EDITORIAL | Wednesday, 21 November 2007

Competitiveness is the name of the game

With just 40 odd days before the euro is adopted as our currency its attractions are tangible.
Businesses will benefit from lower interest rates, lower exchange risk and lower costs related to the conversion of the currency. Entry into eurozone also sends a clear message to international investors that Malta is a stable place and open for business.
Lest we forget, qualification into eurozone was possible after many sacrifices were demanded from individuals and companies. The coming of the euro is a result of the new and increased taxes introduced throughout the last three years. The restructuring process put into motion over a brief period included a tightening of the fiscal reins of the economy and the control, still not sufficient, over public expenditure.
In fairness it must also be registered that a lot of this belt tightening took place at a time when the economic turbulence in the global market caused by the hike in the price of oil was intense. Global economic growth was also down or relatively slow and with Malta facing harsh competition from new EU entrants the difficulties to meet the stringent Maastricht criteria were big. Yet we succeeded.
The question and most importantly the challenge that we now face is to ensure that we are sufficiently competitive so as to sustain growth. The guiding light is competitiveness. Joining euro zone is no panacea for all our problems. Without our effort to continue on a growth curve the country still risks floundering. We have to ensure we remain competitive otherwise all the advantages of eurozone will be lost.
Competitiveness should be at the heart of the proposals dished out by the political class. Any promises, laws or regulations which hinder our competitiveness should be shunned. We need to produce more to sustain our standard of living.
The European framework for competitiveness is the Lisbon strategy, which includes a number of tasks and standards that each country has to aim for ranging from investing in the educational system to pouring money into research and development and effecting changes to the pensions system as well as enhancing our tourism product.
To achieve the aims of the Lisbon strategy business processes and public administration need to change radically. Maltese businesses can no longer work alone, they need to pool resources they need to abandon the tight territorial tendency and realise that to grow they can no longer afford to look introspectively but must think and act globally.
Government must lead by example and make the necessary funds available for research and innovation. This aspect of business is crucial.
Possibly the biggest benefit for consumers following the introduction of the euro, as our currency is price transparency. When purchasing any consumable people will be able to compare prices in Malta with prices abroad. This will put pressure on all businesses to ensure that their prices are competitive and will dissuade them from charging unreasonably high prices since they could be wiped off the market by doing so. This transparency, for the first time in the local market, is the biggest force to keep prices stable. In line with European norms of competition and a level playing field prices will be scrutinised and as a result businesses will be most reluctant to put their prices up capriciously.
It is also to be expected that there will be more financial products launched on the market through the influx of more financial institutions. This all augurs well for the consumer who will be able to get a better deal.
Our economy has been found to be based on credible and sustainable foundations by the European authourities, offering us a unique opportunity to reap all the benefits from the adoption of the euro. It will be a pity and indeed a tragedy to miss this unique opportunity. Being competitive is the name of the business game.