07 April 2004

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Reduce government induced costs

The key to getting Malta’s economy moving and achieving economic growth remains the country’s competitiveness. It is only by producing more at a less expensive cost or by rendering services at a cheaper price that our country can look forward to a higher standard of living. The writing is on the wall; either we are competitive and flourish or we risk falling behind. The truth is that during the last few years our country has fared poorly in comparison to our competitors. We are, in many respects at the bottom of the competitive ladder. This calls for urgent action much of which is within our control. Regrettably successive Governments have benchmarked their performance against previous Governments of a different political leaning and not against our foreign competitors. This has clouded our vision of our true competitive rating.
It is true that increased economic activity is no longer something which the government of the day can create at a whim. Gone are the days where government intervention in the market place can create the necessary increased jobs and result in increased productivity. Too many countries no different to ours have realised at a cost that by just employing people in the public sector one is not necessarily creating wealth as most of the new jobs will generate no increased economic activity. This approach is no longer considered a solution. It is merely a way of politically camouflaging real unemployment figures. It is really a way of duping the population into believing that the economic situation is fine. It is, in fact, economically suicidal.
There are nevertheless many a way in which Government can contribute to generating economic activity and these need both listing and drastic action.
The Government must reduce all the exaggerated government induced costs which are a burden on the business enterprise and which simply make potential customers shy away from operating within our shores.
We shall list just a few examples. Cruise liners stopping at our port of call are charged a landing fee of around four pounds per cruise passenger irrespective of whether the passenger disembarks, or not, in Malta. Does this incentivise cruise line operators to include Malta in their list of port calls when all competing ports charge a pittance compared to this amount? Cruise liner business was rightly identified years ago as a potential growth business for our country. This tax only serves to erase us from the itinerary of many a cruise liner.
All goods imported into Malta have to be handled by the Cargo Handling Company owned by the General workers Union. The charges to transport goods from the port to factories are excessive, with the internal transport costs exceeding the foreign port to Malta cost and as a direct result many a company would think twice before setting up in Malta.
Passengers travelling from Malta are subject to an airport tax far higher than that charged by foreign airports. Does this serve to boost our tourism industry is it rather just another reason for not sending tourists to Malta?
Our country recently introduced a data protection act obliging all companies and individuals who have access to private information on persons to notify the commissioner and to register for a fee. The fees charged are far higher and far more penalising than those charged our competitors operating in other countries.
These above-mentioned charges are just four examples which exist alongside others that are rendering our country uncompetitive. They are all government induced or blessed. All have the net effect of lessening our ability to compete and hinder any possibility of growth. A Government which believes in rendering Malta competitive must start by curbing these excessive costs.

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
Tel: (356) 21382741-3, 21382745-6 | Fax: (356) 21385075 | E-mail