'Clear direction' for investors

With the issue of EU membership behind it, Malta now offered a clear direction to both existing and potential investors, the Federation of Industry said.

The challenge for government, economic operators and the unions was to make a success of this by managing the process intelligently and diligently, it said.

These views were expressed at a meeting on Tuesday with an International Monetary Fund consultation mission, which was seeking the FOI's views on the economy.

The consultation mission visits Malta once every two years to monitor economic and financial developments in member countries to ensure stability in the international financial system.

During the meeting, the FOI officials outlined the main challenges ahead for the Maltese economy and industry in particular.

The situation had to be kept under control and the necessary measures taken so that the country would still represent an interesting destination for investment in both manufacturing and service industries, it said.

The FOI highlighted the benefits accruing to industry as a result of joining the Economic Monetary Union. In particular, the FOI found that the main factors were exchange rate stability and the discipline in public finance that the government had to follow.

The FOI delegation also insisted on the continuing need for public sector restructuring and the reining in of public spending.

It expressed its concern that the decline in the structural deficit over the past few years had been managed through an increase in taxation, rather than by a reduction in government expenditure.

The federation made it clear that it would like to see public recurrent expenditure restricted to the inflation rate.

Referring to some public corporations, the FOI president Anton Borg said that besides the continuous drain on public funds, they were being operated inefficiently and were depriving the private sector of human resources, while they negotiated wage settlements that negatively influenced the entire labour market.

The FOI has taken the initiative to have national productivity indicators as a basis for future wage settlements. A joint initiative has been taken with other stakeholders in the private sector to regularly benchmark Malta's competitiveness against other countries.

The prohibitive loading/unloading and inland transport charges was also highlighted in the context of competitiveness.

Mr Borg underlined the need for the removal of monopolies and restrictive practices at the ports, which contributed to a decreased level of competitiveness for industry in terms of level of service and charges. The federation was advocating a total reform, he said.

The FOI commented on the importance of keeping Malta's incentives for investment in industry and services as attractive as those of competing countries, the need for continuing to restructure SMEs and for optimising the country's human resources to guarantee future economic expansion in the right direction.

It expressed its hope that the successes in strengthening human resources in the upper levels would be complemented by a drive to lower illiteracy levels.