The economy has continued to grow by over 3 per cent in the second quarter of this year despite the unstable international environment, according to Finance Minister Tonio Fenech.
"The real turmoil within the energy sector may have started to subside. Indications are good, but clearly there are still challenges ahead," he said during a business breakfast with the Chamber of Commerce and Enterprise yesterday.
The Chamber gave its preliminary feedback to the minister about the 2009 budget and the national reform programme. It emphasised the need for more enforcement to ensure fair trade, while agreeing with the government's approach of sustainable development. "Short-term goals must not be achieved at the detriment of future progress... fiscal targets should not be achieved at all costs," Chamber president Tancred Tabone stressed.
"Wages in Malta have increased at a much faster pace than productivity, but this could lead to an erosion of competitiveness and the relocation of companies to wherever investment is more profitable," he added. This, he said, could result in slower economic growth and higher unemployment which could be an expensive price to pay for the short-term agreement on wage negotiations.
Mr Fenech said that the economy was being driven by the private sector which provides 70 per cent of employment. He highlighted the need to invest in value-added knowledge based sectors to include more innovation and research.
"We want our economy to keep growing, and the private sector has to be the engine for this growth," Mr Fenech said.
The Chamber said that a submarine cable link to the European energy grid should be pursued with urgency, to secure cheaper energy and more security. The minister agreed, saying that although alternative energy is still more expensive to invest in, "we need to invest today."
In response to the Chamber's fears on unfair competition, Mr Fenech said that although enforcement was taking place, more needs to be done.
"We need to be less burdensome on legitimate business and more forceful on those that are illegitimate," he said.
He promised to simplify the tax system, provide more support services and reduce costs for enterprise.
Mr Fenech also said that Malta is leading the support on a European level on the proposed Small Business Act, a package of ambitious actions to be implemented at an EU and member state level. The Act will allow SMEs to fully benefit from the single market and to expand internationally by orienting more resources to access finance, to research and development as well as to innovation. It will also make it easier for them to win public procurement contracts and turn environmental challenges into business opportunities.
"We are presently looking at which of these measures can be taken up earlier on a local level as part of the national reform programme, for which a separate consultation process was launched last month," he said.
Mr Fenech said the government was also working on the implementation of the Services Directive, which will come into force in December 2009 and which will not only provide another important tool for the reduction of administrative burdens for service providers, but will also create increased competition and improve productivity. This competition will ultimately benefit most companies that are also consumers of services provided by others, he said.
Mr Fenech said the government has embarked on a constant review process of accounting and reporting requirements.
"One outcome is the General Accounting Principles for Smaller Entities. Its objective is to reduce the audit and financial statement reporting requirements for smaller and medium businesses to a more realistic requirement. This should free up financial service provider time and effort to make the service more affordable while maintaining the standards required to support the users of the audited financial statements," he said.
"The real turmoil within the energy sector may have started to subside. Indications are good, but clearly there are still challenges ahead," he said during a business breakfast with the Chamber of Commerce and Enterprise yesterday.
The Chamber gave its preliminary feedback to the minister about the 2009 budget and the national reform programme. It emphasised the need for more enforcement to ensure fair trade, while agreeing with the government's approach of sustainable development. "Short-term goals must not be achieved at the detriment of future progress... fiscal targets should not be achieved at all costs," Chamber president Tancred Tabone stressed.
"Wages in Malta have increased at a much faster pace than productivity, but this could lead to an erosion of competitiveness and the relocation of companies to wherever investment is more profitable," he added. This, he said, could result in slower economic growth and higher unemployment which could be an expensive price to pay for the short-term agreement on wage negotiations.
Mr Fenech said that the economy was being driven by the private sector which provides 70 per cent of employment. He highlighted the need to invest in value-added knowledge based sectors to include more innovation and research.
"We want our economy to keep growing, and the private sector has to be the engine for this growth," Mr Fenech said.
The Chamber said that a submarine cable link to the European energy grid should be pursued with urgency, to secure cheaper energy and more security. The minister agreed, saying that although alternative energy is still more expensive to invest in, "we need to invest today."
In response to the Chamber's fears on unfair competition, Mr Fenech said that although enforcement was taking place, more needs to be done.
"We need to be less burdensome on legitimate business and more forceful on those that are illegitimate," he said.
He promised to simplify the tax system, provide more support services and reduce costs for enterprise.
Mr Fenech also said that Malta is leading the support on a European level on the proposed Small Business Act, a package of ambitious actions to be implemented at an EU and member state level. The Act will allow SMEs to fully benefit from the single market and to expand internationally by orienting more resources to access finance, to research and development as well as to innovation. It will also make it easier for them to win public procurement contracts and turn environmental challenges into business opportunities.
"We are presently looking at which of these measures can be taken up earlier on a local level as part of the national reform programme, for which a separate consultation process was launched last month," he said.
Mr Fenech said the government was also working on the implementation of the Services Directive, which will come into force in December 2009 and which will not only provide another important tool for the reduction of administrative burdens for service providers, but will also create increased competition and improve productivity. This competition will ultimately benefit most companies that are also consumers of services provided by others, he said.
Mr Fenech said the government has embarked on a constant review process of accounting and reporting requirements.
"One outcome is the General Accounting Principles for Smaller Entities. Its objective is to reduce the audit and financial statement reporting requirements for smaller and medium businesses to a more realistic requirement. This should free up financial service provider time and effort to make the service more affordable while maintaining the standards required to support the users of the audited financial statements," he said.