the necessary conditions that safeguard our competitiveness in the years to come.
Prime Minister, we believe this is the opportune time to invest part of the proceeds of today's relative success into our future via the continued upskilling of our workforce as well as in concrete research and innovation initiatives. We believe it is also the right time for the country to take some bold but needed decisions to safeguard our future economic performances.
Our members today will elaborate on our views on a number of issues related to the competitiveness and sustainable economic growth in their areas of business. As I said earlier, we take pride in providing regular opportunities for our members to air their views before the Prime Minister and other authorities in order to offer their ideas and suggestions. Ultimately, both the business community and Government have the interest of the country at heart and we are willing to contribute to ensure our companies operate in the right environment for growth. If we succeed and grow, we can generate the prosperity that our people so rightly deserve.