Inflation, bad governance, overpopulation the main issues facing Malta – SMEs
Small and medium enterprises cited rampant inflation, overpopulation and a lack of good governance as the major issues that the country is facing right now which the government needs to address.
The Malta Chamber of SMEs also pointed out that EU legislation is missing the mark with Malta and has furthermore impacted the economy negatively.
The data emerged in the latest SME barometer, a survey representing 400 anonymous participants and the pulse of the SMEs in this quarter, which was presented on Thursday by the Malta Chamber of SMEs, together with a number of recommendations.
The survey found that the two most important issues that SMEs are currently facing are employee shortage and inflation, with 43% and 28% of respondents respectively highlighting these points.
Inflation and cost of living was also one of the important topics that should be discussed in the MEP electoral campaigns, with 66% of respondents saying that it should be treated as a priority.
Regarding inflation, the Chamber said that much more can be done to tackle the inflation problem and recommended that the government address it head on. It said that this may be done by making it clear to the EU what Malta’s limits are and lobbying to at least remove the consumer tax, as it is unnecessary in the face of “peaking” inflation.
The survey also found that the most important issues the country is facing at the moment are the lack of good governance (33%), overpopulation (31%), increases in inflation (30%), and the level of corruption (26%).
The vast majority – 76%, in fact – of respondents said that they do not think that Malta is moving in the ‘right’ direction. This is up from 72% when compared to the final quarter of 2023.
The Chamber said that Malta not going in the right direction must be addressed and elaborated in saying that Malta is going through turmoil, partially political, that is bad for business, adding that the alarm bells for tangible solutions are ringing.
The Chamber said that governance issues are the “order of the day” and noted that the survey would have given more negative findings had it been carried out in the last two weeks, because corruption affects SMEs too. It elaborated that the economy doesn’t exist in “a vacuum” and does face ripples, and recommended that the government must increase economic trust.
It explained that the reason for this is that the reputation of countries attracts investors, more so with the stability of reputation, meaning that the high government should serve as an example for SMEs. The Chamber went on to recommend a reform of the Maltese procurement system so that it is more transparent and puts Maltese interests as the first priority. It added that “if you do things straightforwardly, you won’t have any problems.”
On the other hand, the Chamber recommended a shift towards skilled, quality workers in order to move away from overpopulation.
When asked whether the next 12 months would be a good time to invest, the survey said that 56% of the participants were not sure.
The Chamber said that Malta has reached an overcapacity with the tourism sector with such aggressive private investment in the last 15 years that the public sector is now trying to keep up. It added that what is needed is a period of stocktaking as the tourism boom cannot be kept up, despite a record boom in the last quarter. This will allow an actualisation of what the country already has by managing tourism more effectively and adding value to what already exists.
Elaborating on the ‘stocktake’, the Chamber said that the country has seen a period of “toxic developments” and a stocktake would mean an evaluation of already-existing buildings. It added that the previous 15 years have been exhaustive, they are no longer sustainable and Malta must now face the consequences of being at over-capacity.
The Chamber said that sustainability isn’t only environmental or financial but also economic, and the fact that so much has been invested in it without a pay-off is a “cry for help.” It said that Malta is in a “very delicate time” because of all this private investment and elaborated that whilst some investors were “cash rich”, others took huge loans to cash in on the boom. Keeping in mind the overcompensation and limit of Malta’s capacity, it is those who took out the loans who are anticipated to end up struggling in the increased competition, it said.
The survey also found that 73% of SMEs do not feel represented in the EU. The Chamber explained that this was not surprising as it is in the public domain that the results of the EU are not satisfactory, with one of the reasons for this being that EU legislation doesn’t cater to Malta’s small size but rather adopts a ‘one size fits all’ approach.
It added that other issues with the EU are its rigid framework and the lack of cooperation between Maltese MEPs as well as their lack of contact with The Malta Chamber of SMEs. It gave the example of how Malta voted in favour of decreasing emissions on the EU level which had the consequence of a tariff of €16 million on freight ships entering the Malta Freeport, citing a study by Alex Montebello.
The overall result of this vote is initially the loss of business to Egypt, which is not bound by the emissions agreement and so is a cheaper port, the Chamber said.
It also pointed out that the main EU countries with ports are Malta and Italy to illustrate that Maltese MEPs get lost in “the bigger picture” of the EU, and called for Maltese MEPs to be more “relevant” to Malta, to consult with the Chamber and ultimately to use our small size as an advantage.