OECD Product Market Regulation (PMR) Indicators: How does Malta compare? ___________________________________________________________________________________ Competitive product markets foster economic growth and can improve the living standards of citizens. OECD’s Product Market Regulation Indicators assess the alignment of a country’s regulatory framework with internationally accepted best practices. The Economywide Indicator measures the distortions to competition that can be induced through the involvement of the State in the economy, as well as the barriers to entry and expansion faced by domestic and foreign firms in different sectors of the economy. This indicator is complemented by a set of Sector Indicators that measures regulatory barriers to competition at the level of specific network and service sectors.
Overall PMR Indicator Index scale 0 to 6
Malta
1.54
OECD countries Average
1.38
5 Most competitionfriendly countries 5 Least competitionfriendly countries
1.00 1.82 0.0
2.0
4.0
6.0
Economy-wide PMR Indicators: a breakdown by major components Index scale 0 to 6 from most to least competition-friendly regulation
6
Malta
OECD average
5 Most competition-friendly countries
5 Least competition-friendly countries
5 4 3 2 1 0 Public Ownership
Involvement in Business Operations
Simplification and Evaluation of Regulations
Admin. Burden on Start-ups
Barriers in Service Barriers to Trade & Network sectors and Investment
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2019. Source: OECD 2018 PMR database.
ECONOMY-WIDE HIGHLIGHTS
Overall, regulatory barriers to competition in Malta are slightly above the OECD average. Public ownership is limited, but still above the OECD average when it comes to large network operators. Rules governing public procurement are in line with key OECD best practices, but there is scope for making the interaction between interest groups and policymakers more transparent. There is scope for simplifying the licencing regime, as well as for reducing the complexity of regulatory procedures and removing barriers to competition in the network and service sectors. In contrast, barriers to international trade and foreign direct investment are low.
Economy-wide PMR indicators: a breakdown by sub-components Index scale 0 to 6 from most to least competition-friendly regulation Distortions Induced by State Involvement Simplification and Evaluation of Regulations
Complexity of Regulatory Procedures
6 5 4 3 2 1 0
Interaction with Interest Groups
Involvement in Business Operations
5 Least competition-friendly countries
Assessment of Impact on Competition
6 5 4 3 2 1 0
Price controls
Governance of SOEs
Direct Control
Scope of SOEs
Gov’t Involv. in Network Sectors
Public Ownership
6 5 4 3 2 1 0
5 Most competition-friendly countries
Public procurement
OECD average
Command & control regulation
Malta
Barriers to Domestic and Foreign Entry
Barriers to Trade Facilitation
Barriers to Trade and Investment
Treatment of Foreign Suppliers
6 5 4 3 2 1 0
Tariff Barriers
Barriers in Service & Network sectors
5 Least competition-friendly countries
Barriers to FDI
6 5 4 3 2 1 0
5 Most competition-friendly countries
Barriers in Network sectors
Licenses and Permits
Admin. Burden on Start-ups
Admin. Requirements for Lim. Liab. Companies and Pers.Owned Enterp.
6 5 4 3 2 1 0
OECD average
Barriers in Services sectors
Malta
Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2019. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
SECTOR-SPECIFIC HIGHLIGHTS Regulations in most professional services could be made more competition friendly, and the rules regulating the retail sales of medicines are restrictive when compared with most OECD countries. As for network sectors, ecommunications and transport by road have a regulatory set-up that is close to that of the five best performing OECD countries, while there is scope for removing regulatory barriers to competition in transport by air and by water and in electricity.
Regulation in network and service sectors PMR Indicators for network sectors* Index scale 0 to 6 from most to least competition-friendly regulation 6
Malta
OECD average
5 Most competition-friendly countries
5 Least competition-friendly countries
5
4 3 2 1 0 Electricity
Air
Road
Energy
Water
Fixed
Transport
Mobile
E-Communications
PMR Indicators for professional services+ and retail distribution Index scale 0 to 6 from most to least competition-friendly regulation Malta 5 Most competition-friendly countries
6
OECD average 5 Least competition-friendly countries
5 4
3 2 1
0 Lawyers
Notaries
Accountants
Architects
Professional services
Civil engineers
Real estate agents
Retail distribution
Retail sale of Medicines
Retail trade
* There are no natural gas sector and no rail sector in Malta. + When comparing the indicators across countries, it should be kept in mind that the activities undertaken by specific professions may vary between countries. Note: All the averages include only OECD countries. Information refers to laws and regulation in force on 1 January 2019. If the blue bar does not appear on the chart for a specific indicator, it means that its value is 0. Source: OECD 2018 PMR database.
OVERALL ASSESSMENT
With regulatory barriers to competition that are higher than the OECD average in several areas, there is scope for improving product market regulation in Malta.
Strengths
Challenges
The administrative requirements necessary to set up new firms, whether limited liability companies or personally owned enterprises, are lower than in most OECD countries.
The rules regulating access to public contracts for the provision of goods, services and public works are aligned with most key OECD best practices.
Malta would benefit from a more transparent lawmaking process. For example, there is no requirement to use plain language when drafting new laws and regulations, nor to regularly publish a list of the laws that will be approved, repealed or modified.
There are no rules regulating the interaction between policymakers and interest groups and ensuring transparency of lobbying activities. For example, there is no compulsory registration for interest groups in a public registry, and there is no obligation on public officials to identify the interest groups that they consult or meet with during the regulatory process.
The regulatory framework in the retail sale of medicines is very restrictive. In particular, there are tight constraints on the number, location and ownership of pharmacies.
Malta has a very competition-friendly regulatory setup in the mobile e-communications sector, as the extent of state ownership is limited, and regulation is close to the international best practice.
Further information
“What are the 2018 OECD PMR indicators?” PowerPoint presentation on OECD PMR website
Vitale, C., et al. (2020), "2018 Update of the OECD PMR Indicators and Database - Policy Insights for OECD and some non-OECD Countries", OECD Economics Department Working Papers
Please visit our website : http://oe.cd/pmr Contact us at: PMR2018@oecd.org