Malta 'risks losing investment' by staying out of the EU

By staying out of the European Union, Malta would risk seeing investment going to other Mediterranean countries such as Tunisia and Morocco where manufacturing costs were a third of those in Malta, Economic Services Minister Josef Bonnici said.

Accompanying Prime Minister Eddie Fenech Adami on a visit to Nylon Knitting Ltd, Prof. Bonnici said it was clear that Malta would be unable to negotiate a partnership agreement with the EU simply because such agreements did not exist.

The trend in the EU was to develop regional agreements and we would have to accept the Euro-Med agreement, which is not any better than the association agreement Malta already has with the EU.

"Such an agreement does not give us the flexibility to diversify the market and to have better penetration. We need the new leap that membership will give us.

"But let us say we stay out and have a so called partnership. Malta would have the same rights as Tunisia and other non-EU but neighbouring countries - but it would have much higher production costs.

"What incentive would a businessman have to come and set up a factory here and employ people if he has access to the same markets from a nearby country where wages could be 70 per cent lower than they are in Malta?

"If we are in the EU, a businessman knows there are no barriers and what the potential market is. If we stay out, there is a heavy price to pay," Prof. Bonnici said.

The prime minister said he was impressed by the amount of investment that the Italian owners had pumped into Nylon Knitting.

Some €35 million (Lm15 million) had been invested and another Lm1 million was being invested this year. In spite of increasing the levels of automation, the factory is employing more people and currently has a staff complement of 250.

Expansion plans are also in the offing. Dr Fenech Adami said the company had expanded and had more plans to continue growing as it knew that Malta was on the road of EU membership.

Nylon knitting took over what used to be the Chatillon in 1977. The company is now owned by Mizar SpA, an Italian company.

It exports practically all its produce, some 71 per cent of it to the EU.

Investment has brought about change in markets. Whereas previously 79 per cent was sent to the parent company, last year's figures showed that 81 per cent was directly sold to third parties.