19 MARCH 2003

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The way forward for industry

Recently elected Federation of Industry President Anton Borg speaks to DAVID LINDSAY about a range of issue affecting Malta’s industrial sector, not least of which is the EU membership question. Borg outlines the direction the FOI is to take this year and explains that Malta’s competitiveness remains at the top of the FOI’s agenda

The FOI has stated on many occasions that the lack of consensus on EU membership has created uncertainty in the country and in the economy? What is the FOI’s view now that a referendum has been held?
Anton Borg Given the reaction of both political parties to the result of the referendum, and pending general elections within less than a month, and in terms of the uncertainty these events create, the FOI cannot see any difference in the situation now than before the referendum.
We are hoping that the country will show its preference to EU membership. The upcoming general election will remove this uncertainty by giving a clear mandate to the next Government to lead Malta for the next five years and to consolidate our relations with the European Union for the future without further delay.
What aspects of EU membership concern the FOI most and in what respects do you think Malta’s industrial sector stands to gain from accession? In what ways would the sector lose out should Malta fail to accede to the EU?
EU membership encompasses the whole economic and social life of the country. It is, therefore, intrinsically linked to industry. It affects its costs, its competitive behaviour, its relations with its employees and its relations with society – such as the environment and the sustainability of its development.
Through EU membership the industrial sector stands to gain from access to new markets within the EU and to countries outside the EU with which there are bilateral trade treaties giving free access to products and services. The moment Malta signs on to the EU treaties it will also sign to participate in these trade agreements and our industry will become entitled to the same benefits.
EU membership also means free entry into all member states for Malta’s processed food and beverage products. Industry stands to benefit from all EU programmes aimed at supporting SMEs in their efforts to grow, innovate and develop further. Part of the financial package negotiated by Government is aimed at assisting industry directly.
Indirectly, industry will also stand to gain from infrastructure projects, especially those relating to the improvement of the environment. Without the financial assistance derived from EU membership, Government would need to raise financing for those same projects, which would mean higher taxation for industry and the workers it employs.
Is the FOI satisfied with the ways in which the restructuring of industry is being carried out? If not, in what ways would you like to see this process boosted?
The process for assisting industry to restructure has now taken off satisfactorily. Through its directorship on the Board of IPSE, the FOI has applied its own pressures so that this can happen. The funds are available and an increased and important number of programmes are available for industrial benefit. Each enterprise that presents IPSE with a serious plan is helped on various counts.
The food processing and beverage firms, however, are latecomers to the restructuring process. They have problems in becoming EU compliant to veterinary and health regulations in a short period of time. Their efficiently also needs to be improved upon and all this in a year when all protection is bound to finish and the local market will be opened, thus threatening their market position.
Some of the firms in the food/beverage sector need factory space that the Malta Development Corporation does not currently have. This could set these firms back on their plans. An effort needs to be made by the MDC to increase factory space availability in the shortest time possible.
While acknowledging the fact that much hangs in the balance in light of next month’s general elections, could you outline the direction the FOI is expected to take over the course of the rest of the year?
Competitiveness remains at the top of our agenda. We have been saying, even in recent weeks, that the problems in the public sector need a solution – such as the overmanning in public corporations and certain government departments.
There needs to be control on public expenditure if taxation levels are not to rise. There is the Social Welfare problem, which is also linked to taxation and public expenditure levels.
Malta’s public debt needs to be brought under control if Malta is to take its place in the Economic and Monetary Union, while the Ports problem has also remained without solution.
The FOI will be looking at what the political parties propose to do about these problems in the next legislature. We expect both political parties to announce clear plans on their agenda.
We want to see our economy stepping up its development tempo. What concrete plans have the main political parties prepared in their respects? Just like the rest of the country, we expect clear answers to these matters. Industry’s future depends on this. Workers will depend on this. The future of the whole economy depends on immediate solutions to these pending problems that hurt competitiveness.
The latest statistics show an increase in manufacturing sales and investment over last year’s fourth quarter. What would you say led to the increases and what are the FOI’s tentative projections for this year?
The FOI is pleased to note an increase in manufacturing sales and investment figures over the same period of the previous year.
This however, does not give any room for complacency. The situation in the world markets is still uncertain. The threat of war and terrorism is still there. Prices of oil are at a record high and Germany and Japan are still caught in a stronghold by recession. Global stock markets are on a downward trend and certain decisions are not being taken in respect of new investment.
It would be highly presumptuous of the FOI to give projections for the year. But we will soon publish our Industry Trends Survey for the first half of 2003, which shows some indications of what manufacturing firms are expecting.
How do you see Malta’s industrial sector competing, as an EU member, with fellow accession countries, many of which carry lower wage bills, production costs and have overland transport to the rest of the EC?
Malta’s competitiveness has been under threat for many years and industry has been making an effort to overcome threats from wherever they came.
The same situation will continue and our enterprises will have to continue with their efforts, whatever the outcome of the EU membership question.
As I said before, the FOI is expecting that the Government will be implementing, over next month, quick and long-lasting measures to supplement industry efforts.
The increase in competition from Central and Eastern European countries which will become EU member states is a further challenge. Malta’s industry would be in a better position to face this challenge if the country takes the road to EU membership, as the countries of Central and Eastern Europe are doing.

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Editor: Saviour Balzan
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