MPs call for better support for SMEs

Labour MP Joe Cilia said yesterday a Labour government would set up an institution to support SMEs in the services sector which were not related to the manufacturing sector.

Another Labour MP, Mr Leo Brincat, said there was need for an ombudsman to consider decisions affecting industry and SMEs, and tax incentives to encourage start-ups.

Nationalist MP Michael Bonnici said the authorities should be more generous in assistance given to SMEs to relocate or start up in specially designated industrial areas.

The remarks were made as parliament continued to debate the European Charter for Small Enterprises. The debate opened on Monday and ends tonight.

Notary Cilia, resuming his speech from Monday's sitting, said the aims of the European Charter for Small Enterprises could be attained whether or not Malta joined the EU.

A future Labour government would seek to make life easier for small businesses by reducing bureaucracy, much of which stemmed from EU requirements.

The Labour government had set up IPSE to modernise and restructure small business, but the present government planned to dismantle it and incorporate it within Malta Enterprise, a move which would weaken this institution.

The MLP would like to see IPSE continue to evolve as an institution which was autonomous of the government. A future Labour government would increase the funds available for the restructuring of SMEs. It would also set up a new institution to support SMEs in the services sector which were not related to the manufacturing sector.

Rather than merging IPSE, the MDC and Metco, one needed to instil greater synergy among all three.

In the crafts sector, hardly any productive work had been carried out by the new Malta Crafts Council when there was the need to protect and promote typically Maltese products. Maltese crafts needed to be viewed as being part of Malta's cultural heritage, and training in traditional crafts needed to be promoted.

Crafts villages, particularly those at Ta' Qali and Ta' Dbiegi, would be improved.

As for credit management, laws would be enacted to protect small businesses so as not to have a repetition of the Price Club case.

Land area would be made available for small businesses to be set up or expand without inconveniencing other sectors of the community.

Notary Cilia said that in view of the importance of the self-employed to society, a Labour government would improve the conditions of this sector in the social sphere, such as by removing anomalies in areas such as national insurance.

Mr Leo Brincat (MLP) said government policies were discouraging business, to the extent that small businessmen were closing down and seeking employment.

Even the EU's charters needed to be taken with a pinch of salt. The charter under debate, in which one could find little to criticise, spoke of the need of access to technological research. How much emphasis was there on entrepreneurship at all educational levels in Malta?

Was the tax system tailored to the needs of small businesses? Simply organising an annual conference to discuss this charter would not go far. A good plan and benchmarks to work on would be more important.

The biggest void today was the plan to set up Malta Enterprise without a national enterprise policy and without all-round consultations.

Mr Brincat observed that the EU Commissioner for SMEs, Erkki Lukanen, had been quoted as saying that only in theory could SMEs tap a single market of 380 million customers; they depended almost completely on their own regional markets.

Membership of the EU would mean more red tape, not less. Mr Lukanen himself had complained that administrative delay in the setting up of small enterprises would stultify the successful launching of new products.

A green paper due out soon in the EU would seek to understand why so few people in Europe wanted to become entrepreneurs, and why so few small companies wanted to grow. All this was putting paid to the government's propaganda about membership of the EU for SMEs.

Surveys in Europe by Eurobarometer had shown that small businesses in Europe were less enterprising than their counterparts in America, and the bureaucracy in the former did not help.

The EU itself knew that overall productivity growth in the services sector, which included most SMEs, was much lower than that in the manufacturing sector. This was a dilemma that even the Maltese government was facing.

Several incentives, aids and allowances under the Industrial Development Act were no longer available to SMEs under the Business Promotion Act. In some ways the act went against EU policy, and Brussels had drawn the government's attention to this.

It was high time for tax incentives to be introduced for start-up SMEs, just as there were in other sectors. What small businesses in Malta needed was not EU membership but a change of thinking. They needed somebody to work on their suggestions, not just listen to them.

Malta would be well advised to emulate other countries by instituting an ombudsman to consider decisions affecting industry and SMEs, and business support networks to anticipate problems.

Mr Noel Farrugia (MLP) said that five small businesses had recently instituted court proceedings because they felt that the public-private partnership concept was going to be in direct competition with them. These were circumstances that needed thorough evaluation.

In order to conform to the EU's common agricultural policy the government would have to take measures which would be detrimental to the competitiveness of Maltese farmers, who were self-employed.

Farmers were important because they provided food and protected the countryside.

Should Malta join the EU, Malta would have to buy most of its food imports from EU member states at a substantially higher cost than at present.

Such dearer imports, such as in the case of flour, would cause problems for bakers.

At this point there was a heated cross-debate between Parliamentary Secretary Edwin Vassallo and Mr Farrugia, the former insisting that Labour's EU partnership proposal would not lead to a better food imports deal for Malta.

Continuing, Mr Farrugia insisted that farmers and fishermen should continue to be supported. Under Labour's partnership proposal, Malta would not be bound as to where to buy its imports from and at what price.

Mr Michael Bonnici (PN) said the charter held that small enterprises were the first to feel both the pinch of bureaurcracy and the benefits of streamlining. With more than 90 per cent of EU productivity coming from SMEs, the government knew the importance of this sector to the economy.

The government was duty-bound to create the right economic climate to increase employment, including the setting up of small enterprises. There needed to be efforts to reduce bureaucracy.

Small industry could no longer operate from garages in inhabited areas, inconveniencing neighbours. There was still a lot of space available in existing industrial estates.

More generous assistance should be considered to enable SMEs to relocate to the designated industrial zones or start their operations there.

The debate was suspended at 9 p.m. with Mr Bonnici in possession.