Riding on the back of a strong economic performance in 2018, Frank V. Farrugia, President of the Malta Chamber of Commerce, Enterprise and Industry, says there’s no denying the feel-good climate for doing business right now, but this has brought, and continues to bring with it, a unique set of challenges that cannot go unmentioned.
“We have been saying that we are satisfied with the recent track record of economic expansion, but this in itself is creating problems within certain sectors, as while economic growth gives the impression that all sectors and industries are doing well, this is not the case,” he asserts. “Such rapid expansion is leading to a rise in operating costs.”
“With resources being limited, prices go up, and those sectors which, according to national statistics, are growing at far lower rates than the average, such as manufacturing and retail, are having to pay a price much higher than they can afford for the resources that they need, most notably human resources. This may also hinder their future growth. Therefore, not everybody is benefitting from economic expansion in the same way.”
Other pertinent problems relate to the cost of housing and its impact on wage increases, as well as increased construction and its impact on the environment. “It is quite clear that, long-term, while the good feeling among businesses in Malta will likely remain, we have to ask, at what price?”
The Chamber President is optimistic, however, that 2019 will bring with it a number of opportunities for certain sectors, primarily in the area of innovative technologies. “This is a positive development which the country needs in order to stay ahead of the curve and to develop further, but here again, there will only be a few local companies able to cope with this development,” he asserts.
Moving on to Mr Farrugia’s two-year Presidency, which ends in April, he says that the past two years have been busy, but equally rewarding. “I was lucky to take on the Council of Presidents of BusinessEurope (COPRES) event in Malta soon after becoming President in 2017, which is usually hosted by the country in charge of the Presidency of the Council of the EU, which Malta was at the time. The Chamber had been working on this for around two years prior to my election, and it was a real success.”
Mr Farrugia asserts that the meeting yielded many positive results, not least that a good number of the high-level attendees had never been to Malta, and got their first introduction to the islands through the Chamber. “Many delegates showed their interest to return, and some already have – among them the President of BusinessEurope at the time, Emma Marcegaglia, who is a highly-respected name in industry,” says Mr Farrugia.
“Additionally, the delegates became aware of what Malta could offer and changed their perception of the islands. Until the meeting, politically and institutionally-speaking, Malta tended to be at the bottom end of the table with BusinessEurope. Things changed when our turn for the EU Council Presidency came about. Our views became more sought-after, and we continued to make in-roads even after the Presidency was over,” he asserts.
“The election of my predecessor, Anton Borg, as Vice-President of BusinessEurope in 2016 was significant, making him the first Maltese official to occupy such a role. Our affiliation with the organisation is quite crucial – through it we’re able to really feel the pulse of business in Europe.”
Another highlight from the Presidency is the Chamber’s 170th anniversary celebrations, which was commemorated with, among others, a national conference about family business late last year. Ferrero R&D Chief Briano Olivares, Buffa Founder Paolo Buffa, and Grimaldi Lines Director Eugenio Grimaldi headlined the conference, which was also attended by local entrepreneurs or their second or third generation family members who have since taken over the business.
“Following the conference, a legacy was also established, where we forged an agreement with the national Family Business Office, through which we formed a tangible link, so that family businesses can now come to the Chamber if they require support in the succession of their family business,” says Mr Farrugia.
“A committee was also set up with the participation of the Regulator of the Family Business Office, which will continue to research and look into new and innovative ways of helping family businesses in Malta. The event was a sell-out on the day, and many of our members have requested a repeat seminar next October, which we’re working on.”
Mr Farrugia adds that the agreement reached on the increase to the minimum wage is another accomplishment for the Chamber, following long discussions and negotiations, in which the Chamber was actively involved, together with other employers’ representative organisations.
The agreement stipulates that minimum wage earners would receive an increment of €3 per week following the completion of a year’s employment with the same employer, and a further €3 weekly will be added upon completion of a second year. “It was an issue that had been in negotiations for a long time,” says the President, “but which we believe was agreed upon with a positive outcome for all.”
The Chamber also published a flagship policy last year to propose solutions to the current labour market challenges affecting the day-to-day operations of local businesses. “The solutions were presented to Cabinet, and included reforms to the country’s education curricula, further incentivising active ageing, skills audits, facilitation of recruitment of foreign nationals, and an international marketing campaign showcasing employment opportunities in Malta. We’re pleased to say that some of the recommendations are being taken on board.”
Mr Farrugia and representatives from the Chamber attended a number of successful overseas delegations throughout the past 24 months, accompanying the President and Prime Minister of Malta, various Ministers, as well as delegations on the Chamber’s own steam. The organisation also welcomed high-level delegations to its quarters, namely a visit from the President of Tunisia for the Tunisian Business Forum, and a visit from the Vice-President of India.
This March, the Chamber will be hosting the National Parliament for Enterprises which is modelled on Eurochambres’ European Parliament for Enterprises, which is held in the Brussels hemicycle, which the Chamber always participates in through high-level delegations featuring Malta’s business leaders. “Eurochambres this year is encouraging member states to organise a similar event in their own parliament. We will be doing so on 13th March, with the collaboration of the speaker of the House of Representatives, and with the attendance of the President of Eurochambres.”
Also in the pipeline is the launch of TechMalta, the third Public Private Partnership (PPP) between Government and the Malta Chamber, following the launch of Trade Malta and Education Malta. “Tech.MT, which was originally ICT Malta, took a longer time to get off the ground due to the rapid developments in the innovation sector, namely in fintech, blockchain and Artificial Intelligence (AI),” says the President. “We proposed to widen the scope for this PPP, and the foundations have since been laid, including an established Board of Directors. In its essence, the aim of Tech.MT will be to promote Malta as a hub for innovative technologies, especially blockchain, AI and robotics.”
This interview first appeared in The Commercial Courier