SME Chamber

Growth, growth, growth

years, Malta has been labouring under low growth rates with GDP registering a
sluggish one
per cent
in good times and slipping into negatives in bad times. Now we are finally
seeing the economy
beginning to move with GDP growth above two per cent.

years, Malta has been labouring under low growth rates with GDP registering a
sluggish one per cent
in good times and slipping into negatives in bad times. Now we are finally
seeing the economy
beginning to move with GDP growth above two per cent.

of whether this is the long-awaited "EU effect" or the results of our
own endeavours, or more
likely, a combination of both, there is a real sense that things are happening
in certain sectors.
2007 might even see Malta growing faster than the EU average, finally bringing
a halt to years of
relative decline.

We will
be the last of the 2004 accession countries to move ahead of the EU average and
will still be a long
way behind the 4%+ growth that Cyprus is experiencing and can only look with
envy at the 6%+
growth rates of other small nations such as the Baltic States, but the
significance of even this
modest breakthrough should not be understated.

capacity is springing all around us. Whether it is all the supermarkets opening
or planned,
residential development or hotel building, the refrain "Malta will be
lovely when they finish
it" has never rung truer.


Even by
international standards, these are not small projects. Tignè Point, Times
Square, Mercury
House/Pender Place, Dock No. 1, the second phase of the Waterfront, Ta' Qali,
Business Park and then SmartCity, are all very significant multi-functional

When we
look at apartment construction, we see 800 units at Mistra Village, 230 units
at Crowne Plaza and
over 100 other small to medium-sized developments where multiple new
residential units are
being created.

 There is
one very obvious question – is there enough energy and capacity in the roughly
Lm1.3 billion
of annual consumption in the domestic Maltese economy to support and absorb all
this massive
injection of supply?

 I think
we all know that the reality is that a very significant portion of all this
economic activity is addressed
at foreign direct investment and now, of all times, ease of access both
physically and the
supportive networks within the economy, are critical.

 And yet
the one industry which is all about bringing foreign money and people is the
industry which is
struggling to survive – tourism.

already had excess capacity in the tourism sector before 2005 but since then
the tourism figures
have shown an absolute decline. Josef Formosa Gauci, the MHRA president, was,
sadly, absolutely
right when he told the prime minister that we are currently 180,000 visitors
behind where we
should be.

even in the tourism sector, the private sector continues to invest and add
magnificent new
capacity – the huge Excelsior Hotel, and the Palace Hotel and eventually the
boutique hotel where the
Les Lapins once stood immediately come to mind.

tourism industry is going through a fundamental shift which has nothing to do
with Malta, and Malta can
do nothing to affect it.

 The old
European inclusive tour operating business is dying and the decline is
happening at an alarming
rate. The latest combination of Thomas Cook and My Travel is yet another sign
of an industry
desperately trying to cut costs.

 And where
do we feel the pinch of that cost cutting? When the business managers call on
our hotels
and tell them they are being dropped from the next brochure or they demand yet
another swingeing
cut in tour operator rates or even more onerous blocking terms.

To use a
developer's analogy, the demolition men have moved into Malta's old tourism
house before we
have got the new one ready.

So what
is to be done to avoid all these massive physical projects from turning into
unsold and unoccupied
white elephants?

simple answer is access.

it is developing the cruise liner hub, restoring the Gozo air link or tackling
the monopoly pricing
of Malta International Airport head on, the Maltese economy is crying out for
all the blocks to people
moving around to be bulldozed aside as surely as the demolition men are working
their way
across site after site on our islands.


has shown in its short time here that it is delivering growth in our visitor
numbers and that many of
their passengers are people that have never been to Malta before. I believe the
case is proven
and that the powers that be can now see the capability of low-cost carriers to
deliver new business
as our traditional markets fail.

But why
stop there? Why cannot we be bold and bring Easy Jet to Malta, encourage more Ryanair routes
and other LCCs to serve us?

 Fifty per
cent of the outbound European travel from the UK and Ireland will be on LCCs
this year. If half
of our inbound traffic from these sorts of countries is not on LCCs, we as a
country are losing
our rightful market share and that helps nobody – not even Air Malta. Lengths
of hotel stay are
falling all round Europe so we need disproportionately higher growth in
passenger numbers to achieve
the same rate of bed night growth, compared with the past.

    Yet with
    its choking pricing structures, Malta International Airport is reporting
    constant profits and  its falling
    passenger numbers. Falling! Malta, just about the only country in all of the EU
    to see its air traffic
    numbers dropping and yet we are growing despite this massive hindrance. Almost throughout
    the world, air traffic growth is the lead indicator to GDP growth, yet Malta is
    somehow defying
    gravity in this respect.

     If all
    this construction is going to be anything more than a fragile bubble, we have
    to create an increase
    in air traffic numbers and that means more LCC routes immediately. The more
    people come
    here, the more is spent, the more we are in the shop window and the more people
    there will be to

    now, the key to growth, growth, growth continuing is tourism, tourism, tourism.

    Tourism Hospitality and Leisure Sector


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