Need to clear up contrasting assessment
Is Malta one of the least business-friendly countries? The World Bank seems to believe so but the European Commission thinks otherwise. Admittedly, Malta still has to come up to scratch in a number of matters that can act as a brake to a faster rhythm of development. But, clearly, great improvement has been made as otherwise the country would not have been able to move ahead and, more importantly, to withstand the constant heat from the economic turmoil hitting a string of countries across Europe.
The two sharply contrasting assessments of the island’s business environment do come as a surprise, suggesting that, maybe, the World Bank is not, after all, as up to date as the European Commission when it comes to evaluating, on the ground, how “friendly” the country really is for business. According to the World Bank, access to credit, dealing with construction permits and red tape in starting businesses, getting electricity and enforcing contracts have made Malta one of the least business-friendly countries not only in Europe but in the world.
To drive the point home even harder, it found that Malta is the most difficult place to do business in the whole of Europe, including candidate members. All this is highly uncomplimentary. Yet, according to Brussels, Malta performed best where it comes to creating a business-friendly environment. It said: “Malta is one of the few EU countries that have enacted a Small Business Act”. It then praised the various schemes introduced by the Government to help access to financing.
Which, then, is the correct version? Since Malta is a member of the European Union, it may be safe to conclude that the Commission is in a better position to assess the situation than the World Bank. The problem is that since the World Bank report is read by people that matter in the world of business, the conclusions it draws can do a great deal of unnecessary harm to Malta’s prospects in its work to attract foreign direct investment.
Which is why, of course, the Maltese Government expressed disappointment and, as against on other occasions when it may not have been well justified in feeling aggrieved by a particular assessment, in this case it would seem it is well in order to complain.
With good reason, the Government has brought up in its counter-arguments the improvements it had introduced to create a more business-friendly environment, particularly the incentives to facilitate access to credit, such as MicroInvest, MicroCredit, and the one-stop shop for businesses, Business First.
Quite rightly, too, it remarked that various international institutions, including the World Economic Forum and the European Commission, had noted the substantial progress the country had made in the business sector and mentioned also the enactment of the Small Business Act in June last year.
There seems to be another sharp contrast. In the World Bank report, Malta places 176th in a classification linked to access to finance, whereas the island ranked 17th in a World Economic Forum report published earlier this year.
Maybe there is something in all this that has yet to be cleared up, such as, for instance, differences in classification and interpretation.
Or maybe, as it has already been remarked, there is some updating on the part of the World Bank that needs to be done. If this is the case, the Government ought to take it up in earnest with it in order to put matters right.