House debates SMEs charter

Nationalist MPs yesterday praised the government for measures it is taking to boost SMEs, but Labour MPs insisted that this sector would not grow until the government acted to lift the national economy from stagnation.

The remarks were made during the continuation of the debate on the European Charter on Small- and Medium-Sized Enterprises.

Evarist Bartolo, opposition spokesman for tourism, said small enterprises depended on the local economic situation and the situation was not rosy: exports and imports had declined. Government ministers were saying that Malta should have a smaller manufacturing sector and concentrate on the services sector, but even this had dwindled by seven per cent.

And while economic activity was declining, the tax burden was getting heavier.

Malta was meant to have a strategic plan for tourism by next month, but there was no sign of it being anywhere near. Tourism affected several other economic sectors, yet the government was undermining important niche sectors such as the language schools through cumbersome visa procedures and taxation.

Another tourism area that the government was hitting hard was the restaurants sector. Of all EU countries, Malta imposed the highest taxes on restaurant services and tourism in general. If the government reduced the VAT charge on restaurants, the increased business would net the government even more in revenue.

The national economy clearly needed an injection of new life and tax revenues should be used to stimulate the economy.

Since accession to the EU Malta had taken on the burdens of membership but had not managed to get enough advantages out of it. It seemed that the government was not well equipped to go after these advantages. There should be full-time employees specialised in doing this, Mr Bartolo said.

Chris Agius, Opposition spokesman on industry, insisted that the government needed to publicly acknowledge the problems which the economy was facing. Economist Edward Scicluna had recently said that the country was experiencing one of the longest recessions since World War II.

The rising cost of living, fuelled by climbing energy prices and taxation, was harming both consumers and industry. While taxation was going up, government services were going down.

Disposable income was declining while industry was facing higher costs and risking lower competitiveness. Malta had dropped 16 places in two years in the competitiveness index compiled by the World Economic Forum. Ever since the government had linked local fuel costs with international prices, the cost of diesel had increased from 20c1 to 41c8.

Clearly the government needed to stimulate consumer demand and industrial competitiveness in order to lift the economy out of stagnation.

Small businesses were facing mounting charges wherever they looked, even in their dealings with the banks. Clearly the government needed to intervene to ease such burdens and help SMEs.

The European Charter on Small Enterprises placed a strong emphasis on worker training. But Malta was continuing to suffer from a mismatch between labour supply and industry needs. This problem had existed for many years, but progress had been small. A case in point was how Malta Enterprise was seeking to attract pharmaceutical firms when not enough skilled workers were available.

It was unacceptable that just over half of Malta's young workers only had a secondary level of education. His view was that many employers were not recognising the importance of MCAST courses, and many students had major problems to find sponsors and a job after completing their course.

Malta also had too few graduands in science and technology, and occupied the bottom of the EU league in this sector.

Mr Agius said he welcomed the fact that procedures for the granting of trading licences had been improved. Such licences also had to be approved by Mepa and he hoped that a recent declaration by Environment Minister George Pullicino that Mepa would also speed up procedures would be realised. Indeed, several authorities had created too many hurdles in the way of small businesses. That applied, for example, to excessive regulation by the tourism authority.

The Labour MP said industrial parks needed to be improved, and he hoped the newly-projected parks would be set up as soon as possible.

The Kordin Incubation Centre also needed to be given greater importance and one should consider expanding its facilities.

Joe Falzon (PN) said the EU Charter on Small Enterprises was aimed at facilitating business by removing obstacles to growth, such as undue bureaucracy and inadequate training. SMEs were very important to the EU and they were particularly important for Malta, because they included most Maltese firms.

The public sector had a key role in facilitating business and the government was working for greater synergy between the public authorities and civil service departments somehow connected with business activities. Indeed, the issue of bureaucracy remained of concern.

Successive PN governments had repeatedly expressed their confidence in Maltese workers as the main resource to fuel economic growth. Training schemes were put in place in line with this belief.

Indeed, small businesses had flourished and more jobs were being created by this sector. Some 1,500 jobs were created between December 2003-2004 in the commercial sector while the number of registered self-employed grew by 300. The average income of employees in the manufacturing sector grew by 14.4 per cent.

What the various PN governments had in common was that they always sought to identify future developments and prepare themselves for new challenges.

The recently published pre-budget document was yet another example of forward planning aimed at attracting investment, promoting growth and trimming government spending. Unfortunately this was a time when the global economy was starting to feel the pressures of rising oil prices, but this should not derail government efforts to strengthen the economy and further plan for growth.

The members of the Malta Council for Economic and Social Development should seek to pull the same rope in line with national priorities. Parliament should also consider the entrepreneurial point of view when enacting legislation. Mr Falzon also stressed the importance that businesses operated on a level playing field within competition that was fair.

Joe Cassar (PN) underlined the government's commitment to small enterprises and how the Prime Minister himself had viewed the charter as being the guiding light for policies to be followed by EU member states to help small businesses and gain competitiveness. Dr Gonzi had also said that the charter should be seen as being the tool which all ministries, departments and public entities should use to promote this sector. Competitiveness Minister Censu Galea had also spoken on the need of certification of standards followed by SMEs.

But while everybody seemed to agree on the need for proper standards, once such schemes were adopted complaints started over costs. Once both sides of the House agreed on the need for seriousness and proper standards, they should support all mechanisms tailored to ensure compliance with such standards.

Maltese businesses needed to follow high standards whether or not Malta joined the EU, because they would otherwise have lost their markets.

Dr Cassar said he welcomed the fact that one of the ways the government was seeking to boost SMEs was by investing more in education and worker training. Proper training, after all, went hand in hand with high standards. Happily, worker training was also being extended to occupational health and safety, and the Occupational Health and Safety Authority had held activities for workers in industrial zones. It was significant that the number of occupational accidents had declined by 13.4 per cent, showing greater awareness of the need for precautions.

He augured that the PN government would keep up its record and continue to work on the implementation of the EU Charter on Small Businesses.

Other speakers will be reported tomorrow.