Maltese firms’ woes

Opposition spokesman on economic development Charles Mangion told Parliament on Monday that many companies did not manage to retain a presence in Libya – the place where they were operating in.

Winding up the two-hour debate on the situation in Libya as it affects Malta, Dr Mangion said most companies were facing cash flow problems since the instability had led to them not being paid. International companies were also using the situation in Libya as an excuse to postpone payment. This was, in turn, holding back companies from buying supplies and paying workers. Such companies were also concerned over their assets in Libya since they were risking losing their title.

Local banks were also putting pressure on companies, asking for increased guarantees or assets against loans. Discussions regarding rescheduling of payments should be held with the banks. Invoice financing should also be considered.

The Labour spokesman advised the government to discuss finances that could be offered by the bank to companies investing in neighbouring countries. There was also insecurity with regard to the situation after the crisis is over.

This discussion was needed to bring the issue to the fore. This was a non-partisan debate since everyone agreed that the national interest should be given the utmost importance and the help it required.

Referring to the Prime Minister’s comments that measures were being taken to help companies find alternative investments in other countries, Dr Mangion said it seemed a number of companies were not aware of this.

The opposition was in no way suggesting the bailout of these companies.

It was important to have diversification in the economic development of the country. Malta could benefit from investments made in neighbouring countries. Although countries should not forget Libya, they should also consider opportunities in countries close to Malta. The government should take the necessary measures to encourage such initiatives.

The government should make sure that all companies were informed of the measures such as the postponement of tax payments and national insurance contributions.

Government assistance included ways to ease cash flow problems and assistance for market diversification, particularly for those companies that depended on Libya for export orders.

Dr Gonzi said he was pleased to note that Maltese employers had, in their vast majority, felt morally obliged to retain the Maltese workers who used to work in Libya. He acknowledged, however, that this situation may change if the crisis continued, and the government would seek to stay ahead of the curve as the situation developed.

The ETC, he said, was seeking individual solutions for workers, particularly the self-employed, who lost their job in the upheaval.

Finance Minister Tonio Fenech said one of the biggest concerns was the situation at Medelec, which depended heavily on the Libyan market, and the government was seeking ways how this company could export to new markets.

Referring to Mr Karmenu Vella’s point on Air Malta workers, Mr Fenech pointed out however, that the situation was different with regard to Libya. The government would help in every way it could, but one could not assume that the government would absorb all workers who lost their job.

He said various companies were being assisted through a delay of provisional tax payments, without interest.

Mr Fenech said it appeared that 80 workers who used to work in Libya were currently registering for work, and the ETC was helping them through its employment aid programme as part of efforts to find them new jobs.

The minister said he had also had talks with the banks on ways of helping Maltese investors in Libya. It appeared, he said, that although Libya-Malta trade reached some €80 million, the export credit exposure was only some €3 million since it appeared that most Maltese exporters insisted on payment on delivery.

He said that while income tax and VAT payments may be postponed, that did not apply to the payments of social security since that belonged to the workers.

Foreign Minister Tonio Borg reiterated that Malta would not participate in any military operation against Libya but would limit itself to evacuation and humanitarian operations.

He called for a human corridor to Misurata so that Malta could offer its services in bringing over for treatment persons who had been injured in the conflict which was turning Misurata into the North African Sarajevo. Neutrality would not be infringed if Malta took action to help people who were dying because of attacks in Misurata. Malta had agreed to offer flight rights under certain conditions while respecting the UN resolution. Military operations were the determining factor in stopping a massacre in Benghazi and in Misurata.

In the first phase of the Libyan crisis Malta had successfully evacuated 270 Maltese and assisted in evacuating thousands of others.

The revolutions in Tunisia, Egypt and Libya were different and he had predicted that the situation in Libya would be different because this resulted in civil war. The damage to the Maltese economy was more the result of the prevailing uncertainty rather than because of the UN sanctions.

Dr Borg said that the worst situation for Malta would be for Libya to be divided in two parts because tension would remain. The military option was still there with Nato executing the UN resolution in protecting civilians although there were always undesired and uncalled for consequences.

Although Malta did not have a say on the sanctions decided by the UN Security Council, it had a say in the sanctions established by the EU which amplified the UN sanctions.

The Foreign Minister said that someone had lied purposely to cause damage to Malta when this person leaked to the press that Malta was trying to block the EU sanctions. What Malta insisted and acquired was that in case of holding companies with Libyan shareholding, such shareholding was to be frozen but the holding company had to continue with its business without being considered as infringing the sanctions. Malta also won the principle that contracts signed before the sanctions entered into operation had to be respected until completion. Dr Borg said also that Malta was participating in the contact group established in London last month. Although there was consensus among all countries there were certain innuendos.