The recent news that the Chamber of Commerce (re-named Chamber of Commerce and Industry) and the Federation of Industry have confirmed their intention to merge begs that some considerations be made. It must be made clear from the outset that it is up to the two organisations and their members to decide on their future. The following are just notes by an observer from the outside.

Those unfamiliar with the structure of our economy and the profile of the main stakeholders would undoubtedly question the rationale of this move. Even those who know "who is who" must have raised an eyebrow or two at this announcement.

It transpires that one central - but hardly aired - argument in favour of the consolidation between the two organisations is that manufacturing is losing its importance in our economy, with some important players shifting from producing to importing at least part of their original lines. Thus, it is argued that manufacturers would be better-off a part of the body traditionally representing merchants and of which they were originally members. If it is true that such an argument is being made, then this is in direct contrast with statements made - even until recently - denying that manufacturing is experiencing decline. It is argued that "high-end type of manufacturing" is being attracted to the country.

The rule of thumb is that the interests of industrial capital or manufacturers - in Malta read exporters - and those of merchant capital - read importers - are at loggerheads on a number of crucial policy issues. One must admit that with the hiving-off of monetary policy from Valletta to the European Central Bank in Frankfurt, a main bone of contention is done away with. Nevertheless, other points of confrontation, such as wages policy, remain with one sector being - at least theoretically - more concerned with containing labour cost and the other with increasing the disposable income of its client base.

This will be an intriguing experiment, especially when the commerce section and the industrialists will have an opposite position on the same issue or policy. The government's policy vis-à-vis registration of medicine was one occasion when the Chamber and the FOI - traditionally allies within the conservative establishment - took differing stands until a "solution" was found.

Moreover, it is a well-know fact that there already were occasions where a trade section within the Chamber expressed a dissenting view on a particular issue but the organisation took a different position given the view of the majority of trade sections. Democracy, you will say. But what if, however, the dissenting section will now be the one representing that vital element of our economy, that is exports?

It will also be interesting to see how votes will be weighted in the new structure. Will it be a one-enterprise-one-vote or will contribution to the country's GDP be used as a basis instead? These two criteria would lead to entirely different results.

It would be interesting to know what both small, locally-oriented enterprises (most of which are importers) and export-oriented world leaders having a manufacturing base in Malta have to say about this.

The fact that the latter do not seem to be opposed to such a merger begs detailed analysis which is outside the scope of this article. One explanation is that the transnationals - especially the larger ones - present in this country have a one-to-one relationship with policymakers and do not consider it necessary to have a common platform.

One further note of interest. Much has been said about the project that has been dubbed as the largest foreign direct investment ever in the country, namely Smart City. One would be forgiven for thinking that, rather than a merger between the Chamber and the FOI, the most logical development would have been that at least one organisation develops its ICT section with a view to welcoming the global players we are told will come to our county. But that is up to the institutions to decide.

It goes without saying that whatever the outcome, this marriage will be a case study too tempting to let go by without being analysed in a factual manner.

In the meantime: Long live the bride and groom!

Dr Muscat holds a PhD in management research from the University of Bristol. His thesis, Fordisms, Multinationals And Smes In The Periphery, deals with the development of industrial policy in our country since Independence and examines the role of key stakeholders such as constituted bodies. He is a Labour member of the European Parliament and vice president of the Economic and Monetary Affairs Committee.

www.josephmuscat.com