During a business breakfast held by the Malta Chamber of Commerce, a strong discussion occurred in favour of collaborating to fight the insularity problem Malta faces at a European level.
Kicking off the discussion, Malta Chamber of Commerce President Marisa Xuereb took a moment to spare a thought for the conflict going on between Ukraine and Russia.
“Europe is technically in a war with its main energy supplier. The ramifications of Russia’s actions go beyond the atrocities it is committing in Ukraine.”
Xuereb then shifted focus on the issues being discussed at the conference. “Whereas mainland Europe has the facility of delivering its goods through land transport, we are limited to the air and sea. The manufacturing industry is feeling the brunt of this and a small port like Malta is often overlooked when it comes to certain shipping routes.”
This causes problems for manufacturers who will have to close off manufacturing lines due to the lack of income when exporting goods and exaggerated costs when importing them, Xuereb said.
“11% of the employment in Malta is related to the manufacturing industry. This is why we cannot let it dwindle down because of our insularity problem. Our manufacturers have serious ambition for growth, but they are hampered because of this.”
In her final statement Xuereb took aim at European directives for the transport of goods around the European Union which she said forget small island states and their difficulties. “Europe has to realise that the one size fits all rule does not apply to everyone.”
Head of the European Office in Malta Mario Sammut said that it is their job (EU office) to hold discussions between stakeholders of the manufacturing industry and Maltese MEPs in order to notify the difficulties faced by “the men and women on the ground.”
Sammut praised the work done by MEPs Josianne Cutajar and Cyrus Engerer on working to address the issues faced by small island states and insularities. “We are lucky to have MEPs who listen and act. Finding the middle road which pleases everyone is not easy, but we have the obligation of flagging these issues at the highest levels of the European Union.”
CEO of the Malta Chamber of Commerce Marthese Portelli said that “the Chamber’s mission is to continuously help businesses flourish and grow. These issues are the biggest stumbling block businesses face when competing with foreign markets, that’s why we need radical change in the sector.”
Portelli said that the Chamber is fully aware of the insularity, peripherality and small size Malta has. “We face constant problems of connectivity, frequency of routes, delays, ever increasing costs and now we also face the problems of EU directives de incentivizing air transport due to the impact of the environment. Although this is a good measure at its core, it comes at a major disadvantage for countries like Malta.”
Portelli firstly focused on Malta’s peculiarities, them being insularity, peripherality, size and economic scale. “Malta’s economic size limits our import and export requirements and therefore we are constantly overlooked by shipping companies. The lack of routes available to and from Malta are a constant threat to our manufacturers.”
At a local level, Portelli called for more digital investment to help businesses upscale their operations in order to address their logistical challenges more efficiently. This paired with better financial support structures to cope with today’s realities and a review of customs operations in Malta is what is needed, Portelli said.
At an EU level, Portelli stressed on the importance of introducing a level playing field with manufacturers from mainland Europe. “We have to address the disadvantages that are hindering our manufacturers’ ambitions as well as the constant obstacles they face with upscaling. We also have to remove international barriers as well as make EU regulators aware of Malta’s perspective on the issues at hand.”
In her final statement, Portelli said that “we must cooperate with our representatives at an EU level to make them conscious of the challenges which Malta faces on a daily basis. Our drive will not stop at this conference, we will continue to draft policies and we will remain in contact with our partners to address these issues.”
'We need to work together'
For this conference the Malta Chamber of Commerce invited all Maltese MEP’s, include European Parliament President Roberta Metsola. However only MEP’s Josianne Cutajar and Cyrus Engerer were available to be physically present.
Cutajar acknowledged the fact that Malta faces exaggerated costs due to the non-existent land routes to mainland Europe. “This causes added costs which Maltese manufacturers have to suffer from in return. We have to make Europe aware of the challenges we have.”
Cutajar stated that the problem of insularity which Malta faces poses a risk to the freedom of movement in Malta. “It is essential that we leave no one behind. Manufacturers in Malta and Gozo only have land and sea as their channels to Europe. The European Union is not doing enough for its small island states, I believe, and we have to keep pushing for a level playing field.”
An appeal was them made by Cutajar for small island states within the EU to join forces and voice their opinions and concerns as a united front. “If we all work together to reach a new pact with the EU, we will be doing our work.”
Cyrus Engerer continued on the points presented by Cutajar, stressing that “we are all part of the European Union and we have to ingrain this point into our everyday workings.”
“We are probably the only member state that is different from the rest, therefore we have to start off by proposing change and not amend EU directives to suit our specific needs,” Engerer said.
Engerer then called to the attention of everyone the realty that Europe is changing and “we have to be the influencers of legislative change because this shift in Europe will greatly impact manufacturers in Malta.”
Focus was then shifted to waste management in Malta. Engerer stated that Malta must no longer look at waste as a problem but rather as a resource. “Malta ships a lot of waste for recycling purposes and more. We need to shift our mentality and utilise every resource we have.”
In his closing remarks Engerer called for Malta to be considered before the proposal stage of legislation. “We must pride ourselves in being ambitious in all regards.”
Increase in shipping costs
After interventions from the Chamber of Commerce and MEP’s, the floor was opened to a panel discussion comprising of various manufacturer representatives who talked about their issues with insularity in Malta.
Chairman for the Manufacturing Group Brian Muscat had strong words to say with regards to the difficulties the manufacturing industry faces as a whole.
“Our domestic market is very small and therefore we have to compete with international markets. The problem is we cannot compete with international markets due to the added costs we face when importing and exporting our goods around the EU.”
He also revealed that his company has an added cost of around €800 per container of goods shipped in or out of the country. “This does not let us compete without international counterparts.”
Apart from these added costs, Muscat stated that in order for a manufacturer to remain relevant, “one has to continuously invest in machinery and warehousing as this is the only way to survive. We need the support of the EU and policy makers in order to tailor a strategy which tackles our insularity problems.”
Musca also called for proper investment when it comes to the labour market, stressing on the importance of quality education in order to have more technically inclined skilled labourers.
Farsons CEO Norman Aquilina also had harsh criticism of how things are currently being undertaken.
“We are at risk of depleting our export drive, which would be the end of our manufacturing industry. The rise in export costs is rendering us uncompetitive.”
Due to these costs, Farsons cannot always be stocked with raw materials and goods to cater for demand. The company is also finding difficulties when it comes to completing contracts with foreign consumers due to the high prices brought about by high export prices.
“We are disconnected from mainland Europe and although the issues we are facing today have always been there, nowadays the are even more pronounced.”
In his final appeal, Aquilina pleaded to not treat the Malta Freeport as untouchable. “This mentality is part of the problem, and we have to change things in order to make ourselves more competitive.”
Other panellists also built up on what was said.
One panellist stated that “Malta relies on 7 shipping lines which carry 75% of the import and export goods out and in to Malta. These companies have registered billions in profit throughout the year and the European directives do not even address these issues.”
One panelist also claimed that the problem has become so bad that “it feels like the Santa Maria convoy has arrived whenever we get a shipment in Malta.”
Another panelist made reference to the European way forward when it comes to the transport of goods. “Last year Europe pointed direction towards the rail system as being the future of transport. The year of the rail they called it. 11 million people who live in small island states across the EU were left in disbelief of what was being said. The truth is that we are not being considered.”
In the closing section of the conference, a common sentiment was felt that Malta together with other small island states have to make the difference needed. “The Maltese trader is not trading in the domestic market but with international traders who have less excise tax, less export and import costs and also fewer customs problems. We have to make the playing field level.”
Photos by The Malta Chamber