Maltese merchant flag grows by 1.6 million tonnes

Tonnage under the Maltese merchant flag grew by 1.6 million tonnes this year and the number of ship detentions fell significantly, Competitiveness Minister Censu Galea said in Parliament on Thursday.

Winding up the budget debate on his ministry he criticised the opposition for not having said anything about consumer affairs and competition policy. The lack of any comment led one to wonder how true it was that the Labour Party gave importance to consumer affairs, Mr Galea said.

In fact, out of the 10 sections covered by the ministry, the opposition did not mention eight.

The debate was opened by Labour MP Joe Mizzi, who said Malta needed a proper port reform. It needed a policy which would maximise the use of Malta's harbours. But the reform the government was conducting only involved port workers.

Malta needed its harbours to be competitive for the sake of industry and also to attract new businesses owing to Malta's geographic location in the centre of the Mediterranean.

It was shameful, therefore, that some quays were in a poor state, equipment was lacking and safety left much to be desired.

Many questions had to be asked about the Malta Maritime Authority, not just about Grand Harbour but also about the way the Gozo ferry harbours project was being repeatedly delayed while costs continued to rise. The project was supposed to have been completed in mid-2003 at a cost Lm8 million, but the latest figure given by the government was Lm15.5 million and the completion date was anybody's guess. And why had a facility for the berthing of cruise liners in Gozo not been provided?

Mr Mizzi said there was bad use of human resources at the authority, with some well-qualified officials being under-utilised because of the interests of certain individuals.

Josè Herrera (MLP) said the ministry's revenue had continued to dwindle over the past few years. In 2007 it would lose some Lm1 million between the Malta Maritime Authority and the reduction of the departure tax. On the other hand it would receive some Lm1 million from EU funds.

The Malta Maritime Authority (MMA) in 2003 had yielded the government Lm500,000, Lm1 million in 2004 and nothing, for no clear reason, in 2005 and 2006. There was an unexplained projected Lm1 million capital expenditure: was this in connection with the Cirkewwa project or with some other project? Why was there no foreseen surplus for the ministry?

The Malta Communications Authority yielded most of the ministry's revenue, reaching Lm7.3 million in 2005 but dropping to Lm2.7 million this year, a figure that was remaining unchanged for 2007. What was the reason for this fall?

On the airport tax, Dr Herrera asked how much the Department of Civil Aviation yielded to the government from the around 200,000 Maltese travellers. In 2007 it was projected to yield Lm3.5 million due to the Lm10 reduction in the departure tax. The tax would be reduced only from June 2007 because the government needed Lm500,000 from it. Faced with continually rising costs, each passenger still paid Malta International Airport Lm6.80 out of a total tax of Lm26.80, compared to £7.74 out of Heathrow.

It resulted from the estimates that the Lm6.80 per passenger amounted to Lm1.4 million. The licensing paid by MIA was only Lm200,000, yielding Lm1.2 million profit to MIA. This was in addition to MIA's other commercial interests. Was this reasonable? Could not the tax be reviewed again for 2008 in order to make travel more accessible for Maltese travellers?

Dr Herrera also spoke about new licensing for broadcasting. Every station in Malta was expected to be broadcasting by digital terrestrial systems in three years' time. It was not fair for stations that had always abided by their licences to suddenly have to hook up with private service providers.

Turning to ship registration, Dr Herrera said the way the register was being administered was too bureaucratic.

The number and tonnage of ships registered with the MMA had decreased for some time, and although it had then started creeping back up some felt that the growth rate could improve. The MLP supported the stand being taken by Malta in the EU against regulatory changes that would erode its competitiveness.

If Malta lost its competitive edge in the maritime and financial sectors, its dream of being a financial hub in the Mediterranean would fizzle out.

Joe Sammut (MLP) said the self-employed were finally being recognised as being at the heart of economic activity. But he had expected more in their favour in this budget.

Independently of statistics, the economic situation in the country was weak. Everyone complained of low cashflow, grocers complained how sales dropped when the Super 5 jackpot grew, and those involved in construction were still getting paid through bartering, rather than in cash.

Dr Sammut said businesses continued to be plagued by bureaucracy, high government-induced costs including the high cost of water and electricity, high taxes, strong-arm tactics by the Tax Compliance Unit and VAT refunds that took too long in coming.

Dr Sammut said it was positive that both spouses owning a business were to be recognised as employees. But if a businessman was 50 years old and his wife started to pay national insurance regularly, would she eventually benefit from a pension? How was the system to affect children's allowances?

If the government really wanted to help the self-employed it should also have taken other measures, such as making self-employed eligibility for sick leave easier and increasing the size of the venture capital fund. Court tariffs needed to be reduced, red tape cut and the tax burden eased. What had become of the one-stop-shop initiatives? Why was the eco-tax higher than in Spain? The water and electricity rates should also be adjusted. Why were the commercial rates paid by a small shop the same as those of a much bigger enterprise?

The Lm1.4 million allocated for industrial parks were not enough, given the work that needed to be done.

Dr Sammut said that while it was positive that licence fees for tourism establishments in Gozo had been cut by a quarter because of the difficult business environment, that same environment applied to Malta, so the deductions should also have been applied to all businesses going through a difficult period.

Parliamentary Secretary Edwin Vassallo said micro enterprises employed a total of 44,000 workers and represented the country's largest employment sector, making them a pillar of the economy.

The best result of the government's policies for the self-employed was increased commerce. Other measures which were benefiting the sector included incentives for job creation, euro adoption and port reform - which would make Malta more competitive, the venture capital fund, tax relief, the pensions reform, the measures for host families, and the employment recognition being granted to women who worked with their husbands in their businesses. This was an important measure. To date, when marriage break-ups occurred such women ended up empty-handed. But more importantly, this measure was giving these women dignity.

Mr Vassallo said that contrary to what the opposition said, the number of self-employed had risen to 20,665 in 2006.

The Trade Licensing Unit in September alone received 86 applications for licences.

It was true that the power surcharge was a problem, but rates were still lower than when revised by Labour.

Dr Sammut had called for court tariffs to be reduced, but did not say anything on how court procedures often used by businesses had been improved.

Mr Vassallo said the leader of the opposition had taken a step forward and four backwards when he spoke about euro adoption last week. Dr Sant had said he hoped adoption of the currency would not open a door to inflation. Wasn't this a slur on traders?

The Parliamentary Secretary said the environment in industrial zones had been greatly improved, with extensive road resurfacing and the installation of services. Lm1.4 million were being allocated for a continuation of this process. The work done so far had cost Lm3 million and had safeguarded some 3,000 jobs.

Mr Vassallo said current initiatives by his secretariat included familiarisation tours of EU institutions by 300 self-employed where they could assess funding and assistance opportunities available for the sector.

The Secretariat and the Trading Division had just published a leaflet explaining the process of applying for trading licences through a one-stop process.

Over the coming months work would continue on the Ta' Qali crafts village, the Attard and Luqa industrial zones would be refurbished, and new roads would be constructed in new industrial zones. Six sites covering 80 tumoli would be transformed into zones for small factories.

Inflation following the advent of the euro would be controlled, but not in the bygone Labour ways. If the present government had ever followed those procedures, prices in Malta today would be much higher. It was competition that kept prices down, concluded Mr Vassallo.

Winding up, Minister Galea replied to comments by Mr Mizzi, saying that the outcome of the Mgarr/Cirkewwa project would speak for itself and the Gozo part of the project was to start being used soon. He said that although the opposition in government had said that the project would cost Lm40 million, its actual cost was nowhere close to such a figure.

Mr Galea said that investments in the several directorates of the MMA were to continue. The number of ships entering territorial waters in the year ending September had increased by nine million tonnes compared to the previous year; there was an increase of 83,000 cruise liner tourists and a 10 per cent increase in cruise liners.

On port reform, the minister said that contrary to what Mr Mizzi had claimed, this was an overall reform which would see changes in all operational systems, making the way the ports worked unrecognisable. Workers would be able to earn a better living and more work would be attracted to the country. This would also lead to cheaper rates for importers and exports.

There was still a lot of work involving the workers, but they also had to go through the process. However, changes would be done in a way through which no one would suffer.

The new operators would be investing substantially in the coming year, much more than had been done in recent years. The operators, the minister said, had an interest and a responsibility to ensure that new work was attracted to Malta, something the previous operators had not cared much about.

On the Malta ship registry, he said that following the Erika incident which had given Malta a bad name, the country had to ensure that its register would continue to be considered as a serious one which observed international standards. Tonnage on the register had this year increased by 1.6 million following constant drops since 2002/03, when a decision to stop accepting ships older than 25 years had been taken because they were the source of Malta's shipping problems. Detentions of Malta-registered vessels, he said, had now declined and would continue to go down in the coming years.

The work on the register had been acknowledged even in the French Parliament, when a French minister replying to questions had said that Malta had made substantial progress and was now in the white list of the Paris Memorandum of Understanding.

Mr Galea said that besides managing the tonnage growth under the Maltese flag the MMA also had a role in the international sector. It was committed to seeing that Malta participated strongly on all international levels and shouldered all its responsibilities.

The MMA's proposed spending of Lm1 million involved the communications system, to ensure that any vessel passing through Maltese territorial waters would be continually monitored. The €3 million project would be funded by the EU.

Mr Galea said this sector was bound to keep growing over the next few years. The shipping register was a government responsibility, and nothing would be done to privatise it because it would not be in Malta's best interests.On the National Reform Programme, Mr Galea said that it was his ministry's job to ensure inter-ministerial coordination for the country to increase competitiveness in every sphere. The National Reform Programme was drawn up specifically to help Malta achieve positive results for the economy in general. Such results were in fact already being obtained.

He mentioned the first 35 scholarships given a few days ago to Maltese nationals, amounting to Lm200,000, for their master's degrees or doctorates. He said that the country had to be more competitive in ICT, research and innovation to continue making progress in the future.

The economic expansion experienced last year, the drop in the deficit and the decline in the country's debts were due to a people who had worked together for the country to progress. Malta's progress was also acknowledged by international fora, including the World Economic Forum.

A number of initiatives, including a change in the regulation of businesses in Malta, had been carried out. The regulation unit was set up in March to facilitate businesses and remove outdated regulations.

On job creation, he said Lm1.4 million were to be spent on infrastructure for SMEs and Lm300,000 on infrastructure for small industrial estates.

More than 800 trademarks were registered with the Commerce Division, the responsibilities of which also included the issuing of licences.

The Consumer and Competition Division had launched the European Consumer Centre, which was solving a number of cases, and the Consumers Tribunal last year treated hundreds of cases.

The Civil Aviation Department was responsible to ensure that security regulations were constantly followed. Malta had once been considered a dangerous country but it had moved up from category three to category one. He said it was important for the department to continue ensuring good levels of security and safety.

Over 40 airlines operating into and out of Malta would continue to have the security they needed for their operations.

The Standards Authority had few employees, but it gave Malta the stature it deserved through highest-quality standards that had earned the trust of Maltese and foreign consumers alike. There had been a time when standards in Malta were seen as unnecessary.

On the Communications Authority Dr Herrera would have been expected to dwell on other than a very minor detail on how broadcasters could or should work. But the authority's work effectively meant that communication services in Malta were of the highest standards.

The liberalisation process in Malta had not had the backing of the opposition. But the results were there for everyone to see. Efforts should be ongoing to ensure ongoing progress.

The communictions sector would be irrecognisable in five years' time. As a case in point, telephone subscribers could now change service providers without changing their number.

Malta could already boast of having a higher average of broadband than much larger countries in Europe.

There were a number of challenges ahead. The ministry was committed to seeing, in unobtrusive ways, that there were no abuses in prices to the consumer, not only on medicines but also in other sectors. By next year the Consumer Division and the Malta Tourism Authority would together ensure that all catering outlets displayed their prices for the benefit of potential customers.