The partnership option for industry
Dr John Attard Montalto lawyer, politician,
former Minister for Industry - is also religious, loves listening to
classical music, wrote a book called The nobles of Malta,
which was awarded the Malta Literary Prize for 1981, has visited more
than 100 countries and is a baron, although he prefers not to use the
title. JULIAN MANDUCA caught up with him in his office in Valletta
When I mention the name John Attard Montalto, people immediately
know who Im talking about. The first image that springs to mind
is of a tall, slim, young-looking lawyer who was minister for industry,
but usually people will say: "is that not the one that lots of
Politicians in Malta lack sex appeal like Moroccan summers lack rain.
Attard Montalto is one of the few that, with a few tips, could make
the catwalk and he does not mind being thought of because of his sex
appeal, in conjunction with his successes as a minister.
"I think it is a compliment. All men like to think that women find
them attractive. I think that in one way or another we all have a certain
amount of vanity and I must admit that I am a little bit vain. Of course
I prefer it if men would think of me as the ex-minister for industry."
John Attard Montalto may be vain to a certain extent, but it is by far
not the only thing on his mind. He obviously keeps very much up to date
on what is happening in our industrial sector.
"The fact that Malta is, in my opinion, an industrialised country
is extremely positive. Considering our size and lack of resources, with
reference to raw materials, I think we have performed extremely well.
Our performance is the result of over 50 years of investment in industry,
especially in manufacturing. It did not come about on its own, it took
a lot of imagination to attract foreign-owned companies to Malta.
"We have about 200 foreign-owned firms that export substantially
to the western world in particular."
Several economists and commentators feel that while Maltas industry
did very well in the 70s and 80s, the 90s saw something of a slump.
But Attard Montalto does not believe Malta has fared badly.
"Our expectations have been fulfilled, we have nearly a dozen top
notch factories and we can no longer say that Maltas industrial
is developing. We have a mature industrial scene.
"One must distinguish between industry that is operating from Malta
and that which is trying to be attracted.
"With regards to those that are present in Malta. We have seen
that nearly all the flag bearers have made huge investments over the
past years. ST, Methode, Brandstatter, Dowty O Rings, Carlo Gavazzi,
Baxter and many others have decided not only to remain in Malta, but
also to expand and invest.
"They all know that Malta is not a cheap location. There are many
other countries that have cheaper labour, financial incentives that
compare favourably or surpass what we offer and this means that these
companies have decided to expand in Malta because it pays them to do
While it is often assumed that because of globalisation companies will
always choose to move to cheaper destinations, but Attard Montalto points
out that this is not always the case.
"The decision to stay in Malta is in line with general global trends
as far as Foreign Direct Investment (FDI) is concerned. Contrary to
perceptions, FDI is mainly directed towards industrialised and developed
countries. In fact, the latest statistics show that 68 per cent of FDI
has gone to these countries.
"This means that the perception of competitiveness has developed.
Previously industrialists took a narrow view of investment as far as
the location is concerned and used to consider three specific elements:
low wages, fiscal attractions and political stability.
"Today investors consider many more elements such as an educated
and technologically advanced labour force and induced costs such as
transport and telecommunications. One is aware that the choice of location
for new investment is much more complex than previously thought.
"As regards new investments, in the past years, apart from some
exceptions, no completely new investment of a certain magnitude has
"Government points at HSBC as a new investment and takes it into
consideration for statistical purposes. This gives a completely erroneous
picture of foreign direct investment over the past four years."
"The reality is that new FDI has been extremely moderate. It has
not stopped, but there was nothing of significance.
According to Attard Montalto, this has nothing to do with the world
"I believe that one of the main causes is the lack of Maltas
profile as a place for FDI in the manufacturing sector. The blame lies
squarely on the government agencies responsible for advertising Malta,
in particular the Malta Development Corporation. The way in which Malta
is advertised is very amateurish. We hear about targeting specific sectors,
but what is actually happening is that old strategies are being directed
towards particular manufacturing.
"I believe that when one talks of targeting one should identify
not a sector, but a specific enterprise. One should be extremely forceful
to try and persuade the decision-makers of that specific company to
locate or extend their manufacturing to Malta.
"We should analyse what industry is here and target their suppliers,
or cluster manufacturers in the same line of business."
The obvious question springs to mind: Did the former industry minister
do that when Labour was in power?
"When I was minister, I directed the Board of MDC and its chief
executive to change their strategies, because I felt that the performance
judged by the results was inadequate."
"One example of how we put this into practice was that we started
to target small to medium sized companies in Italy, explaining that
Malta is an ideal location for extending their line of manufacturing
business since we offered all the advantages that Italy offered, while
at the same time we did not have what they call the social induced costs
which, by law in Italy, was holding back expansion."
Attard Montalto is convinced that the partnership option being heralded
by the Malta Labour Party will give Malta that added advantage.
"I do not believe the assertion that Malta within the EU will be
able to attract increased FDI. We would have to curtail our incentives
to come in line with EU regulations.
"This will mean potential investors will not have a different scenario
to than that offered by other EU countries.
"If Malta is not a member of the EU, Malta is not constrained to
pass legislation to come in line with EU directives.
"ST, which is our major exporter, will have to change its work
practices because of specific EU regulations related, for example, to
the shift system and overtime. This will lead to our competitiveness
being further eroded.
"There is no difference between the two options as far as access
to the EU market is concerned."
"A cornerstone of the partnership option is accessibility to the
EU market. This is a sine qua non. One would still have to have the
quality as requested by EU regulations.
"I believe certain important regulations regarding health and safety
should be adhered to, immaterial of whether Malta joins the EU or not,
but there are other regulations that would definitely affect Maltas
competitiveness, the choice of raw materials for our products in relation
to the cost for instance.
"If you are a member of the EU you can import from where you like,
but as a member Malta would have to take into consideration the regulations
that affect the cost of the raw materials."
If Malta does not join the EU, however, it will not benefit from the
Structural and Cohesion funds that the EU offers to help with the restructuring
process. Attard Montalto believes Malta will still manage to get funding:
"Between 1996 and 1998, when Labour was in power, Malta had been
allocated funding for pre-accession and, notwithstanding that, we froze
our application. The EU accepted our proposal for the use of the said
funds for the restructuring of our manufacturing base.
"If we stay out of the EU, the funds we get might not be called
Structural or Cohesion, funds, but we are determined
to negotiate a package that will enable us to develop our infrastructure
and our industries.
"One must not forget that most European Union countries have a
positive balance of payments as regards Malta, and the Labour Party
in government was able to enter into a favourable protocol with Italy
on this basis.
"One seems to analyse the situation as regards the EU as either
we join and get funding, or we dont join and get no funding. This
is incorrect. There are several possibilities, one of which I have just
referred to - protocols with particular countries in addition to a package
as a result of our partnership option."
All well and good, but I ask Attard Montalto what would happen if Maltas
negotiations for the partnership option with the EU are not successful.
"That is a hypothetical question. Lawyers dont consider hypothetical
situations. When before the 1971 elections Mintoff was asked the same
question with regards to the agreement with Britain, Mintoff answered,
"We will come to an agreement with Britain."
But would this be one that would include funds made available to industry?
"The agreement which I envisage is inclusive of funds to restructure
our industrial base where necessary and to invest in the industrial
infrastructure to make Malta a more competitive location.
"The partnership option is not solely dependent on Maltas
relationship with the EU. That is part of our general political vision
and includes agreements with other geographic zones such as the US,
which today absorbs roughly 20 per cent of our exports.
"The partnership agreement will not allow for the curtailment or
limitation of other aspects of our economy such as agriculture, fishing,
financial services and maritime services."
In the parliamentary debate related to the referendum and EU accession,
Prime Minister Eddie insinuated that John Attard Montaltos speech
indicated that he favoured EU accession.
"I was hurt because I never expected to be completely misquoted
regarding my contribution on industry. Senior members of the NP know
that nowhere in my speech did I link the problems that we found in industry
on being elected with the freezing of EU accession. The way that my
speech was completely inverted not only took me by surprise but as I
stated it hurt me."
Attard Montalto is convinced that the partnership option will be best
for Maltas industry and is sure that Labour will be in government
once again in the coming months. Time will allow us to judge whether
he is right.
Attard Montalto, in the meantime, answers my final two questions:
"I expect the Labour Party to win the elections and as to whether
I will be minister, that is the prerogative of Dr Alfred Sant.
"In the referendum I will vote No. The Labour Party
has given the three options and I expect that these will surpass the