Today, hardly anybody speaks of direct state intervention in the economy anymore. Not even the model of the mixed economy has survived, where state enterprise operated side by side with the private sector. Nowadays, even old Socialists agree that the private sector has to be the power engine of the economy. That is not the same as saying the state has no role to play.

The accepted modern concept is that the state should create the right conditions for private business to take initiatives, risk and thrive, in the context of what is a more than ever open economy where competitiveness makes or breaks the future. While that presumes the smallest possible role for the state in ownership terms, with no further talk of, much less commitment to, the commanding heights of the economy, the role of the state remains crucial.

It should not, for instance, crowd out the corporate sector with too frequent incursions in the capital market. That could be one danger for the future in Malta, with the public debt remaining high in absolute terms, necessitating refinancing on top of funding the annual budgetary deficit while the corporate sector plucks up further courage to tap the capital market, with public offerings of shares and bonds.

With that in mind, the government of the day also continues to have an essential role to play in promoting direct investment, both domestic as well as foreign. Creating the right conditions by maintaining political and industrial stability, as well as having a friendly tax system in place, is part of doing that.

The state promotes direct investment not only by providing the right infrastructure but also by going out and marketing the country’s locational attractions, advantages and competitive edge. In our island, that is done mainly through Malta Enterprise. All in all, the economy is a success story, though not as positive as it is made out to be by the government. Charles Mangion, who shadows the economy, financial services, and pensions, recently gave a very valid analysis of the main indicators while speaking on the second reading of the Small Business Bill. He quoted corrective facts and figures that were not shot down by the Finance Minister or any other government spokesman then or later and which ought to be digested by the Prime Minister and his economy team.

That reality check showed the extent to which the island has to work harder to achieve sustainable growth motored mainly by exports. Yet, it did not gainsay that we are making progress, though we have to be certain that the growth we see in the GDP figures is for real, and not overstated, to our medium-term detriment not least in an EU eventual transfer-payments context.

Such progress can be underpinned through the promotional efforts of the Prime Minister and his Cabinet colleagues. In the early and mid-1970s, Prime Minister Dom Mintoff concentrated on trying to attract foreign investors to Malta, particularly from Germany. He succeeded. Such political pro-action has been followed up through the years with extensive trade missions, some of them headed by the President.

Prime Minister Lawrence Gonzi also takes it upon himself to try to attract foreign forms to invest in Malta. He told a party gathering a few days ago he is meeting foreign companies interested in renewing or starting new projects in Malta in sectors ranging from IT, to manufacturing and financial services. From what I hear, he makes a good fist of it and leaves a very good impression. The main board of an international insurance giant, which has an investment in Malta and is increasing it and on whose local board I sit as a director, met in Malta recently.

Dr Gonzi found time to meet the top officials of the main board on a Monday, before he started a Cabinet meeting. Despite the tight schedule he gave them the time they required. I asked the chairman how the meeting had gone on. He said it was an excellent meeting and sang Dr Gonzi’s praises.

Direct confirmation of the island’s chief executive promotional ability is good to hear. Malta offers an inherent advantage in the readiness with which its leaders meet visitors or go out to reach them and explain to them what the island is all about. That is a significant advantage explaining, for instance, our success in attracting a very good flow of investment in the financial services sector.

It is something to acknowledge and build upon.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.