SMEs needed new stimulus to enable them to intensify their activities and become more competitive rather than new structures which increased bureaucracy and duplication of work. Speaking during the debate on the Small Business Bill, Mr Brincat said what was needed was fast tracking, easier access to finance, a spirit of entrepreneurship and access to venture capital.
The government’s priorities were wrong. The micro credit scheme announced in the 2010 Budget had seriously fallen back. SMEs were burdened with enormous hikes in utility bills that he was sure the government would remedy before the next general election.
Consumers had less spending power adversely affecting consumption. There were numerous self-employed persons who were contemplating looking for a full-time job.
Mr Brincat referred to the EU Entrepreneurship survey, the findings of which were of concern because Malta’s entrepreneurial activity index was much lower than the EU average. Malta also had a low rating as regards the entrepreneurial climate index.
The survey reported that the Maltese were the least likely to agree that people who had stated their own business and failed should be given a second chance and to disagree that they would never invest money in a business managed by someone who had failed.
It was positive that Malta had second generation entrepreneurs, this being better than the EU average. The positive influence of higher education on entrepreneurship in Malta was also higher than the EU average. He called for more business start ups from young and female entrepreneurs.
The government was right to consider proposals from constituted bodies. But this was not enough. It needed to listen to what operators had to say. Analysis about SMEs had to be holistic and sectoral, because each sector faced different challenges.
Malta was already late in seeking ways on how companies could contribute towards a green economy. The green economy was mentioned in the pre-budget document but there was nothing concrete in the Budget itself. Other EU member states had already set targets on the creation of green jobs. These jobs in Malta were limited to waste sorting at the WasteServ plant.
There was the need, for creating a business environment where SMEs felt they were economic and entrepreneurial protagonists. The government should indicate how it would trim regulatory and administrative burdens that were supposed to have decreased by 15 per cent by 2012. There was the need to translate the European Charter for Small Enterprises into action.
Malta needed more banks ready to take risks in financing SMEs. Dialogue between these two sectors was, therefore, needed. SMEs should be helped in establishing good practices. He insisted on the need of venture capital funds in Malta.
Some banks were considering the concept of business angels which in other countries provided seed financing to facilitate product development and marketing for start up SMEs. In this regard, it was essential that these SMEs have professional and comprehensive business plans.
Mr Brincat claimed that this could be done without the need of formal and complicated bureaucratic structures. The authorities should carry out regular surveys among SMEs to identify their priorities.
He referred to a recent EU survey which indicated that only 17 per cent of SMEs in Malta expected to increase their turnover in the near future, when this figure rose to 60 per cent in case of SMEs in Poland and Austria.
The EC Enterprise and Industry factsheet on small businesses indicated that Malta’s dependence on micro enterprises was higher than the EU average. These enterprises were increasing by two per cent when the EU average increase was 13 per cent. Start-up SMEs amounted to five per cent when compared to 24 per cent in the EU. State aid to SMEs in Malta amounted to one per cent, far lower than the 10 per cent EU average. In Malta, 35 per cent of SMEs faced financial access problems compared to the 21 per cent EU average.
Rest of the debate will be published tomorrow.