MPs underline competitiveness challenge

MPs from both sides of the House underlined the need for competitiveness during the final day of a three-day debate on the government's policy on entrepreneurship and SMEs.

Labour MP Carmelo Abela said there was no doubt about the need to foster an entrepreneurial mentality. The public sector, first and foremost, had to observe such a mentality and not serve as a barrier to business initiative.

The education sector, too, should promote entrepreneurship. Much remained to be done in this context at the university. What had become of those students who were successful in business plan competitions and Young Enterprise? Had they been encouraged to further develop business careers? Indeed, graduates, and others leaving post secondary courses, needed to find support when they decided to forge a career as self-employed.

But in saying that the university should promote entrepreneurship among its students, one also needed to ensure that the university had the funds it needed to achieve its aims.

Dr Anglu Farrugia (MLP) said there was general agreement on the benefits of a free market economy, but if investors' long-term interests were not protected it would spell economic disaster.

Malta needed to guard and improve its competitiveness. But selling off Sea Malta was not a step in that direction. The national shipping line was Malta's only assured shipping service to the main export markets. Clearly, national interests would not be at the top of any private shareholder's agenda.

Dr Farrugia complained that SMEs going through a bad patch were not finding the financial help they needed from the banking sector. Some entrepreneurs had lost almost everything they had worked for.

A better company recovery procedure for SMEs was clearly needed.

Dr Farrugia said all that Malta Enterprise had to show for its efforts so far was a small firm employing some 15 people.

But hundreds of jobs had been lost at other workplaces.

Non-EU potential investors in Malta were getting bogged down in bureaucracy and the only real losers were the Maltese people.

Malta needed to step up its efficiency and avoid squandering. At Malta Freeport, Lm2 million had been spent to repair a gantry crane, and it was still not working.

Thousands of liri were being spent on hired cars at the Freeport. There did not seem to be a problem with this, but then the government claimed to have no funds to adequately help SMEs. This was not the sort of thing that created trust and an open environment which promoted investment.

Concluding, Dr Farrugia said he had reported what was happening at Sea Malta to the World Bank, which agreed that the shipping line was an essential asset to Malta's interests.

Labour MP Stefan Buontempo also insisted that SMEs should not be burdened by so much bureaucracy, saying the self-employed were having to spend too much time on paper work.

This sector clearly needed to be given greater attention, not least as it constituted 40 per cent of the economy. Before the last election the number of self-employed had gone down by 325 because the Nationalist government had abandoned the sector.

The government claimed that consumption was on the increase, but it was unemployment that was growing. Cash flow was shrinking and people in the construction sector were being paid by barter. Indeed, the government should reflect on the poor performance registered by trade fair exhibitors this year.

What businesses needed was an environment where they could work. Sending them 20-year-old tax bills was not only illegal, but it certainly did not help the situation.

The government was seeking to reduce its spending by cutting back on capital projects but not on its current spending. And tax revenue was not growing because of economic growth, but because of a higher rate of VAT, as well as new taxes on medicinals and property inheritance, leaving less money in people's pockets.

Nationalist MP Robert Arrigo said banking facilities to SMEs had improved considerably over the past few years.

He referred to comments that sales at the trade fair had declined, saying the fair was no longer the only place from where one could obtain bargains and discounts.

He said that the Employment and Training Corporation should consider giving benefits to people registering for work, aged over 40, who were willing to take up self-employment.

Mr Arrigo called for greater flexibility and understanding by wardens with regard to SMEs. In his district many shop owners complained about how they were fined Lm45 for parking to load or unload merchandise which took longer than six minutes.

Winding up, parliamentary secretary Edwin Vassallo said the country's economic development depended on people in business. But one had to move from words to facts.

He stood by his view that the battle against bureaucracy was slowly being won, but said bureaucracy was akin to a deadly disease where progress to counter it was slow and no effective medicine had been found.

Boosting the sector of small and medium sized enterprises should be a collective, all-round effort. The government had a vision for the sector. It knew where it wanted to go.

For a start, he wanted to bring about a change of mentality in the way decisions were taken. The way legislation was written needed to be improved, and it was simply intolerable that every violation was described as being a criminal offence, with the guilty persons liable to imprisonment.

Mr Vassallo said he wanted to create a climate where authorities and government departments held regular consultations with businesses and both sides better understood each other.

Decisions by ministers and authorities should not be taken in isolation but their potential impact needed to be considered in the context of previous decisions.

Mr Vassallo said he did not want the self-employed to be favoured by the government, but he wanted the government to better understand the needs of businesses so that legislation was better drafted. It was a process which would take a long time to reach fruition and which had to include the service providers in a new mind-set.

One should not look down on people in business. Everyone had a contribution to make towards the creation of jobs.

People in business, however, also had to shoulder their responsibilities. For example, if everyone paid his taxes, the government would not have a revenue problem and taxes could actually come down.

Mr Vassallo said his secretariat would soon be publishing its business plan for 2005. He said the government remained committed to continuing to improve the business environment and boost opportunities for financing and training for SMEs, all aimed at job creation.