14 September 2005

The Web

Malta asks for more

Upon signing the accession treaty in Athens, Malta secured her rightful place in the EU club. Tonio Fenech the parliamentary secretary in the ministry of finance has reiterated the plea not to miss a golden opportunity to put forward different projects for EU financing.
The halcyon days when prior to accession the pro-EU lobbyists painted the post accession days as turning this fair land into the land of milk and honey, are over. The anticlimax was reached this year when only EUR85 million have been allocated from structural and cohesion funds. Measuring this up against our annual debt servicing cost of EUR184 million, it is not hard to see why the general disillusionment with EU membership.
No wonder the pro-EU feeling has fallen to below 40 per cent from the 53 per cent mark reached at the referendum.
The Parliamentary Secretary is busy heralding the business community, unions and NGOs to gear themselves towards identifying and exploiting all the opportunities of membership. Definitely the answer cannot lie in the creation of various lobby groups that specialise in identifying programmes that we can participate in, projects we can join or initiate, or niches we can occupy. Fragmentation of our approach is not advisable. The ideal solution is to form an umbrella association. This is not easy to realise, however one must first labour to understand the contorted and bureaucratic maze that drives the EU Commission.
As an example let us examine in detail the publication of a Green Paper on entrepreneurship intended to help SMEs. This was presented at the Barcelona Council in 2002. The Paper addresses two key issues for Europe. Firstly, why do so few people start a business, when a relatively large number of individuals express their interest in entrepreneurship? Secondly, why do so few European enterprises grow and why do those that grow do so at such a modest rate?
Answers to these questions will certainly help Maltese SMEs in their objective to restructure their companies in light of tougher competition from emerging accession countries. Again, why is domestic business so cash strapped? Growth in this area can only result from a fiscal and monetary stimulus but where do we go for the extra funds? Can the EU provide the solution?
Two years ago the Commission adopted a package of documents outlining policy towards small and medium-sized enterprises across Europe, the so-called SME package.
These aid packages comprise financial support for capital investment, aid for research & development. As a full member state Malta will be able to tap into additional resources provided by the EU, which complement government initiatives already in place such as funding programmes from Malta Enterprise.
But where does one start to tap these resources when the perception by smaller traders is that the expedition seems fruitless? The glossy brochures tell us that EU funding includes financial support for capital investment, aid for research & development, and additionally schemes with long term aims to improve local infrastructure, training, and employment opportunities. The hype associated with Brussels goes a long way to pave the path to funding as a well-planed rose garden.
The IVA lobbyists had constructed dreams of a never ending jam jar pouring goodies to help finance growth in manufacturing or commercial sectors. The time for pontificating is over and we need to act.
Brussels triumphantly tells us that the basis of most EU grants is through the encouragement of collaborative partnerships with other EU firms or academic organisations.
So with so much on tap can we start identifying the sources of the proverbial Nile? The devil as usual lies in the detail.
A lot has been written by the minister for competition about the insufficient funding by private industry for research and development in Malta. Now that we have read the fine print can the bureaucrats move their backsides and start helping the industry in general and SMEs in particular?
This all seems hunky dory but in a realistic way we must not lose sight of the statistical facts that are showing us a negative growth in GDP last year compounded by a 17% drop in exports.
But not all is doom and gloom and we can remain resolute in our drive to maximize the opportunities as the EU window will not remain open indefinitely.
Following the clarion call by the honourable Tonio Fenech parliamentary secretary for industry and other groups to suggest ways how to access the next EU budget one is tempted to suggest a scheme whereby SMEs can stand to gain. Definitely the primary aim is to access finance support services and to facilitate their inter-regional and cross-border co-operation. Certainly this objective can only materialize if we can smoothen the labyrinth which tortuously slows down the access to support services for entrepreneurs.
This is not to mention that micro and sole proprietorship businesses can never dream of receiving any trickle of assistance due to the bureaucratic tangle. With so little in the kitty for sponsorships how can we re-train and increase occupational and geographical mobility of those potentially and currently working in small and medium sized businesses of sectors affected by enlargement, in particular the most vulnerable groups such as unskilled workers. The answer would lie in applying for extra funds for the creation of more vocational and technical colleges followed by a root and branch overhaul of our cranking educational system that seems to ignore science and technical subjects in favour of the traditional arts.
It goes without saying that the radical reform needs proper EU financing otherwise how can we strive to improve the capacity of our community to develop and manage sustainable cross-border networks in the areas of youth, education, culture, health, social affairs, environment and civil protection, particularly targeting environment, transport and consumer protection.
Two years ago PKFMalta in conjunction with its counterpart offices in Hungary and Slovakia and Estonia formed a Civil Europe Association (CEA). This association is intended to be independent from political structures. The statue of CEA is determined to establish a network following the system of the EU regions, it is going to act as an information centre, communicating business possibilities, tenders for available EU funds and so on. Its professional bodies will be headed by leading experts of each field.
In addition CEA aims to provide SMEs and other NGOs with cross border information services and practical advice on how to motivate international business connections.
Of course CEA is still waiting for EU support and thus in the prevailing period it cannot proceed without governmental support to become the "first contact" in international investment projects.
It is also very interesting to note that CEA have approached prominent law firms to collaborate with them on precisely the same issue of funding for their various existent or potential sectors. In fact following various initiatives, consultants were entrusted to prepare a business plan for sector specific business with the proposal of setting up a common lobby group.
A private initiative such as CEA should be nurtured and allowed to mushroom without the bureaucratic tangle of red tape some of which has unavoidably led the nation to its knees.
The positive aspect is that the EUs next five-year budget and Malta’s objective one status is a lucrative combination. With this in mind CEA’s plan was to expect government funding to reach its objectives but only received Lm500 from NGO funds.
Hopefully this may change and the noble initiative set by Tonio Fenech may not go unheeded. The island can also emulate this initiative by regrouping its efforts and nurture the pragmatic initiative set out by the Civil European Association.

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Editor: Kurt Sansone
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