The Malta Independent 3 March 2024, Sunday
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We must do more to support family businesses

David Casa Sunday, 5 February 2023, 07:04 Last update: about 2 years ago

Having survived the pandemic with deep bruises, Malta’s small businesses are now contending with inflation. The EU gave the green light for emergency instruments to be used to support citizens during the various crises that gripped the continent. Reconciling the need to lower debt and supporting our communities is the upcoming challenge.

In doing so, protecting small, community businesses is a particular priority and remains the litmus test in assessing our economic health. This is because among all the SMEs operating in Malta, the overwhelming majority of them are micro-enterprises that employ less than 10 people and generating limited revenues.

Despite their size, microenterprises collectively contributed more value to the Maltese economy than small, medium or even large enterprises. More than big projects, Malta’s economy is dependent on the smallest enterprises, especially retailers and professional services. This is why it makes sense to invest in them.

In addition to the contribution to the economy, their community benefits should not be underestimated either. They provide employment for workers who are both skilled or unskilled more than larger companies. They arguably cater for clients in ways that bigger businesses do not, being more flexible to expand into different niches and offer genuinely unique products and services.

Malta’s economy is lively precisely because of the high quality goods and services offered by Maltese entrepreneurs who strive daily to provide better, more innovative products to a variety of market niches. This is true in the tourism sector, but it is also thanks to these small businesses that Malta can become a better place to live.

Investing in our community businesses should be a priority. The question is how to do it. Life needs to be made easier by cutting red tape, lessening bureaucratic requirements, and ensuring support throughout administrative processes. It should not take half a year for permits to be issued, for instance.

And we cannot forget the small businesses who pay rent. The surges in the property market does not just mean that most businesses absorb costs to remain competitive. It also makes them more vulnerable if something happens to their place of work. Expiring leases, bad advice, and disputes can stop businesses in their tracks at very short notice, with limited options and high hurdles for them just to continue serving clients.

Regrettably, these stories are becoming more and more common from honest family businesses who want to do things by the book. It boggles the mind that constituents have to endure out of pocket with delays and setbacks while ‘cowboys’ flaunt regulations with little repercussions. This logic reveals a worrying reality where it is often more profitable to break the law than it is to follow it.

What is the purpose of laws, regulations and processes if they are so tedious to comply with they end up being prejudicial to the point that family businesses cannot operate? Having a regulatory labyrinth only incentivises those with a disdain for the law to do as they please. ‘Cowboys’ benefit doubly from poor enforcement, taking advantage and distorting competition with those who try to obey the law.

This needs to change, especially now. As inflation’s grip starts to release slowly, the smallest businesses are still vulnerable. It is already a tall order to thrive in an unstable climate. Reinforcing unfair practices can deliver a decisive blow against struggling enterprises.

The only way to fix this is to have robust but very efficient and fair processes for businesses. The default position should not be to let them wait, not when livelihoods may be at stake. Respect for those processes must be coupled with stronger enforcement of those with a knack for not doing things properly.

It is also paramount that Malta starts to better appreciate its local talent. An immediate solution is to have better financing opportunities for microenterprises, but especially those who are doing something innovative. Not just technologically. But goods and services continually benefit from Maltese innovation, in turn benefitting residents and visitors alike.

Going forward, microenterprises must receive better support to weather the challenges and exploit the opportunities made available, especially in the context of the green transition. In the Social Climate Fund that I have just concluded in negotiations, microenterprises are listed as beneficiaries. They will be entitled to investments to become more resilient to the challenges they may face.

This kind of support needs to be available generally. The first bump in the road should not be enough to send microenterprises packing. More support means improving the offering of our retailers, sustaining its diversity and upholding its quality. Maltese workers have an ingenuity that should be encouraged, not curtailed. Their talents can and do drive innovation. They deserve our attention and support.

 

David Casa is a Nationalist MEP

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