Opposition spokesman for economic development and financial services Charles Mangion called on the government to make “adequate amendments” and “new regulations” to the Permanent Residents’ Scheme and reactivate it as soon as possible to stabilise the property market and make Malta once again attractive to foreigners seeking to take up residence on the islands.
Dr Mangion was opening the general discussion on an opposition motion regarding the scheme which was originally suspended for all non-EU nationals on December 24, 2010. Fifteen days later, the scheme was also suspended for EU nationals. The opposition presented its motion three months ago.
The opposition was still in the dark on the real reasons that led the government to suspend this scheme. Publicly, the government had justified its move by arguing that Malta’s free healthcare scheme was being abused through the scheme.
He said it was important to stabilise the scheme because Malta was already facing stiff challenges from other EU member-states including France, Italy, Spain, the Czech Republic and Portugal.
The opposition could not accept complacency on a scheme which had been giving positive results.
Dr Mangion said the scheme had a positive impact on Malta’s economy. Developers, property agents and professionals - including himself as a notary public – were involved in the sector. Malta was considered favourably in this business but an international report on retirement havens had said that Malta, together with New Zealand, South Africa and Ecuador were off screen for 2011. This year, Malta missed an opportunity for earning foreign currency.
He said that €35 million of property was sold in this sector in 2010. The government received a substantial amount of revenue from the capital gains and duties.
The sector formed part of the construction, quarrying and real estate which contributed €629 million to the GDP last year or 5.6 per cent of the economic growth. It was nearly as much as financial intermediation (at seven per cent) contributed to the GDP. Over 12,600 workers were employed in the sector earning some €114 million a year. Other sectors were also linked this sector.
Dr Mangion said that one could not therefore leave such a scheme suspended. One had to tackle the difficulties raised in a consistent way but rapidly. There had been some 1,000 applications since 2004. It was fair to investigate in order to attract mainly high-network individuals.
He said that a legal notice under the Immigration Act needed to be changed so that foreigners could apply for such a scheme through Maltese embassies abroad without the need to go to their mother country. The value of the property to be bought or rented had to be reviewed upwards.
Administrative shortcomings should be addressed and monitoring properly carried out to ensure that there were no abuses. Since the difficulty seemed to have arisen from a non-EU country national, one had to ensure that permanent residents had to have a comprehensive health insurance and would not be a burden on the taxpayer.
There was the need for the government to strengthen the scheme through better regulation so that it could continue to earn the country foreign currency, with government receiving revenue and giving incentives to the private sector to make a profit.