European Commission approves Malta's aid to industry

The European Commission has approved the aid being given by the government to various industries in order to help them through the current recession.

Many industries particularly those in the manufacturing export-oriented sectors have been feeling the pinch lately as their order books have suffered due to lack of demand from abroad. In order to boost these businesses during this particular difficult time the government, through Malta Enterprise, has embarked on an aid scheme tailor-made for those industries which are passing through a tough time.

The aid, which amounts to up to a €500,000 grant to each industry is tied to guarantees on the level of employment and on a fresh investment injection by the same companies.

Many industries have already been helped since February including Methode and Trelleborg. Malta Enterprise is currently conducting more negotiations in order to secure more investment and employment opportunities.

Following an application by the government, the European Commission has now authorised, under EC Treaty state aid rules, the Maltese measures to help businesses to deal with the current economic crisis.

The Commission said that aid of up to €500 000 per firm may be granted in 2009 and 2010 to businesses facing funding problems because of the current credit squeeze.

Following its analyses, Brussels said that the scheme meets the conditions of the Commission's Temporary framework for state aid measures, which gives member states additional scope to facilitate access to financing in the present economic and financial crisis.

"It is therefore compatible with Article 87(3)(b) of the EC Treaty, which permits aid to remedy a serious disturbance in the economy of a member state," the Commission said.

Competition Commissioner Nellie Kroes told The Times that the Maltese scheme will help alleviate the difficulties faced by Maltese businesses affected by the current situation without giving rise to any undue distortions of competition.

The scheme is based on the provisions of the Temporary Framework that deals with compatible aid of a limited amount. In particular, the maximum amount of aid does not exceed €500,000 per company and the scheme applies only to businesses which were in difficulty after July 1, 2008.

The aid will be granted in the form of direct grants. Under the scheme, limited amounts of compatible aid can be granted as from its approval by the Commission until December 31, 2010.