Government is aiming to achieve 6.5 per cent economic growth in real terms in 2017, whilst ensuring a surplus of at least 0.5 per cent of GDP, says Minister for the Economy, Chris Cardona. If achieved, 2017 will top an already exceptional year in 2016, where GDP growth reached 5 per cent.
Dr Cardona goes on to establish the Government’s sectoral priorities for the coming years. “Going forward, we will be consolidating our efforts to continue promoting Malta as a centre of excellence in a number of ICT sub-sectors, such as cybersecurity, internet and digital based operation and big data. We will also be focusing on precision metal engineering and water management, whilst also targeting energy efficiency projects. The advanced manufacturing and food sectors are also yielding positive results, and have potential for greater growth.”
Dr Chris Cardona
Speaking on the ease of doing business in Malta, where the country is still lagging, Dr Cardona acknowledges that there is a lot of room for improvement. He said that Government will be setting up the Malta Business Council with the private sector, to act as a watchdog and ensure bureaucracy is reduced while increasing Malta’s competitiveness. A unit within Malta Enterprise to assist SMEs in setting up their business will also be established.
“We will continue working to improve the business simplification exercise we started last year, wherein a number of administrative procedures that were prolonging the time taken to start a business in Malta have been eliminated or simplified significantly,” says Dr Cardona. “In fact, a business can now start its operations within one week from application, compared to the minimum three weeks which existed before.”
Dr Cardona asserts that, in the past four years, Malta has attracted a record number of foreign projects, and the demand for industrial space is now greater than ever. “We are adopting methods in land allocation that are smarter and more sustainable to make the best of our limitations,” he explains. “In the coming months, works will commence on the regeneration of the Ta’ Qali Crafts Village, now branded as an Artisan Village. We will also be working to increase the capacity of industrial and manufacturing space within Xewkija Industrial Estate through the creation of a tech hub at the ex-MDP site, together with the redevelopment of the Tal-Ħofra site that are currently being negotiated with the private sector. Another project in the pipeline is to promote Malta as a destination for start-ups. A lot of work has been done already, and we believe Malta can be successful if the adequate resources and set-up are available.”
Meanwhile, leading economist Gordon Cordina delves into the economic sectors which have done well in the recent years. “Recent growth was balanced between ‘new economy’ and ‘traditional economy’ activities. The newer economic sectors tended to be more volatile, while traditional sectors generally enjoy more stable growth. Between 2011 and 2016, gaming was the fastest growing sector, accounting for more than 20 per cent of growth. The consumer and tourism sectors, as well as the professional and technical sectors, have also seen high growth. On the other hand, manufacturing was in decline save for a few pockets of innovative activities, typically carried out by micro firms.”
Dr Gordon Cordina
Dr Cordina also identifies policy priorities for the government to tackle. He asserts that a concerted effort should be aimed at the development of the global lifestyle hub concept for Malta over the medium term. Well-balanced and properly sequenced investment in economic, environmental, social, cultural and human capital are key to sustain quality growth. “In addition,” he continues, “economic strategies are needed to diversify within and away from overweight sectors, and away from excessive dependence on tax competitiveness. Opportunities from Brexit should also be exploited.”
Malta Business Bureau President, David Zahra, meanwhile, asserts that the financial services and iGaming sectors are expected to remain major drivers of growth throughout this legislature. “The continued availability of specialised human resources, both developed domestically through a responsive education infrastructure and through the attractiveness of our island for technical people from other countries, as well as the supporting corporate tax environment, will continue generating business in these sectors,” he asserts. “However, it would be a mistake to rest on our laurels with the success of these economic sectors. The new administration must focus its energy on ensuring further diversification of the Maltese economy, with the creation of new sectors focusing on areas characterised by research and innovation.”
Dr David Zahra
Dr Zahra also emphasises the need to improve the ease of doing business in Malta. He highlights that key priorities for business growth should include the introduction of mechanisms to improve ease of access to finance, and a sustained commitment to address over-regulation, which has skewed the way businesses commit human capital internally, snuffing creativity and business development.
In the near future, Dr Zahra continues, this administration will be tasked with negotiating Malta’s share of the EU’s Multiannual Financial Framework post-2020. “We recommend that Government develops a strong strategy to maximise on the opportunities that Malta can benefit from through EU funding, keeping in mind the economic support companies require in every stage of the business lifecycle, capital infrastructures for better traffic management as well as products to improve our tourism product, among others.”
This article originally appeared in the July edition of Business Agenda