Tender to be issued for management of €10m in EU funds

A tender will shortly be issued for a credit institution to administer the €10 million microfinance funds announced in the Budget, Malta Enterprise chairman Alan Camilleri told The Times Business.

The institution need not be a bank and could even be an insurance company, Mr Camilleri said.

"This credit institution could even allocate its own additional funds for such microfinance. We hope to have the microfinance scheme in place within three to four months. Seventy-five per cent of the required collateral will be put up by the fund itself. The client will only have to put up a quarter of the required collateral, which means a maximum of €6,250," he said.

The €10 million for microfinance are funded by the European Union under the JEREMIE regional funding scheme. JEREMIE provides the framework for a series of coherent financial actions to improve the financial environment for small businesses at national, regional and local level. The EU believes that increasing small businesses' access to finance and risk capital enables economic growth and competitiveness.

JEREMIE's resources are derived from EU Structural Funds for the funding period 2007-2013.

In addition to the €10 million the European Investment Bank could fork out an additional €10 million for the microfinance scheme.

Mr Camilleri said that the other important measure announced in the Budget to help SMEs - the 40 per cent tax credit (60 per cent in Gozo) for sole traders and small businesses that employ up to 10 people if they invest in new technology or generate new jobs - was equal to a 270 per cent tax deduction.

"This tax credit will mean a 270 per cent tax deduction. It is intended to stimulate growth and is aimed at encouraging SMEs to purchase new machinery and ICT equipment and to create new jobs - even one. The maximum tax credit will be capped to €25,000 and will only be available for investments done in 2010 and 2011. The scheme is also targetted at book publishers and paying for the costs of patents and literary works such as CDs," Mr Camilleri said.

The Malta Enterprise chairman also highlighted the importance of the 60 per cent tax credit for the setting up of artistic districts in Valletta, Vittoriosa and Victoria, which was announced by the Minister of Finance in his Budget speech. "This is to take effect in 2010 and 2011 and an area in each locality will be designated for this in discussions with the relative local councils," he said.

Mr Camilleri said that the Budget had allocated €1 million to encourage foreign manufacturing companies based in Malta to set up additional vertical activities in Malta.

He said that Stainless Steel, which has been in Malta for 35 years, will tomorrow officially announce the setting up of its sales and marketing function for the Middle East in Malta.

"Stainless Steel was very grateful for the assistance we provided them this year to combat the effects of the global economic climate and this was one of the reasons why they decided to set up a regional sales and marketing office in Malta," Mr Camilleri said.

Other business friendly measures announced in the Budget were the allocation of €8.5 million in European Regional Development Funds for industry, €2.5 million in a reserve fund for industry - which Mr Camilleri said will probably not be used if the economic climate improves - and €20 million for San Ġwann Biotechnology Park and Incubation Centre.