EDITORIAL | Wednesday, 19 December 2007

A European mindset

As all four political parties apply the final touches to their electoral programmes, this newspaper hopes that due attention is paid to the concerns of business within the new European environment.
If the private sector is to be the powerhouse of the economy just like all European democracies, the concerns of people in business need to be addressed; especially in the fiercely competitive environment that Maltese businesses operates in today, and more so tomorrow with the introduction of the euro. We strongly advise that concrete proposals are included and that all four programmes are not filled with platitudes and pious intentions. Most importantly, prior to publication it is of paramount importance that dialogue meetings with the private sector and not just the constituted bodies take place at which the politicians can hear first hand what the problems being encountered by business are.
The problems facing business in today’s Malta are various: Bureaucracy, unfair competition, restrictive practices causing a non-level playing field, excessive bank and insurance charges, excessive penalties, new eco taxes, costs for the introduction of European Union directives, excessive taxation rate on company profits, and excessive debit and credit card charges, among many others.
The forthcoming election gives all four political parties an opportunity to address these issues and commit themselves to proposals. After the election, the victorious party will also have the opportunity to actually implement its proposals. If cleverly worked out after a consultation process, they could go a long way towards making Malta more business friendly where business applications are fast tracked as in northern Europe.
Achieving growth in the next few years is not going to be easy. Growth is not automatic in the euro zone. The world economy is struggling against increases in the price of oil and cereals. It is agreed that the age of reasonably priced food is over and that no country can look forward to food prices stabilising, let alone remaining at their present levels. This can create social upheaval. It is against this menacing background that the parties need to carefully, sensibly and responsibly draw up their proposals. The price of oil cannot simply be dismissed by committing oneself to not increasing the surcharge beyond 50%. This is a short-term measure; in the long run we need to start tapping into alternative sources of energy. This involves concrete and not token incentives to ensure that business leads the way to getting its energy requirements from alternative sources.
It is too simplistic for increases in the cost of living to be portrayed as greed on the part of the business community. While not excluding the existence of certain unscrupulous businessmen, all cannot be tarred with the same brush. Imported inflation and abuses by companies operating from a dominant position certainly cannot discredit the whole business community. Needless to say, wherever abuses are taking place the office of fair-trading should step in and impose corrective measures, which would exclude price orders and other protectionist measures.
The issue of government-induced costs also warrants analysis. During the last three years there have been many increases in taxation, new taxes and charges imposed by government, which have had a detrimental effect on business. The only way that these costs can be absorbed is through an increase in economic activity in the country. Fortunately, the tourism turn around could help ease many burdens which have fallen on the business community in the last few years.
Making the environment more business friendly in order to achieve growth is one side of the coin. Equally important is to ensure that the country’s welfare benefit system is not made unsustainable. All new welfare benefits and hand-outs can only be financed through economic growth and by the country producing more. Without these developments the government will simply have to carry on increasing taxation with the correspondent decrease in disposable income and, as a result, growth. Fortunately at this moment in time the employment prospects and potential for growth look rather promising. But these cannot be taken for granted. Our economy is subject to all the shocks of the globalised world and markets can fail very easily. Accordingly we must carry on focusing on our economy being competitive in order to compete. This requires a leaner public sector and an export-driven business activity capable of bringing in foreign earnings.
Our membership of the euro-zone should certainly help towards attracting more foreign investments to our shores. It should as a result be less risky and more secure to do business in Malta. There are also a great many advantages which the business community is welcoming including lower interest rates and the elimination of currency exchange costs.
In the coming weeks all attention will be focused on the euro. The business community is well advised to see the euro as our own currency as an opportunity to grow in the second largest economic block with a total population exceeding 400 million. This change opens up our exports to the whole economic new world as it allows all our partners to look and consider Malta as a safer place to invest.
This new environment in which business will be operating represents a completely different ball game. Maltese operators will have to compete in the market place with the best of foreign businessmen. Rather than frown upon this development, local entrepreneurs should look at it as an opportunity to grow, to stop thinking as islanders and to develop a European mindset. Government, too, should carry on liberalising the economy.