Small open economies depend on direct productive foreign investment to prosper. Malta’s economy is no exception. Insufficient investment in the last several years has meant that our infrastructure has suffered, thereby threatening our competitiveness and future growth.
The inefficiencies of Enemalta have become a millstone round the neck of businesses as well as of families who have had to struggle to pay for their energy bills. Decades of neglect and mismanagement resulted, among other things, in a debt mountain of €840 million that Enemalta owed to its creditors.
The strategy to pass on this deadweight of inefficiencies on consumers was criticised by the European Commission as well as rating agencies. This is the nightmare that every new administration would want to avoid to deliver the jobs and economic growth that our citizens rightly expect.
Last year the debate on how to walk out of this nightmare was surrounded by uncertainties about the feasibility of the energy strategies proposed by our main political parties. It now looks increasingly certain that we are on the right path to re-engineer how Enemalta functions, give the people a reliable, clean and affordable energy source, and help businesses regain their competitiveness by lowering energy costs.
The high level Government delegation led by the Prime Minister and his deputy that visited China has succeeded to transform our previously weak energy management strategy thanks to hard work of energy strategists, politicians and other advisers who had a clear vision of what was needed to achieve a quantum leap in efficiency.
The Maltese delegation has managed to convince the Shanghai Power Electric to become a strategic partner in Enemalta by taking a significant shareholding in our energy utility. This should enable Enemalta to start tackling its debt mountain and win much-needed favour with rating agencies that were threatening a further downgrade of Malta because of our utilities massive problems. This investment should also help Enemalta to invest in its distribution infrastructure that has suffered from benign neglect for over two decades.
Equally important the Memorandum of Understanding signed by the Maltese and Chinese delegations envisages the setting up of a joint venture to service other power stations that China has commissioned in other Mediterranean countries. The concept of Malta as a hub for providing services to neighbouring countries is still valid and this should ensure more job creation especially in the services sector.
We need more friends like China, who respect us for our commitment to work hard for our country
The possibility of China setting up assembly plants for photovoltaic solar panels in Malta is another bonus delivered by this very successful diplomatic initiative. The recent agreement between the EU and China to avoid a trade war between Europe and China on the question of Chinese exports of solar panels may be eased by the kind of agreement that China has signed with Malta. What is also certain is that when this venture takes off, it will help Malta hit its 2020 targets for the use of renewable energy.
Of course, the hard work of making this successful visit bear fruit did not end with the return of the Maltese delegation from China. A lot of hard work now needs to be done to ensure that these projects will in fact materialise and deliver the advantages that we have just mentioned.
China has for long had immense respect for Malta and it never forgot the support that tiny Malta gave it in the early 1970s, when few countries were prepared to take China seriously on the political and economic level. I experienced this respect directly when I formed part of an official delegation that visited China about a decade ago. I then realised what a great nation China is and how much potential there was for reinforcing our friendship with the Chinese people.
The outcome of the recent Government delegation to China will surely rank among the most successful investment promotion initiatives that Malta has achieved in the past half a century since independence. Despite the daunting challenges facing our economy, we need to celebrate success as much as we need to engage in deep soul-searching whenever we fail to achieve our economic objectives.
Success breeds success. This model can now be adopted for other areas where we need to upgrade our performance, for example our public educational and health sectors. We need to build alliances with friendly nations beyond the confines of the European Union.
We need more friends like China, who respect us for our commitment to work hard for our country.
johncassarwhite@yahoo.com