Handling Malta’s insularity for the sake of our businesses and consumers
Insularity has been linked with a number of advantages, including marketing opportunities that lure tourists, leaving a positive impact on island economies.
HMalta can build a strong movement in favour of such cause. Challenges faced by Maltese Businesses have also been experienced overseas on other islands to the extent that they have made various studies and come up with strong arguments to support their claims.
owever, it has also been associated with added costs for the transport of goods. Unlike a small company in Belgium that can easily transport freight to or buy raw material from neighbouring countries within hours at limited costs, Maltese SMEs like those on other islands face the added cost of transport, equivalent to the distance travelled over sea, and additional time (waiting at ports) which leads to additional personnel costs. This additional cost is also reflected in the higher prices paid by consumers.
Last week, the Nationalist Party proposed the setting up of a national fund to cushion the impact of additional transportation costs experienced by business. The €40 million national fund will help Maltese entrepreneurs mitigate the exorbitant transportation costs eating away at their income, as well as their competitiveness. A new PN government will make a strong argument with the European Commission to apply state aid rules to facilitate such an initiative, thus allowing our businesses to compete and have a level playing field.
Article 174 of the Treaty on the Functioning of the European Union (TFEU) recognizes the special nature of island territories and the need to reduce challenges originating from insularity. However, very few concrete EU measures have aimed to support islands to date. It is time for us as an island state to start pushing this agenda, taking the lead. It is also in this regard that earlier this year, I presented a proposal to the Conference on the Future of Europe for EU legislation, including that related to transport, to be subjected to a territorial impact assessment that takes into consideration the challenges faced by islands, not least the cost of insularity.
Malta can build a strong movement in favour of such cause. Challenges faced by Maltese Businesses have also been experienced overseas on other islands to the extent that they have made various studies and come up with strong arguments to support their claims. For example, a study supported by the Region of Sardegna has shown that insularity drastically reduces the profitability of the local railway network, whilst profitability of the same network is boosted once insularity is artificially removed.
More recently, the Region of Sicily has also joined the fray. Studies conducted by the region have shown that the cost of insularity for the entire territory amounts to 6 billion euros a year, which corresponds to a sort of hidden tax for each Sicilian equivalent to about 1,200 euros. In Italy, insular regions have joined forces to support one another and reap benefits which are key for the development of their respective territories. One would have expected the same approach in Malta. After all, the opposition expressed its willingness to meet government officials and help it make its case with the Commission.
However, unlike the Regional Government of Sardegna or Sicily, as expected, Malta’s labour tried to water down this proposal, ignoring the real challenges faced on the ground which add up to the already difficult situation emanating from the pandemic.
Whilst the measure proposed by the Nationalist Party is a starting point to address the significant disadvantages faced by our businesses, other measures need to be considered, including tackling unfair competition and incentives to help SMEs to thrive online. We are committed to bring about change and will not be discouraged by Labour’s inability to reap the opportunities that the EU represents.