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Investment the key to it all

Overall, the Maltese economy is doing well. That was so under the previous administration. That which succeeded it, the Labour government, continued with the same theme. We now have fresh confirmation from the annual specific report of the European Commission, which also states that it expects Malta to continue to do well. The report’s reservations were of a medium- to long-term nature.

Alongside such widespread positive comments there are indicators which suggest a closer look should be taken at the statistics. For instance, in spite of a general feeling of well-being, some of the figures suggest that retail trade is slowing down. That is not borne out by empirical evidence. Yet, if the collected figures do not lie there has to be an explanation.

It does not seem to lie in a widespread economic slowdown. The more plausible suggestion emanated from the Minister of Finance. He said the figures of the National Office of Statistics do not take trading over the internet into account.

That is a fair point. The internet trading phenomenon has reached Malta. The articulate use the internet to source many of their requirements, usually from abroad. But internal internet trade is growing as well. Even groceries can be bought over the internet. Possibly domestic internet trade is duly recorded in retailers’ accounts, and so is captured as consumption by the NSO. But internet trade sourced from abroad is not recorded anywhere except in the individual consumer’s records, which do not make it to the NSO.

Another factor affecting internet trade and consumption records is the growing tendency of individual consumers to source their requirements overseas, to a large extent but not uniquely from Sicily. Not only items of furniture but also apertures are brought in that way. Word has spread that considerable savings can be made on like-for-like products ordered from Sicily and brought down in a private van or other means of transport.

In this case, statistics are not telling the whole truth, though not deliberately, calling for a fundamental review of how they are collated.

I do not think statistics have been lying in what they say about the construction industry. There has been a long slowdown. With the policy changes that have been announced and with the revision of Mepa’s structure and more sensible efficiency therein, it may be that this sector will soon start picking up, hopefully in a sustainable environment-friendly manner, justifying local and euro talk of sustained good overall economic performance ahead.

To my mind, though, and to that of many others what matters most is the level of net new investment in the economy, particularly foreign direct investment. Domestic real investment is very important and the fiscal and other measures announced to stimulate it are welcome. But foreign direct investment is essential since its output reaches a much bigger market.

On both counts Malta Enterprise has a key role to play. This is a known fact and it was recently made clearer through an interview carried by this newspaper with Mario Vella, the chairman of Malta Enterprise.

Dr Vella, appointed by the new government amid a lot of unnecessary flak, brought with him important previous experience both of Malta Enterprise as well as of the private sector. As expected, and responding to prods by his interviewer, the chairman spoke of the unsatisfactory state Malta Enterprise was in relative to satisfying requirements. Among other things he pointed out that of the 150 or so of its employees, only a handful were directly involved in foreign investment promotion.

Domestic real investment is very important and the fiscal and other measures announced to stimulate it are welcome. But foreign direct investment is essential since its output reaches a much bigger market

That is now being seen to, along with various other gaps. In due course the government will be announcing a revised industrial policy, to which Malta Enterprise will no doubt contribute a lot, while the views of the representatives of the public sector are also expected to be taken fully into account. The stress should be on helping domestic industry and other economic activities restructure where necessary and update their skills, not least on the basis of improved productivity and competitive unit costs.

But the main drive should be on foreign direct investment, on making Malta more attractive to encourage existing growth sectors to expand their actives, to identify new sectors especially in niche areas. Logistics, well-established elsewhere but relatively new to Malta, may be presumed to be attracting much attention by export promoters. An imaginative appr­oach exploiting our combined resources will have to be applied, on a policy which husbands land still available for exploitation, as well as industrial facilities which are under-used or not being used at all.

Growth is a function of investment. That is how we arrived where we are. That is how we have to move forward – through a coordinated effort combining the intelligence and skill of labour and capital, of the public administration, representatives of the broad private sectors, and the unions.

Much needs to be done. Much can be done with the right effort.

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