Micro-credit scheme takes off

During the last five weeks, the government has received requests worth €10 million under the micro-credit scheme from business owners wanting to expand their operation.

Introducing the second reading of the Small Business Bill, Parliamentary Secretary Jason Azzopardi said the scheme, promised in Budget 2010, was originally worth €10 million, but the government held talks to widen the scheme’s portfolio to €51 million.

Dr Azzopardi paid credit to the GRTU which some 18 months ago had suggested the scheme.

He said the Bill was an important one, seeking to enhance the operational environment for medium and small enterprises (SMEs) in order to facilitate their setting up and growth. It sets up the Enterprise Consultative Council and the College of Regulators – two advisory bodies, to provide a forum for consultation and social dialogue, advise the government on challenges faced by the business enterprise, address grievances which emanate from the business enterprise and come up with remedial action.

The Bill aimed at putting small and medium enterprises on the highest level of the economy as 98 per cent of the economy depended on micro businesses employing less than nine employees. He said these were an essential framework of the economy and the stronger the SMEs, the stronger the economy. Thousands of livelihoods depended on them.

Three years ago, the government had announced a plan based on reforms to continue give value- added. These reforms covered, among others, local councils, pensions, primary care, Mepa and public transport. The results of such reforms were encouraging but the government remained flexible to change where needed.

For Malta, the economic crisis was a thing of the past. This did not mean that everybody was feeling the same feel-good factor. But the economy was responding and unemployment had decreased and the number of those gainfully occupied were at a record level.

Where other European countries were introducing austerity measures, the government had given tax credits, hence leaving more money in peoples’ pockets, Dr Azzopardi said.

The government had safeguarded some 5,000 jobs. Not only, but factories that a few weeks ago were on a four-day week, were now working overtime on Saturdays and Sundays.

During 2009, SMEs employed 60,000 and produced €2 billion in value-added. The wholesale and retail sectors employed 23,000 and the financial sector – which generated the highest turnover – employed 11,000.

The labour supply went up by 1,240 to 153,000. This year, the gainfully occupied have already risen by 2,173 to 147,000. Nearly 50 per cent of the gainfully occupied came from SMEs.

Registered unemployed fell by 933.

According to the NSO, during 2009 there were 4,666 new Vat registrations. Between 2001 and 2009, there was an increase of 51 per cent in new VAT registrations which amounted 22,039. Fifty-two per cent of these were micro enterprises.

SMEs were also assisted through e-governance: 95 per cent of the basic services were on-line – the best of the EU member states. Malta’s start-up costs were less than the EU average.

Dr Azzopardi listed initiatives the government had taken in favour of SMEs. He said that in 2008, the company registration was reduced by 30 per cent and with electronic registration this further fell to 40 per cent. Several SMEs had already received refunds.

The education entrepreneurship was being promoted through a €100,000 budget that would benefit primary and secondary schools in projects costing €5,000 to stimulate and create enterprise.

Through the micro-invest scheme, SMEs employing not more than nine people in Malta could have a 40 per cent tax credit and those in Gozo, 60 per cent. Some would benefit up to €25,000 for refurbishment, employing more people and buying a vehicle to transport merchandise. To date, there were 660 applications, of which 200 had already been processed. This meant an investment by these applicants of €12 million that would lead to a tax credit of €5 million.

Malta Enterprise was helping SMEs, employing less than 50 employees and with a turnover of less than €10 million, evaluated their export capabilities. Studies would centre on financial, human and marketing resources.

Local councils benefitted through a €150,000 fund.

The 5,000-strong artisan sector was being assisted through IT check-ups to protect their intellectual property.

Malta Enterprise had seven EU schemes under the ERDF which, during the last 18 months, handed out €42 million in grants to 396 small enterprises.

In future, Dr Azzopardi said, a quality improvement programme would be launched, giving tax credits worth €10,000. A micro-business park would be established in Gozo for 39 enterprises. Refurbishments would continue at Corradino as well as the introduction of child-care centres at industrial estates.