GRTU stresses that Access to Finance and Access to Public Procurement a consistent problem for SMEs

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.