Min­is­ter Car­dona ac­knowl­edges chal­lenges of do­ing busi­ness in Malta

Malta Independent - - FRONT PAGE - He­lena Grech

In re­sponse to the news that Malta once again re­mains the most dif­fi­cult place to do busi­ness in the whole of the EU, Econ­omy Min­is­ter Chris Car­dona spoke of the sim­pli­fi­ca­tion of bu­reau­cratic prac­tices and other mea­sures that ad­dress this chal­lenge.

Malta ranked 76th out of 190 coun­tries sur­veyed. The main sore points are in the ar­eas of reg­is­ter­ing prop­erty (147th), get­ting credit (139th), start­ing a busi­ness (132nd), re­solv­ing in­sol­vency (84th), deal­ing with con­struc­tion per­mits (82nd) and get­ting elec­tric­ity (77th).

Asked about the re­sults of this World Bank’s Ease of Do­ing Busi­ness re­port, Dr Car­dona said:

“A num­ber of ini­tia­tives ad­dress­ing th­ese di­rectly were an­nounced in last week’s Bud­get for 2017. The abol­ish­ment of most trade li­cences and the au­toma­tion of the is­su­ing of num­bers for VAT and PE will ease bu­reau­cratic prac­tices as will the re­place­ment of a num­ber of forms cur­rently re­quired when set­ting up a busi­ness lo­cally by one form which in­cor­po­rates all the oth­ers hence re­duc­ing bu­reau­cracy and pro­cess­ing times.”

More broadly speak­ing, Dr Car­dona added that ‘Im­prov­ing Malta’s rank­ing in the Ease of Do­ing Busi­ness’ re­port pub­lished by the World Busi­ness Fo­rum is a chal­lenge which the Min­istry for the Econ­omy In­vest­ment and Small Busi­nesses has ac­knowl­edged and has been ad­dress­ing di­rectly from the be­gin­ning of this gov­ern­ment’s ten­ure.

“Al­though there is still a lot of room for im­prove­ment, since Malta’s first en­try in the World Busi­ness Re­port in 2012 at 102nd place, Malta’s rank­ing has im­proved sig­nif­i­cantly. Since then strate­gic de­ci­sions and poli­cies have been put into place lead­ing to Malta mov­ing up 26 places, to its cur­rent rank­ing at 76th place, after hav­ing climbed six places this year alone.”

Turn­ing to what has been done over the past three and a half years to ad­dress this is­sue that is so vi­tal to Malta’s grow­ing econ­omy, he said:

“The min­istry recog­nises there is still much to be done on this is­sue and is com­mit­ted to con­tin­u­ing to cut red tape and fa­cil­i­tat­ing the busi­ness en­vi­ron­ment. This is be­ing done in a con­certed ef­fort by the gov­ern­ment in gen­eral, with var­i­ous as­pects be­ing looked into. In par­tic­u­lar, it is to be noted that amend­ments to the Com­pa­nies Act, Chap­ter 386 of the Laws of Malta, have been tabled in Par­lia­ment re­cently to ad­dress re­struc­tur­ing and liq­ui­da­tion is­sues, as well as the cre­ation of the De­vel­op­ment Bank and tax cred­its and other in­cen­tives for start-ups.

“Last year an amend­ment was also in­tro­duced re­duc­ing the fee for set­ting up a busi­ness dras­ti­cally when the process is done on line. To­gether with other pe­riph­eral amend­ments such as a dras­tic re­duc­tion in the time re­quired for a busi­ness to be pro­vided with util­i­ties such as elec­tric­ity, other ef­forts are be­ing made by the gov­ern­ment to ad­dress is­sues hin­der­ing ease of do­ing busi­ness.”

Gov­er­nor of the Cen­tral Bank of Malta re­acts

Gov­er­nor of the Cen­tral Bank of Malta Mario Vella, re­act­ing to the World Bank rank­ing, said that the Cen­tral Bank has been analysing the ease of do­ing busi­ness lo­cally for a num­ber of years.

He said that while such a re­port can­not be ig­nored and places pres­sure to ad­dress cer­tain key is­sues, macro-eco­nomic in­di­ca­tors such as the GDP, bal­ance of pay­ment and em­ploy­ment lev­els, which have been healthy of late, must also be kept in mind.

Mr Vella also stressed that such stud­ies look at the sit­u­a­tion cur­rently, while gov­ern­ment mea­sures and ini­tia­tives need time in or­der to kick in.

“Our Re­search Depart­ment has at­tempted to an­swer the ques­tion in a pub­li­ca­tion in our Quar­terly Re­view 2016: ‘Mea­sur­ing In­ter­na­tional Com­pet­i­tive­ness’. This sug­gested that Malta’s cost com­pet­i­tive­ness has not de­te­ri­o­rated in the last decade, and, in fact, Euro­stat data show that the cur­rent ac­count of the bal­ance of pay­ments has moved from a deficit of 5.6% of GDP in 2005 to a sur­plus of 4.3% last year. Re­search on this is­sue is con­tin­u­ous and will fea­ture in a pub­li­ca­tion and sym­po­sium that the Cen­tral Bank will be hold­ing next year.

“Whilst the com­pet­i­tive­ness in­dices pub­lished by the World Bank and the World Eco­nomic Fo­rum carry con­sid­er­able weight they should not be con­sid­ered as the fi­nal judge­ment on the mat­ter.

“Macro-eco­nomic in­di­ca­tors (GDP growth, bal­ance of pay­ments and em­ploy­ment trends, fis­cal deficits and debt lev­els, as well as unit labour costs read­ings) de­liver equally im­por­tant in­for­ma­tion about a coun­try’s com­pet­i­tive­ness. In fact, it is rather odd that the two small Eu­ro­pean coun­tries that per­formed best dur­ing the fi­nan­cial cri­sis, Lux­em­bourg and Malta, fea­ture quite low in the World Bank in­dex.

“Yet such in­dices can­not be dis­re­garded and if any­thing they should spur us to ad­dress iden­ti­fied weak­nesses.

“In fact, the Cen­tral Bank of Malta and our bank­ing in­dus­try col­leagues are proud that the Credit Reg­is­ter ini­tia­tive has per­mit­ted bet­ter rank­ing for Malta in the Get­ting Credit sub-sec­tor.

“Go­ing for­ward I am con­fi­dent of fur­ther progress on Get­ting Credit met­rics when the Malta De­vel­op­ment Bank be­comes op­er­a­tional. Our ini­tia­tives to make changes to the in­sol­vency process and to en­force cred­i­tors’ rights will in due time also de­liver im­prove­ments in our Re­solv­ing In­sol­vency and En­force­ment Con­tracts cri­te­ria.

“The truth is that cer­tain ini­tia­tives and pro­grammes aimed at se­ri­ous im­prove­ment of old bot­tle­necks and the elim­i­na­tion of in­ef­fi­cien­cies need time to kick in. Mean­while, how­ever – and slightly so – in­sti­tu­tions such as the World Bank and the World Eco­nomic Fo­rum judge by ac­tual re­sults.”

Malta Em­ploy­ers’ As­so­ci­a­tion

Di­rec­tor Gen­eral of the Malta Em­ploy­ers’ As­so­ci­a­tion Joseph Far­ru­gia noted that Malta’s rel­a­tive po­si­tion com­pared to other EU coun­tries is not favourable, how­ever out­lined a strat­egy where the is­land should con­cen­trate on its strengths while still ad­dress­ing bones of con­tention for busi­nesses.

In com­ments to The Malta In­de­pen­dent, he said: “The re­port clearly demon­strates that, in spite of progress made in some ar­eas of do­ing busi­ness, Malta’s rel­a­tive po­si­tion is still worse off com­pared to other EU states, al­though not in all as­pects. This shows that there is a lot of room for im­prove­ment in our pro­cesses and or­gan­i­sa­tional set-up in or­der to as­sist busi­nesses to func­tion ef­fi­ciently. One ex­am­ple that we have raised this year is the pro­cess­ing of VISAs to third coun­try na­tion­als.

“We need to build on our strengths – i.e., ar­eas where we have high scores – and ad­dress oth­ers where busi­nesses still feel sti­fled with un­nec­es­sary bu­reau­cracy or ad­min­is­tra­tive bur­dens that can ac­tu­ally serve as a bar­rier to en­try into the busi­ness world and dis­cour­age en­trepreneurs.

“One ini­tia­tive that MEA has launched as part of the SME week this year is the pro­posed de­vel­op­ment of an SME tool­kit which will en­able start-ups and ex­ist­ing busi­nesses to nav­i­gate bet­ter through var­i­ous gov­ern­ment de­part­ments and au­thor­i­ties. This is a project which we will be work­ing on in the com­ing year and which, if suc­cess­ful, will surely help to im­prove our rat­ings.”

Malta’s rel­a­tive po­si­tion is still worse off com­pared to other EU states, al­though not in all as­pects

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