Malta has been ranked in the eighth place among EU member states for improvement in industrial productivity and competitiveness, in a new report that has just been published by the European Commission.
The scoreboard measured improvements in manufacturing productivity made between 2006 and 2010.
While the average manufacturing productivity improved by 10 per cent, Malta’s improved by 25 per cent.
“The increased proportion of highly skilled labour force since 2006 has contributed to improvements in competitiveness,” the report says about Malta.
The report also lists a number of challenges including “the dependency on oil, and sustaining the improvements in the business environment over time”.
“The promotion of private research also remains a challenge,” the report states.
The EU’s scoreboard looks at member states’ industrial performance in five key areas: manufacturing productivity, export performance, innovation and sustainability, the business environment and infrastructure, and finance and investment.
Dividing the performance of its members into three groups, Malta was placed in the second – “uneven performers” – with Estonia, Slovenia, Spain, Italy, Portugal, Greece, Cyprus and Luxembourg.
The “consistent performers”, whose industries are dominated by technologically advanced firms, top the scoreboard and include the likes of Germany, Denmark, France and the UK. The third and last category, the “catching up countries”, includes eight member states – all former communist countries.
According to Brussels, Malta performed best where it comes to creating a business-friendly environment. “Malta is one of the few EU countries that have enacted a Small Business Act,” the report states, while praising the various schemes introduced by the Government to help access to financing.
The report cites specifically the Microinvest tax credit scheme – where Maltese enterprises benefit from a tax credit of up to 40 per cent when investing in innovation implementing compliance directives and expansion including new hires. The Commission commented: “The take-up of the scheme so far has acceded expectations and this has been linked to the low level of bureaucratic requirements.”
With regard to public administration, the Commission’s report states that “a number of simplification initiatives have already been implemented resulting in a €7 million reduction per annum in administrative burdens”.
On the negative side, the report mentions the impact on the business sector of the high price of oil: “Electricity prices for medium and small size firms in Malta are among the highest in the EU.”
Acknowledging that Malta has little control on the price of oil, the report suggests that the island prioritises the completion of the electricity link with Sicily so that the island can lower its dependency on the price-volatile commodity.