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The Malta Chamber calls on Government to be more of an Enabler BY CEO DR MARTHESE PORTELLI
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he Malta Chamber of Commerce, Enterprise and Industry presented 100 recommendations ahead of the upcoming general elections in a document entitled ‘Time to Step Up’. The recommendations are spread over five pillars, namely: Economic Recovery, Resilience and Growth; Good Governance; Human Capital and Education; Infrastructure and Digitalisation; and Sustainability. The document builds on The Malta Chamber’s ‘Economic Vision for Malta 2020-2025’ and its Budget proposals for 2022. ‘Time to Step Up’ focuses on two main aspects: 1. those sectors and industries which need targeted action to facilitate their recovery 2. those sectors and niches that have significant growth potential. It identifies the creative arts and culture, retail and tourism as key areas which require immediate action to support their recovery. For instance, arts and culture require more effective centralised funding and the retail sector needs a masterplan that lays out the future of retail, particularly in key locations that are a touristic and cultural destination in their own right such as Valletta. In the tourism sector, there needs to be a quality leap whereby Malta’s tourism product is redefined to one which is unique and qualitative and where the Malta Tourism Authority needs to become more of an enabler and active regulator. With respect to sectors that have a significant potential for growth, ‘Time to Step Up’ insists on targeted action and a broadening of scope supported by investment in the required skills and competences and incentives to attract talent. These include specific manufacturing segments such as semiconductors, energy storage technologies and the production of green fuels that are being favoured by EU policy. It also recommends a repositioning of the financial services industry particularly
in the light of the corporate tax harmonisation drive. A broadening of scope of the gaming industry beyond iGaming to establish Malta as a centre of excellence for digital games and eSports is also recommended. Additionally, Malta can develop its maritime industry in terms of both luxury yachting tourism and the provision of technical services through more investment in its ports. More investment is also required to support logistics and to kickstart Free Trade Zones, coupled with a holistic reform in the way our ports and customs operate, as well as direct support on transportation costs in view of Malta’s insularity and peripherality in the context of the single EU market. The Malta Chamber insists that Government needs to be more of an enabler. Ease of doing business remains key. This can be achieved by reducing bureaucracy and streamlining systems and procedures through digitalisation, including a fully integrated eGovernment to ensure more transparency, greater efficiency, shorter response times and less costs for business. The Malta Chamber recommends the establishment of a centralised document repository to facilitate due diligence by both public and private entities, such as banks and corporate service providers. Following up on its blueprint on Public Procurement Reform published in January 2021, the document includes some of The Malta Chamber’s more critical proposals related to good governance in public procurement. These include full transparency on direct orders and Government contracts, including modifications and variations, and the blacklisting of operators who are not complaint with tax dues and employment laws. Significant improvement in the way the judicial system operates, supported by the required investment in technology and human resources, is also required to provide an effective deterrent to rogue operators and enable legitimate businesses to thrive. There are also a number of recommendations to strengthen the labour force, following on from its National Workforce Strategy Document of August 2021. Among these are incentives to improve the retention of foreign workers and a fiscal incentive of a five-year tax break to attract local talent that has relocated abroad back to the country. These need to be supported by initiatives to increase expenditure in R&D to 3% of GDP and to reskill and upskill the local workforce based on a national skills mapping exercise. It also advocates for reforms to the pension system to encourage workers who opt for an early pension to pursue part-time employment and those who reach retirement age to continue working.
The Malta Chamber reiterates its call for a complete overhaul of our education system at primary and secondary level to ensure that the next generation is more motivated to learn and better equipped for future jobs. In terms of the future, The Malta Chamber’s recommendations include digitalisation and sustainability. Among the bolder recommendations are the undertaking of a carrying capacity study focused on the built and natural environment, heritage, culture and business requirements as well as a tangible reform in the way planning is done so as to address the vacuum in sustainable long-term planning. The Malta Chamber’s 100 recommendations include a call to safeguard the stability of energy costs to contain inflation, thereby protecting the purchasing power of the population and the competitiveness of local businesses. In view of the process of electrification of vehicles we are calling for significant investment in the distribution network and advocates for its liberalisation. It also reiterates its position that Malta needs to have the EU-funded hydrogen-ready gas pipeline connecting it to the European network, in addition to the second interconnector, to ensure access to a broad low-carbon energy mix. Finally, The Malta Chamber also calls for a reduction in the effective corporate tax rate of local companies to 25%, as Malta’s 35% is the highest in Europe and only a handful of notoriously high tax countries such as France and Germany have corporate tax rates exceeding 25%. The Malta Chamber insists that any reductions in the effective tax rate need to be attached to full tax compliance and should not be capped to ensure a level playing field among complaint operators irrespective of their size – 99% of all local operators are SMEs by EU standards and all deserve to be supported. The Malta Chamber believes that targeted assistance for micro companies (those employing less than 10 people) should be directed at improving their digital capabilities and their operating standards, but corporate tax, unlike personal income tax, should never be progressive as it should not have a redistributive function. Profits generated from enterprise need to be taxed evenly, subject to full tax compliance which The Malta Chamber has constantly promoted as part of its commitment to good governance and its call for ethical business. The Malta Chamber believes that its 100 recommendations can help to foster an ecosystem that promotes economic growth without compromising on quality of life, respect for the environment and social cohesion. n
