Malta 'left unprepared' for competition

The opposition's spokesman on industry, Chris Agius, yesterday accused the government of not having prepared Malta for the increased competition from North Africa and Asia.

He said during the budget debate that Labour wanted to see manufacturing industry take its place once more as a motor of the Maltese economy.

The present government had taken this sector for granted and imposed new burdens, thus raising production costs and eroding competitiveness. As a result, the sector had shed some 4,500 jobs in four years. There were 1,199 dismissals this year up to August and the risk of many more dismissals was real. The situation at Denim Services was a case in point. The government would do well to take up the opposition's call to create a task force aimed at finding new jobs for such workers.

The government, however, also needed to act more effectively to protect the industries which existed in Malta.

Competitiveness was not just about labour costs. Had that been the case, how was Finland at the top of the competitiveness league? How had the government helped Denim Services before its collapse?

Mr Agius asked what is happening at Malta Enterprise where 13 employees, notably managers and analysts, had left. He welcomed the fact that ME was now resorting to micro-targeting again. What sectors was the corporation focusing on, apart from pharmaceuticals?

Mr Agius complained that a skills mismatch still existed in Malta, and industries with high added value were having difficulty to find the workers they needed.

He also strongly criticised the government over energy prices, saying the higher cost of electricity and thin fuel oil would have a major detrimental impact on industry. Had this impact been calculated? He felt the government should have assumed a greater burden of the price hike.

In his speech Mr Agius also called for quicker action on the redevelopment of the Ta' Qali crafts Village and Ta' Dbiegi crafts village in Gozo and the development of industrial parks for SMEs. He insisted that the transport grant for Gozitan industrialists should be maintained. The government, he said, should also encourage foreign investment in Gozo.

Mr Agius said tax credits announced in the budget, such as those on e-business, research and development and new back-office operations, were good, but these measures had been announced before and they were not enough for industry. The tax credit on re-investment had also been announced by IPSE.

It was worth pointing out that tax credits applied when companies started making a profit, which would not be in their first years. The government should consider grants, when possible.

He augured that the governemnt would protect Malta's advantage in the e-betting business.

Turning to Malta Industrial Parks (MIP) Mr Agius said it was taking too long for the governemnt to come up with new schemes for factory building and for better utilisation of existing stock. Inefficiency in this sector was hindering the attraction of new investment.

There was also need for the environment in industrial estates to be raised to the standards of the Mosta Technopark.

Malta also needed business parks for start-ups according to the nature of their activity.

Touching briefly on the film industry, Mr Agius said bureacracy was the number one enemy of growth in this sector, but Malta's potential in this area was otherwise undoubted.

Concluding, he agreed with the Prime Minister's statement that privatisation would only be resorted to when market conditions were favourable. And privatisation should be transparent and in consultation with the workers.

Replying, Investments Minister Austin Gatt said the industrial niches which Malta Enterprise was seeking to promote for investment in Malta were well known. Apart from pharmaceuticals, they included ICT, aviation and maritime industries. With regard to pharmaceuticals, one had to look ahead to ensure that Malta did not become over-dependent on one sector.

It was important that the people were not misled on the future of certain areas of the manufacturing sector, notably textiles. Companies such as Denim Services may temporarily solve current problems, but he would wager that the problems would return in a few years and he did not see textile industries in Malta in 10 years' time. Such realities could not be ignored. Therefore one needed to plan to change from textiles to other services.

For example, a project being planned with Cisco was aimed at female workers in the textiles industry with little education. These persons would be trained in IT and one would then see how they would be able to venture out into new sectors of employment.

In saying that exports had declined this year, one should look at the figures carefully. The decline was in the export value of products by ST. All sectors had otherwise done well.

Dr Gatt said it was his wish to see a national industrial policy, but that could only be achieved if all parties sought the national, rather than sectoral, interests.