As we start coming out of the pandemic which pushed many Maltese businesses to the wall it is now time to think big about the next phase of the Maltese economy. Like thousands of Maltese who want to see a sustainable future for our islands, I am not happy with an economic model based on population growth or rather the importation of cheap labour force, where the only significant innovation in the last eight years was selling our identity to the highest bidder.

The pandemic aftermath will not be easy to navigate. Consumer confidence is at an all-time low in Europe and that will have its long-term bearing on the tourism sector. Naturally, we stand by our hoteliers, restaurateurs and the myriad of other operators in the tourism industry in Malta. A post-pandemic perspective however also needs to revisit the shrinking portion of our economy dedicated to the manufacturing industry.

For a long time post-independence Malta has seen the development of several branches of manufacturing operations, from jeans to transistors to electronic appliances. In the last twenty years however, our economic model, taking stock of our natural handicap of insularity from train and road networks in Europe, staked most of our investment on the services economy. That was a good move overall. Igaming and Financial Services markets can be conquered without having to foot the transport bills. 

The services industry has indeed charmed us all to the point that most of our new ideas will have to relate to more of it. Here I’m picturing Silvio Schembri with that Maltese speaking robot and the failed promise of the blockchain island or the equally dead in the bud initiatives for facilitating ICT start-ups. The services economy has the push and the steam not only of public authority (competent and less competent) but also of public opinion in Malta. Too many of us still think of sneakers socks and underpants when we speak of manufacturing. And yet, we must not diminish the value brought about by investing in high value added manufacturing initiatives.

Some time ago I visited a factory in Bulebel headed by two Maltese engineers. With their internal research and their own private investment they are now managing to land contracts for the production of elements and components of the electric car industry. This they did without much help from anyone. No public funding. No public promotion and no direct orders either. The electric car industry is projected to triple in size in the next five years. Imagine the potential for quality employment and foreign direct investment if we could tap into the know-how of people like these two engineers to formulate a targeted policy to attract all the other branches of the electric car component market.

Let us not shun the potential of manufacturing for Malta. We owe it also to our kids. The diversification of the job market would greatly benefit from places of employment in demand for high skilled profiles specialised in new branches of engineering, chemistry, i.t. and management.

Apart for a targeted attraction policy coupled with fiscal measures we must also be ready to address the systematic disadvantages of Malta in the European single market. A pallet stacked with electric car components leaving Bulebel must face five days of at least three kinds of transport operators, from truck to port, sea transport and then truck again to arrive in northern Europe five to ten days later. The additional cost and time represent our competitive disadvantage when compared to our competitors in the same European Union. I refer to those costs as ‘the cost of insularity’.

Having worked within different European Institutions negotiating legislation for a long while I can think of a few cases where Member States successfully argue for particular attention or tailor-made concessions within the EU framework due to their natural setbacks. Our civic nurture accepts that competition must start from as much as possible of a level playing field. In such spirit, notwithstanding the single market drive for uniformity Austria may impose special road tariffs to all EU transit to limit emissions from neighbouring countries while Swedes can buy and sell chewing tobacco which is elsewhere banished. I’m not here arguing for either to be done in Malta. My point here is that we must see the European Project also as a vector to factor in our particular needs, systematically.  

The above is for instance not irrelevant to the fate of our national airline and the application of EU state aid policy. Should state aid policy apply to the regions of Nordrhein-Westfalen which have 6 major European cities in four Member States with a 2 hour truck drive in the same way that they operate with regard to Malta with its minimum 3 hour flight connection plus handling and truck time to the centre of the single market?

For manufacturing to thrive also in the periphery of the Union, the EU needs to factor in, in a more systematic way, the cost of insularity before it proposes new legislation and in the implementation of existing policies. For this reason, I submitted a written proposal to the Conference on the Future of Europe for the European Commission to include a systematic cost of insularity test in its impact assessments. This proposal is gathering support from different fronts.

I will keep on pushing for special attention to the situation of islands not connected to the single market of the EU as I believe that this is imperative for Malta to keep making a success out of EU membership, now and for generations to come. You can also endorse this proposal online on futureu.europe.eu.

Peter Agius, MEP candidate

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