Author: SME Chamber

GRTU CEO Abigail Psaila Mamo participated in a round table discussion organised by the European Commission Representation in Malta on the 2015 Country Report for Malta.

The Commission representative explained that in 2014 both the economy and the labour market continued to perform well and the outlook for 2015-

2016 is favourable.

The report specifically on Public Procurement

“Despite improvements, Malta’s competitiveness continues to be hampered by structural challenges in the business environment and the innovation framework. The length of public procurement procedures has been reduced considerably but still remains somewhat above the average for the EU.”

The report specifically on Access to Finance

“Investment has been muted, despite the favourable economic performance. Limited capital accumulation to some extent reflected the changing structure of the Maltese economy towards less capital-intensive service activities. However, the analysis also pointed to a number of structural weaknesses that hinder private investment, such as difficulties in the access to finance and inefficiencies in the business environment also related to shortcomings in the energy and transport sectors. Investment is projected to rebound in the medium-term, although it is unlikely to reach its pre-crisis levels.”

In her intervention Ms Psaila Mamo stated that the Government has a number of initiatives that are relatively recent and ongoing which could not have been taken into consideration in the Commission’s report because the report is based on figures mostly from 2013 or mid 2014. These initiatives should result in further positive developments however the initiatives must be timely and we must make them count. Paper exercises will do very little, we need to translate good paper exercises into measures and actions that benefit SMEs in real terms.

On access to finance the GRTU CEO reiterated that while there are a number of elements that may have contributed to a low level of investment, GRTU is a firm believer that Access to Finance is the main one. In a survey GRTU is currently conducting its members appear divided on how they assess the ease of accessing finance, some report that this is easy and some report that this is difficult. This probably depends on the type of project they present. Members however unanimously agree that accessing funds is very costly and this relates to both bank charges which are disproportionate, interest rates which vary significantly and go up to 8% and excessive collateral requirements which are sometimes even five times the loan amount.

On public procurement the GRTU CEO stated that Malta is still lagging behind the EU average, this even though an improvement in number of days was registered. Ms Psaila Mamo argued that introducing an electronic procurement system was necessary but making electronic procurement mandatory, therefore eliminating the option of submitting a written bid, was a step backward. This, compiled with the fact that you have to apply for an e-ID on the company (2 weeks), you have to attend a course to understand how the system works and the system in itself is full of pitfalls that makes it easy to make mistakes and have you bid disqualified, makes access to public procurement difficult. This is preposterous in this day and age. The ease of access to public procurement should not be measured simply on the number of days it takes to submit a bid but on how many bids are submitted compared to other countries and according to the size of the enterprise, and how many bids are disqualified due to silly IT related mistakes.

A representative from the Ministry for the Economy, Investment and Small Businesses recognised GRTU’s claim and said that in fact Government was currently carrying out a study to understand why Malta ranked very high in the amount of eGovernment services it offers but then ranked very low in the level of use of e-gov services by enterprises.

GRTU has today met the Hon Leo Brincat in a meeting that was requested by the Minister himself. The Minister informed GRTU that according to Budget 2015 the Government decided that the eco contribution will be removed on all electronic and electrical products and instead Malta will start conforming to the WEEE Directive. The Minister presented the draft Legal Notice and gave a short explanation on the plans Government has in this regard.

GRTU welcomed the consultation however GRTU also informed the Minister that, without any reservations, it requires a clear guarantee by the Government that it will first exempt all those operators that between 2007 and 2015 were carrying their 

environmental obligations under eco contribution, from the legal obligations under the WEEE Directive covering the same period.

This is a cardinal point for the GRTU and a priority because it is not acceptable that an operator pays an environmental tax twice on the same product. GRTU will be evaluating the draft Legal Notice and will be consulting its members before presenting its official comments to the Minister in the coming weeks.

Local operators in the PV sector will soon be given the opportunity to carry out installations at an area which the Government will be allocating for such investments at a price of Eur 0.50c per sqm.

This is an initiative GRTU has, during the past months, been lobbying for and is now very pleased that Government has seen the validity of its proposal and Minister Konrad Mizzi has committed himself to make it work.

This development and commitment came after GRTU publicly expressed its disappointment when it read on the papers that a significant amount of land was being made available to Shanghai Electric Power at very advantageous rates.

The GRTU argued that Maltese enterprises should not be treated any less. The Ministry understood this complaint and immediately expressed its willingness to provide a similar opportunity to Maltese enterprises.

What the initiative will actually involve is giving local PV sector operators (importers, retailers, installers) the opportunity to carry out works on a piece of land during periods when work is slow.

In the last years GRTU has been working with the renewable energy sector GRTU has learned that this sector is very volatile because it is dependent and therefore affected by the Government schemes (MRA schemes). When a scheme is open the sector experiences a sudden spike in work load for which they have to prepare with additional human resources. On the other hand, it experiences the exact opposite effect when the scheme closes, with the instant halt of work and many employees become idle. The sector has had to learn to diversify and shift its operations however, it cannot do this effectively enough to shift and occupy full capacity until another scheme is open.

A survey conducted by GRTU found that the sector employs in total around 750 installers alone and these are employees that are at high risk when the level of installations is low. The number of employees continues to increase if one had to include non-technical employees. We consider non-technical employees to be low risk and therefore a much lower percentage of these employees, when compared to the technical employees, are at risk of becoming redundant.

When one considers that the latest scheme closed in March 2014 and the sector took till around September 2014 finalising installations, it is evident that the sector has now been struggling for a good seven months in its efforts to keep all technical people in employment.

This will however not be the only positive element that will come out of the initiative. Every now and then governments state that small portions of a PV farm shall be put for sale and available to families that have no roof space. GRTU is a great believer in equal opportunities, in fact it has launched the PVPFS scheme to aid families who have a roof but do not have the financial means to take out the initial investment and be able to install PV panels on their rooftops. This initiative should take us a step further and offer the perfect platform to enable families that do not have access to their roof to purchase or lease parts of the proposed PV farm. This will help families get access to more affordable energy prices as well as possibly getting some financial return on their investment.

One of the biggest challenges Malta, like many other countries, faces today is the security of energy supply. Unlike other counties Malta however has very scarce resources and this puts our country in an even more precarious situation to overcome this challenge. It is however also true that the country, its residents and enterprises, cannot afford not to have an aggressive and constant energy policy that increases Malta’s independence when it comes to energy supply and drives down energy prices for users. In addition Malta is also under pressure to reach the EU 2020 targets for energy generated from renewable energy.

We feel proud to say that both the GRTU and its members in the private sector have been both very instrumental and of service to our country in contributing to the energy policy, reaching the EU set targets, reducing our dependency of imported resources and driving down prices for those who saw the value of such investments. This however could not have been possible without the essential contribution of the public sector that over the years has helped in directing and driving investment in the renewable energy sector. GRTU firmly believes that the experiences undertaken so far have been positive for all involved and that the public sector has found a valuable partner in the private sector to support it in its initiatives.

The European Commission has recently launched a Green Paper on building a Capital Markets Union and two flanking consultation papers on securitisation and a review of the Prospectus Directive.

This Green paper was launched as an initiative to break down existing cross-border barriers in European investment which prevents businesses from accessing finance at reasonable cost, give savers more investment choices as well as enhance the efficiency of the system that channels such funds.

GRTU President Paul Abela and Deputy President Philip Fenech attended an event organised by the European Commission Representation in Malta to present the Green Paper on Capital Markets Union in more detail and provide a platform for the sectors’ stakeholders to exchange their views and contribute to the consultation exercise.

During the discussion GRTU President Paul Abela emphasised that the European Commission should look beyond banks if it really wants to facilitate access to finance for SMEs. Finance facilities must target also SME organisations, within an agreed framework, that will promote access to finance and really have SMEs at their heart. Banks will always first and foremost priorities profits, low level of risk and promote their own products. These are far from the priorities of the European Commission and SMEs.

GRTU has followed reports in the media where it was stated that 300,000 square meters of space had been granted to Enemalta, so as to be made available to Shanghai Electric Power, at the mere price of Eur 0.50c per square meter.

GRTU is very disappointed by such an announcement after it has been lobbying for Government to make an area of land available to local businesses for PV investments.

Instead of leasing it to local businesses for investment and rehabilitation it was leased to a Chinese company. An area of this size could have easily provided for 2 years’ work for the Maltese enterprises and their employees involved in this sector. It would have made up for the quiet periods this sector experiences when MRA schemes are closed and their staff are idle.

To add insult to injury the price at which the Government owned factory roofs are being offered for lease is Eur 3.35 per square meter. If what is reported in the media is correct, this is almost 7 times more expensive than the rate given to Shanghai Electric Power.

In GRTU’s opinion, this is a case of two weights and two measures, where a foreign company is being given advantageous terms in respect to many local companies.

GRTU is incensed that Maltese businesses are being treated as second class citizens in their own country. GRTU feels that Maltese companies should get first preference by right, ahead of foreign businesses and if there is an opportunity Maltese businesses should always be given first priority.

GRTU is not against foreign direct investment but at least we require that Maltese companies are treated with dignity and given the same opportunities at the same price of foreign businesses.

GRTU demands an official clarification and if the facts are as reported, then GRTU demands corrective action in this regard so that Maltese enterprises are placed on equal footing.

A Country Thematic Review by CEDEFOP (EU Centre for Vocational Training) on Malta’s Apprenticeship Schemes gave an overview of the current systems in order to pave the way forward for reforms in work-based learning tied in order to make vocational training more closely tied to industry needs. This report was presented today at a Stakeholders’ Meeting held at MCAST in Paola.

GRTU applauded the efforts undertaken to bring forward this report as it sheds light on the previous schemes formerly held through ETC, which is a necessary step in order to reform apprenticeships as we know them and integrate them into education to bridge training with the world of work. GRTU agreed on the importance to rebrand apprenticeships, but also argued that the revamping needed to ensure a renewed quality which both students and employers can trust.

GRTU highlighted the need to ensure that the workings of any such schemes need to be feasible and attractive to micro-enterprises and self-employed. Given that the Maltese economy is made up of mostly such small businesses (at a rate which is higher to its EU counterparts), if the apprenticeship schemes are to be successful, they have to be tailor-made to fit the realities and exigencies of the smaller businesses. If the number of opportunities for trainees to acquire apprenticeships is to be widened and boosted, we need to ensure that considerations of small businesses are taken into account, so that even the wide sector of smaller businesses can also participate in offering these opportunities. The situations of these businesses need to identified and the schemes shaped upon them. For instance, self-employed and micro-enterprises will not have HR departments that can be assigned follow-up and handling of apprentices – but they can offer invaluable training opportunities as well. The scheme has to then be communicated and facilitated targeting also these businesses and not only larger employers.

GRTU also advocated the need for an increasing culture of apprenticeships in building an understanding of the benefits of work-based learning. This is should also serve as a spill-over towards linking educators and trainers with the world of work. If students are going to be undergoing apprenticeships to be linked to industry, we also have to ensure that teachers are in touch with the labour market.

Apprenticeships need to be given quality and value by establishing credits and an agreement on recognisable learning outcomes which both the employer and the student agree upon in order to know what training is to be achieved throughout the experience. However this has to be done in a clear and simplified manner that is not burdensome on partaking employers in a way that discourages participation.

In terms of recommendations related to strategic planning concerns, GRTU suggested that the relationship between small businesses and training institutions needs to be solidified. A setup has to be put in place to ensure an ongoing colloquium with industry which also reflects the needs of micro-enterprises and even self-employed. This would serve as a one-stop-shop for training needs and skills matching.

GRTU also welcomed the responsibility of apprenticeships being allocated to MCAST as the major public VET provider. GRTU however added that it would be necessary that MCAST would now also steer a national outreach to employers together with the help of employers’ representatives and support other training providers, both public and private, to also embark tap into the pool of apprenticeships.

Minister for Finance Prof Edward Scicluna addressed a joint meeting of the MCESD and the MEUSAC Core Group focusing on the National Reform Programme for 2015. The discussion was based on the New European Semester under which the European Commission provides a detailed analysis on the budgetary plans of Member States and gives Country Specific Recommendations (CSRs) which are intended to give direction to how respective Member States should deal with particular challenges in order to perform better in line of EU financial and fiscal targets.

The Commission report described Malta’s economy and labour market as performing well in 2014 with a favourable outlook for 2015-2016. It however highlighted that despite lower budget deficit, public finances sustainability remains a challenge. The participation of women and older persons in the labour market has improved yet remains considerably low. The authorities have focused on reforming the energy sector to diversify the energy mix. Malta’s competitiveness continues to be hampered by structural challenges in the business environment and the innovation framework, notwithstanding improvements. The report states that investment has been muted even though economic performance has been muted.

Minister Scicluna disputed the statements on investment and the means by which is taking such considerations. He also emphasized on the deliverables which the government is setting in terms of budget initiatives which are also targeted at addressing the country specific recommendations. These included, amongst others: finalisation of the Fiscal Responsibility Act; continuing to improve tax compliance and fighting tax evasion; pension reform discussions; public health reforms; measures to enhance labour market and skills; diversification of the energy mix; increasing of energy produced from renewable sources.

At the meeting, GRTU articulated major concerns for SMEs which need to be addressed in period ahead which tie to the comments presented in the Commission report. GRTU stressed the importance of focusing on the fact that Malta’s economy is built around a higher rate of micro-enterprises than the rest of its European counterparts.

A) This implies that administrative burdens need to be addressed tangibly and not only through legislative procedures but also by training all levels of the public service to understand that a delay in procedures may not cost much for a government department but cause serious repercussion to a micro-enterprise or self-employed. GRTU suggested immediate training initiatives, perhaps through EU programmes, which can be undertaken hand-in-hand with employers, to address the sensitivity to the results of administrative burdens on business.

B) GRTU welcomed Minister Scicluna’s statement of commitment towards moving towards electronic payments. This, GRTU explained, needs to be tied with offering new opportunities to existing business models that need to be supported in order to upgrade to turn challenges such as online shopping into opportunities.

C) GRTU voiced its concern on the Report’s comments on lending stagnation particularly in the case of smaller businesses. Banks need to be incentivised to provide the resources for businesses to operate. GRTU also welcomed and urged for further upcoming initiatives to find alternative means of accessing finance such as through providing structured private financing to small businesses to be able to take the necessary steps to the next level.

D) In terms of Research and Innovation indices, GRTU commented that despite giving due importance to academic high level research, it is essential to start considering business-tied innovation which small businesses and self-employed may not have the possible structures to invest in. GRTU suggested initiatives to be coupled between enterprise and public and private vocational education institutions that can provide tailor-made research opportunity support to business ideas and needs for micro-enterprises and self-employed.

E) GRTU stressed the importance of taking necessary measures to address tax evasion. GRTU added that whilst it is imperative to ensure that for fair competition practices are kept, it is perhaps more urgent to ensure that systems are put in place in practice to address taxation which is not being captured at all, such as undeclared goods. GRTU asked for updates about the developments of the setting up of a instruments such as the proposed Guardia di Finanzi alternative as announced in Budget 2015.

The Government is launching a new website that will promote the current products available on the market in relation of green buildings. Malta is already making a lot of advances in relation to greener buildings however it is clear that there is a larger need for more improvement for this concept to grow. This week architect Ivan Bartalo project officer at BICC (Building Industry Consultative Council) visited GRTU to deliver a presentation to a number of operators that provide smart technologies. Through this presentation Mr Bartalo explained the aim of the website and also highlighted the key products and services to be featured in the website. 

These product include:

• Solar thermal heating systems
• Photovoltaic panel systems
• New build and retrofit insulation
• Double glazing doors and windows
• Cladding systems
• Hard flooring systems

This initiative targets consumers to promote products and services that are energy efficient and smart technologies that lead to lower energy consumption and/or the generation of renewable energy.  The website will provide information:

• on the concept of green buildings
• product catalogue of local building technologies
• job descriptions of certified technicians, designers, consultancy and other specialist services
• technical product information
• non-technical advice for homeowners

The government believes that this initiative will not only benefit consumers that will be able to invest in energy efficient technology but also local suppliers that will be able to reach a wider audience.

• Smart, Green Fisheries
• Smart, Green Aquaculture
• Sustainable and Inclusive Territorial Development
• An Integrated Maritime Policy