Malta Chamber of Commerce, Enterprise and Industry president David Curmi has been in the headlines several times over the past weeks, proclaiming the chamber’s stand on everything from illegal trade from Sicily to bank interest rates. But not everyone agrees with the chamber’s stand – and the motivation behind it. Vanessa Macdonald challenged some of its claims.

Figures supplied by Virtù Ferries show that a small proportion of the trailers on the catamaran are Sicilian traders. They accuse the chamber of creating this ‘smokescreen’ to protect the larger importers who are its members from the loss of trade due to legitimate competition ... Do you agree?

No, we disagree. This is not an issue we have with Sicilian traders – and we never really mentioned the words ‘Sicilian traders’. What we have is an issue with procedures. The proportion of Sicilian traders as stated by Virtù may be low, but those that are coming into Malta which are not Sicilian-owned is definitely not. The problem is that the government is totally unaware of what is inside those trailers.

Virtù said it gives a manifest saying what it is said to be inside ...

Yes, “general cargo” ...

I have seen a manifest and it specifies whether it is fresh food or furniture or anything else. And these manifests are given to customs and to the police.

We think that they are not given in every case.

That is a very serious allegation.

That is what our members feel. They are finding products on the market that made their way to Malta but not through their channels.

That does not mean they are brought in with tax evasion or without paying eco-tax.

It does not mean that. But we know for a fact cargo is coming into Malta without payment of eco-tax – which is a unique tax – and with dubious procedures for the payment of business-to-business VAT.

Mr Saliba has to give us proof that the authorities have actually levied eco-tax. We have no proof that this has ever taken place.

You say you have the facts. Why don’t you publish them? So far we have not been able to ascertain whether there has been a single case, let alone to establish the scope of the problem.

We have passed on some factual information to the authorities. We do not think that we should pass on information to the media.

And are investigations under way?

That is what we are told.

The Italian Ambassador believes the solution is not surveillance on cargo coming via the catamaran but the removal of the clause which means all groupage must go to Ħal Far, whether it is from the EU or not.

The accompanied cargo arriving on the catamaran does not follow that procedure and it is unfair, as our members who are importing cargo legitimately through other sources must take it to Ħal Far where they are charged haulage and customs fees, must pay for bonded stores, and pay VAT on their freight – which you do not pay when you ship through the catamaran.

We cannot accept that cargo that comes with one shipping line has to be taken to Ħal Far but cargo that comes through another has a different procedure, which is far more advantageous and less costly.

So make catamaran cargo go to Ħal Far or remove the requirement to go to there for the rest? Doesn’t it worry you that it costs some €1,500 extra for a 40ft trailer to go to Ħal Far?

If we level the playing field, we have no problem.

No problem with removing the clause about the requirement to go to Ħal Far?

We have no problem with that. But eco-tax has to be removed as well before this can be done. This is a unique tax that does not make sense – other than as a source of revenue for the government – and is the most problematic one at the moment for our members ...

In your Industrial Policy you are proposing an urgent revision of the cost-of-living adjustment. You’ve been asking for this every year for decades. When are you going to give up?

Never. This is something we believe in very strongly. We raise it at every opportunity and we will continue to raise it until the authorities realise that we cannot continue with a situation where our unit labour cost has increased at a rate higher than that of Ger-many and the UK. At the same time our productivity is actually down.

Everyone understands that it is bad and needs to be discussed. But no one has the political courage to tackle it.

At the last MCESD meeting the unions did seem to be quite concerned about competitiveness, especially in manufacturing, and they were raising similar issues to ones we have been raising recently, such as the electricity costs.

The government is proposing to lower electricity rates for industry in March 2015. You want it to do so sooner. Government will not get cheaper electricity until then, so your proposal would mean greater losses for Enemalta ...

We have the third highest utility rates in Europe at 18c per unit when the average in the EU is 9c. With the 25 per cent discount that the government is going to give in March 2015, it will bring it down to 12.5c/13c so we are still far away from the 9c EU average and countries like Tunisia where the average unit price is 6c.

We want to send a message to the FDIs that as a country we are doing something about utility rates. And we also need to attract new FDI

We fully understand the government’s constraints but we have been trying to come up with alternative packages to help around 22 heavy consumers in the interim.

We want to send a message to the FDIs who own these companies that as a country we are doing something about it. And we also need to attract new FDI .... We have not managed to attract any significant FDI since Lufthansa Technik and SR.

The EU has set a target of bringing industrial activity and manufacturing back to around 20 per cent of GDP from15.3 per cent. It Malta, the figure is around 12-13 per cent. It is going to be a steep climb.

The debate about interest rates and declining demand for lending is still going on. Do you agree that the problem is that companies are under-capitalised?

Interest rates cannot be seen in isolation of the whole banking structure. If you were to input a request for lending from a small under-capitalised Maltese company into a European bank, I think the system would still give you the same sort of rate that the Maltese bank is coming up with, because a small under-capitalised Maltese company requesting a facility presents a higher degree of risk.

I am very concerned with intrusion into this area, as banks are going to have to go through a very difficult time.

We cannot compare ourselves to any European country. We just have two main lending banks. Germany has 100. Holland has 50, the UK has over 100.

Losing Banif Bank would not be a plus as we want to increase access to finance. If it is acquired by someone who is already here it would mean you would have one bank less.

The two main banks are now going to be supervised by the ECB and whether we like it or not, their life is going to be more difficult than it was. Banks will obviously become more risk-averse and this would decrease their appetite for risk, making them very selective. They would exclude start-ups and people with no track record.

Our business sector depends on these two banks. Let us try and preserve what we have built and not destroy it.

We find certain proposals being made very superficial. For example, you cannot say that just because a bank is charging very low interest on house loans and relatively higher interest on commercial loans, they should be averaging their rates.

The bank lends on the basis of risk, not averaging costs.

Your policy is calling for collateral free loans through credit guarantees – something similar to Jeremie. Where would the money for such schemes come from?

The Prime Minister said the proposed Development Bank could borrow money from the ECB and then give these funds to the banks exclusively to stimulate business – it would not lend directly. That is a possibility.

There is a lot more money where Jeremie came from and many other types of models in Europe we haven’t even looked it. We should not shy away from this as there is considerable appetite for these packages.

Chamber’s Industrial Policy: Blueprint for the future

The role of manufacturing

Industry is a very important pillar in our economy and the economy would probably not survive without it, but its share of gross value added has gone down from about 19 per cent to 12 per cent.

Attracting FDI

What does a foreign investor ask when he contemplates whether Malta is viable to operate from? They normally ask five questions: what is your average labour cost, what is the cost of factory space per square metre, what are your electricity rates, what are labour conditions and what are the incentives? They are not interested in anything else.

Remember that Malta will be losing significant competitive advantage as incentives have been reduced, on the whole, from 30 per cent to 15 per cent.

Factory space

There needs to be an urgent space audit as there is a lot of space which is being underutilised or not utilised correctly.

There should not be a waiting time. An investor who wants to come to Malta would want to be able to set up within three months.

There was a proposal two years ago by Malta Enterprise and Malta Industrial Parks to revise the rents for government-owned factories – without consultation. They would have been very unrealistic. It was a long fight to stop them from going ahead. If they have to be changed, it has to be done in consultation with stakeholders as the government needs to be aware of realities of manufacturing today.

The cost of factory space is one of the few advantages that remain today for manufacturing. They may be low when compared to the private sector, but not when compared to what other countries can offer.

Labour costs and competitiveness

Statistics show that our unit labour costs have gone up. Had they gone up in line with productivity, I don’t think we would have complained. But what we are worried about is the compounding effect on wage structures this has had over a period of time.