'No choice but to achieve'

The EU is not yet on course to reach the targets it laid down in its Lisbon Agenda for Growth and Jobs, agreed to in 2000. In a bid to boost progress, each member state is now pursuing its own national strategy, the so-called National Reform Programme (NRP). Malta's NRP is being implemented under the responsibility of Competitiveness and Communications Minister Censu Galea, chairman of the Cabinet Committee on Competitiveness. Ivan Camilleri spoke to him in Brussels.

What is the National Reform Programme and what does it aim to achieve?
The National Reform Programme is a plan of action to modernise our economy in view of the targets set by the EU. Through its implementation the government is carrying out a strategic agenda that will ensure Malta becomes an even more relevant political and economic actor in international relations. As we all know the EU itself and its immediate neighbourhood are going through a process of rapid transformation. Over the years, as a partner country, an accession state and now a member country of the EU, Malta has demonstrated that it is capable of adapting to the changing geopolitical and geo-economic climate that we find ourselves in. This is a process that we must continue.

How were Malta's targets identified?
Malta's NRP is the outcome of a very substantial public consultation exercise with the five strategic themes selected being chosen after a lengthy marathon of interaction between the public sector, trade unions, employers' associations, members of civil society and Parliament. As a listening government, this style of continuous public consultation is a policy we will continue to adopt throughout this programme's implementation.

What are the main objectives of your strategy?
We have decided to concentrate our efforts on five strategic themes in the coming years. These are the sustainability of public finances, competitiveness, employment, education and training and the environment. We think that focusing on improving these areas will ensure that Malta's economy will be better geared towards the increasing challenge of competition around us.

On the other hand, the NRP also recognises the changing socio-demographics and their impacts on public finances and employment, and is contributing to address these issues over the next three years.

Although we have been a member of the EU for the last two years we can't really say that our economy is booming. Have we lost our competitive edge?
Improving national competitiveness is a matter of priority for the government as it will help Malta respond to changing international economic conditions. Increasing competitiveness is vital for Malta's economy to continue to expand and grow.

Our primary thrusts are aimed at mobilising investment and reinforcing an entrepreneurial culture, removing as much as possible unnecessary obstacles or burdens to businesses and branding and upgrading tourism infrastructure. There is no quick-fix for achieving competitiveness, but I believe that we may be, even now, seeing the first positive results.

Nice words... what concrete action?
True, these may sound like only nice words. However the NRP is about concrete action.

First of all, within this context, I want to refer to the various market liberalisation measures undertaken over the years that are concrete proof of this government's track record. Reforms have been introduced with the aim of increasing the exposure of a number of industries to market discipline, and to accompany this liberalisation process with an appropriate regulatory regime. Examples of this line of policy include the telecommunications sector, banking, financial services and postal services sector, among others.

With regard to the present it is important to point out that various measures mentioned in our NRP have already been included in this year's budget programme and are being implemented.

Among the actions to be initiated to better our competitiveness, we will be reviewing our enterprise policy to meet the current and future needs of the country. We have also already set up a dedicated Better Regulation Unit with the aim of simplifying processes, consolidating and rationalising regulations in particular to SMEs. We are also working at developing new tourism niches while sustaining mainstream tourism and upgrading our key infrastructure.

A reform of Maltese ports to maximise utilisation of the Valletta Port is also being tackled. We are trying to remove inefficiencies in the pricing structure in the operations of our ports through the involvement of the private sector. In fact, this process will soon be over.

Employment is one of the most important sectors the EU is focusing on. We have still one of the lowest employment rates in the EU, especially in the female sector. What are you doing about this?
It is the government's intention to raise the overall employment rates and we are particularly focusing on an improvement in the female and older workers' participation rates. To that effect, the government has committed itself to implement various measures such as a revision of the youth employment strategy, a review of the tax and pension systems to encourage female participation and promoting family-friendly measures including eWork and child care.

While acknowledging that a large part of the NRP concentrates on development of our physical infrastructure, my government firmly believes that Malta's competitiveness can only be sustained if serious resources are also committed to the further development of our human resources. It is for this reason that education and training is a strategic goal that we will dedicate utmost attention to throughout our continuous process of reform. We believe that every citizen must be given the chance to improve his/her aptitude through a system of life-long education and training and we will endeavour to build upon the already good reputation Malta has in this regard.

The government is further strengthening the compulsory education system (secondary, higher education and the provision of guidance services) and establishing systems that recognise non-formal education and training. We are also ensuring that education and industry stakeholders collaborate to ensure graduate supply-demand balances.

How will you be implementing all these initiatives at the same time while trying to further reduce the deficit?
Every single one of the challenges I mentioned are framed within the context of sustainability of public finances and environmental sustainability.

Malta's medium-term budgetary objectives have already been spelt out in its updated Convergence Programme presented to the EU. We are determined to meet the convergence criteria and we are giving concrete results on this.

The commitments made in the Convergence Programme and the characteristics of the country place limits on the infusion of public funds in the economy. A delicate balance was found between what is affordable in the medium term (under fiscal sustainability), the relevant priorities of the country and the ability to support growth sectors of the economy.

What about our strengths? Do we have any when compared to the outside world or are we only an inward looking economy?
We are not starting from scratch. Over the past two decades we have revolutionised our economy. Look at the financial services sector. It is a major success story of the Maltese economy. It has assumed growing importance over the last decade and is now a significant contributor to Malta's economic output. In 2005, financial services contributed 12 per cent of GDP and the sector is responsible for 6,000 jobs. Net asset value of Malta-based funds jumped from Lm400 million in 2004 to Lm1,800 million in 2005.

Another sector where we have an excellent track record is the telecommunications sector. Since the liberalisation of this sector a few years ago Malta has experienced nothing less than a telecommunications revolution.

The mobile telephony sector has registered a phenomenal growth over the last four years and broadband subscriptions have increased threefold in 2005. Cable TV subscriptions have reached 77 per cent penetration of households and in 2005 a new Digital Terrestrial TV network was introduced.

Today we can boast that Malta has become an ideal location for international financial and company services to set up base.

The Malta NRP has been criticised as lacking new initiatives. What are your views on this?
In the process of drawing up our NRP one of our guiding principles was attention to detail and commitment to achievable targets. In fact, our programme is concise but very detailed. We do not just say what we want to achieve but we give details of the process, the ownership and the measures that are planned to achieve our goals. We committed ourselves to tangible targets and gave a detailed account of how we intend to bring the various initiatives to fruition.

Various important measures that are critical to the economic well-being of our country and which have been topical for a long time are now being implemented or are in the pipeline. I have already referred to the port and pensions reform which are considered by all and sundry to be key initiatives, but there are various others.

If we achieve what we have embarked on in our NRP, in three years' time we would be able to respond to our detractors, the same way that we do with reference to the telecommunications, IT and financial sectors of our economy where we have been extremely successful contrary to what the usual doomsayer was predicting a few years back.

Do you really think the government will achieve all the NRP's targets?
We have no other choice. We have set ourselves these targets. With our feet on the ground and within a strategic context and knowledgeable about our limited resources, we are taking new initiatives that fit with our situation, trends and future direction. That is why education and environmental sustainability are important to us. The Commission agrees that the ambitious objectives and proposed measures are appropriate and relevant to the situation, scale and characteristics of the country.

Implementation is crucial. This is not an internal exercise we are carrying out. All ministries have been given a responsibility with specific tasks that fall under their remit for the timely and effective implementation of NRP measures. The Management Efficiency Unit will be monitoring and reporting on implementation progress to the Cabinet committee regularly.

Implementation requires a tripartite social dialogue within the Malta Council for Economic and Social Development and with other stakeholders as necessary. As the Malta NRP states, "these fora provide the opportunity to anticipate, discuss, act and manage change".

At the same time, Malta will be doing its best to maximise the EU opportunities and funds for a number of measures and the National Strategic Reference Framework 2007-2013.

As Malta approaches its third year of EU membership it is clear that becoming more competitive is our country's main strategic goal. It is only through the economy's sustainable expansion and growth that we can guarantee the existing high levels of social cohesion attained over the years to come. We are determined to improve this.