Trade licences are finally going to be abolished, as from January 1, 2017, following a concerted effort by Malta Enterprise.

Around 15,000 entities will no longer need to have a trade licence in order to operate, except for very specific categories like buskers, street hawkers and auctioneers – usually where the operation would not be covered by a Planning Authority permit.

Given the number of operators, licence fees add up and the government stands to lose around €1.4 million every year

Around 1,400 of the new businesses currently being created every year will also be spared.

Malta Enterprise chief operating officer Marika Tonna and the chief officer for research and policy review, Marco Abela, coordinated the removal of the licence as part of a larger campaign started a few months ago to simplify business, which has also brought the time to set up a new business down from 28 days to just 48 hours in most cases.

Although there has been talk of reducing bureaucracy for several years, the final straw seems to have been the poor rating given to Malta by the World Bank in its global assessment of the ease of doing business.

The task has been tackled a number of times, but entities such as the Better Regulation Unit and the Commission for Simplification have not managed to get nearly as far as this team, which Ms Tonna said was down to their refusal “to take no for an answer”.

“We are there to attract investment. So although we are not an authority, we felt that it was part of our role to tackle this,” Mr Abela added.

Malta Enterprise, with a remit from the Office of the Prime Minister, worked with the Management Efficiency Unit and Business First, sitting face to face with each and every entity to try to persuade them that the status quo no longer made sense. Trade licences were originally issued by the police, who would painstakingly list in a ledger all the products that the operator would sell. However, over the years, as the business environment got more sophisticated, the number of checks and balances increased, from the Planning Authority for the location and its impact on its surroundings, to the Public Health Department for sanitary and hygiene considerations. The fiscal side was also tightened by the introduction of VAT. All in all, the licence itself had became outdated and yet, no one was willing to bite the bullet.

The situation was even more nonsensical, she explained, because so many operators never got round to applying for a licence, while others who did would not renew it from year to year – which created an unequal playing field, even though the cost of the licence was as little as €70 in some cases, to a maximum of €1,000.

Given the number of operators, licence fees add up and the government stands to lose around €1.4 million every year – but the fee hardly covered the costs of its administration and collection.

Just as welcome will be the simplified process to set up a business. Mr Abela explained that in the past, applicants were sent from pillar to post, having to fill in some seven to eight forms for different entities.

“Much of the information was common to all these forms. And other entities needed information that was not being collected.

“Now we have used the benefits of technology, thanks to government IT agency Mita, to set up a single two-page form for the applicant – either a company or a self-employed person – to submit, which is then automatically disseminated to the entities involved – like the National Statistics Office, JobsPlus and the Data Commissioner – with all the information required, instead of the applicant going to each and every one.

“And NACE categories relating to food will also automatically trigger information being sent to the health authorities,” he said, adding that the procedure was already available online.

The next phase will by year end enable authorised intermediaries like accountants and auditors to submit applications on behalf of their clients, and will expand the scope to partnerships

“We are not going to stop here,” Mr Abela promised. The next phase will by year end enable authorised intermediaries like accountants and auditors to submit applications on behalf of their clients, and will expand the scope to partnerships.

The next phase starting in January will be even more challenging as it will not look at the starting up of a business but at their operation and winding up, which is far more complex.

There are also anomalies that make even less sense that it wants to sort out: “If an oil tanker on Hurd Bank finds a buyer for its cargo of oil, they need to send a sample for analysis by a laboratory.

“But to get that one or two litre sample into Malta, you would need to go through exactly the same amount of paperwork that you would if you were importing tanks of fuel to sell commercially, down to economic sanctions and excise taxes!” he said.

Ms Tonna and Mr Abela are crossing their fingers that the huge leap in response time will improve Malta’s ranking for ease to do business, which went up by seven places in the 2017 report out recently, even though it did not reflect all the improvements made since the previous report.

“Unfortunately, the World Bank methodology does not really help Malta. For example, the case study is based on theoretically opening a warehouse in the capital city. Well, can you imagine opening a warehouse in Valletta, getting a PA permit for this Unesco World Heritage Site and asking Enemalta to install a substation somewhere to feed it with power?” Ms Tonna shrugged.

“The input is also very heavily weighted towards eight legal firms, which supply 19 out of the 40 consultees. A wider array of contributors might give a more accurate picture.”