Robert Borg

The Maltese economy is experiencing strong economic growth. Latest economic indicators pointed to an increased real GDP in the fourth quarter of 2015 by 5.7 per cent on a year-by-year basis. The annualised real rate of growth in 2015 reached 6.3 per cent. In comparison, the economic growth in the EU area is still weak with an increase in real GDP in the fourth quarter of 2015 of just 0.4 per cent.

In the first quarter of 2016, our annualised real GDP growth also registered a significant increase of 5.2 per cent as compared to a 0.6 per cent real increase in the Euro area. The Central Bank is projecting an annual growth rate for 2016 in the region of five per cent. Improved liquidity in our economy is a major contributor to our economic growth. This, in turn, provided for an increase in private consumption and government consumption.

These results did not materialise at the expense of our deficit. Our deficit to GDP ratio continued to decrease to a record level of 1.5 per cent in 2015 and is pointing to a balanced budget in the next couple of years. The sustainability of these results depends mainly on whether our policymakers manage to safeguard our major economic and industrial achievements and, at the same time, provide for new market opportunities to increase the resilience of our economic success.

The expansion in the tourism industry is a major contributor to our success. In March alone, tourist arrivals increased by well over 14.2 per cent on a year earlier. This also contributed to a substantial increase in tourist expenditure and nights stayed in Malta. Our economy is also experiencing an increase in the numbers of cruise liner business, whereby arrivals in March reached 39,000 tourists. The sustainability of the tourism industry remains a crucial element in the sustainability of our economic growth.

The level of service in our tourist and services industry and the needed improvement in our infrastructure provides not only for an improvement in our standard of living but is a must to create the necessary competitive edge over our competitors. Policy decision-making should aim at achieving long-term sustainability rather than short-term exploitation in this sector.

The level of employment in our economy is also a direct reflection of the increased economic activity. Malta is experiencing historical low levels in unemployment. In April 2016, the number of registered unemployed according to ETC records fell further to 3,751 from 5,568 in the same month of 2015.

The country needs to be more proactive in its investment approach

Malta is also experiencing an increase in activity rate mainly in the female sector. Major employment increases are being registered in the services industry in areas like transportation, real estate, financial services, support services, art, entertainment and recreation. Minimal employment increases have been registered in direct production. It is without saying that the financial services sector is a major pillar in our economy. Political pressures that may affect such a sector, including both internal and external pressure, should be clearly resisted. A drop in this sector may exponentially contribute to a drop in the value added being registered in our economy.

The economic uncertainties affecting Europe, particularly following the Brexit decision, require a strong proactive approach from the government to increase the level of political and economic sustainability of this industry.

Our country needs to create new niche industries, particularly when we consider the economic vulnerabilities just mentioned. Although the economy is experiencing an increased level of service exports, there is a complete restructuring in our traditional manufacturing base. The level of net goods exports in our economy are also quite vulnerable, this being a reflection of a weaker manufacturing base. The country needs to be more proactive in its investment approach and access to finance to the general industry.

The recent announcement of major investments in the health and educational sectors, the level of foreign investment in the energy market and the announced investment in Malta’s maritime hub would not only provide for additional liquidity in our economy but will provide for more diversification and resilience in our industry. This additionally sustains the increased economic growth experienced in recent years.

Robert Borg is an accountant and auditor.

Marthese Portelli

While no one can prevent a bubble from exploding, there are safeguards which can be set in motion to prevent the bubble from being created in the first place. Economic progress, including that of the construction sector, is of primary importance for our country. However, this must be accompanied by the necessary safeguards to ensure such progress is sustainable, and that it ultimately translates into a better living environment for all.

The first thing we need to understand is whether we are facing a development boom or not. According to the 2015 annual report of the Central Bank of Malta, the Malta Environment and Planning Authority “issued 3,947 permits during 2015, over one-third more than in 2014”. This amount is around one fourth less than the number of permits issued in 2008. Nonetheless, although there was a significant decline in the quantity of permits issued between 2008 and 2014, it seems that we are now well on the way to hitting the 2008 level of activity in this sector.

This of course raises a number of concerns as to whether this increase is sustainable. There do not appear to be any comprehensive studies which establish the actual demand for property, and the areas in which such demand is most pronounced. One has to be careful to ensure that supply will not outweigh demand.

In view of the above, it is becoming increasingly important for the government to publish its local plans. It is becoming increasingly important for the government to ensure that all the policies that should accompany the Strategic Plan for the Environment and Development (SPED) are in place. It is becoming increasingly important for the government to ensure that all the policies being published are in line with the SPED and that there are no policies that contradict or are in conflict with one another.

Alarm bells have also been sounded by the Malta Developers Association

We have a SPED which is devoid of any detail and has no implementation plan, and the local plans which were meant to provide such detail have not as yet been amended and published for consultation.

We also have a SPED which was largely criticised by all the eNGOs and by various members of civil society, including the Opposition, yet this government used its parliamentary majority to forge ahead, thus presenting the impression that might is right, and that the approval of development projects will depend largely on political backing or otherwise. This creates an unfair platform between the developers and the public, and also between developers themselves.

This lack of strategic direction and vision within this government has led to a situation where projects are being proposed in a haphazard manner. This has led various sectors of civil society and NGOs to sound the alarm bells on the impact that haphazard and unplanned development will have on our built and natural environment, on issues such as congestion, as well as on our infrastructure and property prices. The alarm bells have also been sounded by the Malta Developers Association who have cautioned government on the giving away of public land for speculation.

Last month we published 35 short-term traffic proposals aimed at mitigating the current traffic gridlock, ultimately resulting in lower opportunity costs, lower pollution levels in our towns and villages, and improved mobility and accessibility. In our environmental document, we will definitely be giving due importance to the redevelopment of dilapidated areas which have been neglected and are crying out for regeneration. Our environmental document will be founded on the principles of good governance. It is also our belief that public institutions, notably the Planning Authority (PA) and the Environment and Resources Authority (ERA) should operate autonomously and no longer be the lunga manus of the minister or the Prime Minister’s Office.

This is why the Nationalist Party has been working steadily on updating its environmental policy, which will deal not only with our natural environment and with the rural environment, but also with the built environment and with the regeneration of the urban areas. Our policy will seek to provide a better quality of life for each and every one of us while continuing boosting the economy. We will focus on ensuring that our development areas manifest quality through various initiatives. Our commitment to safeguard the natural, rural and historical environment while ameliorating our urban areas is one important step in this direction.

Marthese Portelli is the shadow minister for energy, environment and transport.

If you would like to put any questions to the two parties in Parliament send an e-mail marked clearly Question Time to editor@timesofmalta.com.

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.