Small and medium- sized enterprises – SMEs – are import-ant in practically every country, not least where there is a well-developed manufacturing sector. A frightening article in last week’s The Economist about the situation in Italy makes the point in a broader context.

The article records the decline in Italian manufacturing, especially of cars, refrigerators, washing machines and such like. The detailed drop in output since 2007 given by The Economist makes despondent reading. It suggests that Italy, after Germany probably the EU’s largest manufacturer, will never recover the output it has lost over the past five years.

Then it moves on to the direct link between the main manufacturers and Italy’s SMEs. The article points out that a large part of the manufactured article is supplied by SMEs, sourced by the manufacturers. The decline in sales of the final product has affected SMEs even more savagely than it has affected the manufacturing plants themselves after assembly. It is likely that a number of SMEs will not just be unable to recover their lost levels of output, but they will be thrown – are being thrown – out of business completely.

What is left of manufacturing in Malta is not of the same type as Italy’s mainstays. Nevertheless there was and remains sub-contracting by some manufacturers, the main one probably being Brandt (Playmobil), which, thank goodness for its fine management during the Helga Ellul years and a captive market, is still running strong. Mainly it outsources to households. But there are, unsung, tiny SMEs which keep it supplied with parts used in its manufacturing process.

In the broader context SMEs are crucial to the Maltese economy. For years the economy has reflected an imbalanced structure, made up of a few giants like SGS (ST Microelectronics) and the Malta Drydocks before it was destroyed by a combination of design and circumstance, a larger number of middle-sized companies employing several hundred workers, and a host of SMEs from sole operator to others employing under 10 individuals, mainly three to five.

This mix deserves particular attention. Even if SMEs are not very involved in exports, they are important in the jobs sector. Should it be possible to encourage SMEs to take on one additional worker each, the unemployment situation might tell quite a different story.

In this regard the previous Nationalist administration was correct in launching several financial and fiscal schemes intended to help SMEs, and the present Labour administration is correct in retaining and aiming to build on these schemes.

If the Government is unsure of its ability to fight abuse it should take a look in its own mirror and take action to toughen up

Which is why it was not easy to understand the decision to restrict the urgent importation of solar panels to five big importers with the condition that they do not sub-contract. Why not? Poss-ibly because abuses took place in schemes aiding buyers in recent years, and these have been traced to a restricted number of SMEs, though that does not necessarily exonerate all the major suppliers.

But if that was the case, then the solution lies in more thorough regulation and enforcement – and not in denying SMEs an opportunity to be utilised by the relatively big importers. This prohibition probably jeopardised the object-ive of utilising EU funds for the purpose of promoting PVC use and creates difficulties for the big importers themselves. (The scheme was subsequently cancelled on Tuesday by Malta Enterprise due to “technical problems” in the supplier selection process).

I find it even more difficult to understand the draconic measure, given the parallel action taken by the Government to make easier the life of SMEs interested in tendering for government contracts. There, a slew of relaxed conditions have been announced to make tendering by SMEs far simpler than hitherto in terms of bid-bonds they had to put up and such like.

It does not mean that SMEs will be able to try their luck across the broad spectrum of government requirements during the year. Yet a new window of opportunity has been opened for them, and was happily welcomed. Why the contradiction? If the Government is unsure of its ability to fight abuse it should take a look in its own mirror and take action to toughen up. It would be right to be more rigorous and to make it clear that abuse will be punished as sharply as can be.

Beyond that, the market should be opened up, not restricted. The good work done by the previous administration and the good follow-up by the present lot should not be undone by inexplicable contradictory measures.

Rather, more should be done to identify how SMEs could be aided further. For instance, how do they fare in the Mepa context? We cannot go on building forever, but some building still has to be carried out. There are many small builders to do it. Working in teams of two and three they may not be classified as SMEs. But in reality, that is what they are.

How many building permit applications are stuck in the Mepa pipeline which, if processed and where possible approved without haste but without dragging of feet either, could generate work for these small units of builders?

There are other examples that can be brought forward. SMEs and their organisations are the best source to do it. They will do more of it if they see that the Government is listening, as it repeatedly says it wants to do through its business-friendly approach.

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