Political crisis has rocked business, GRTU warns

Both local and foreign businesses are bearing the brunt of the political upheaval in Malta and are already rethinking their investment plans on the island, the GRTU has warned


BOTH local and foreign businesses are bearing the brunt of the political upheaval in Malta and are already rethinking their investment plans on the island, the GRTU has warned. GRTU CEO Abigail Mamo told BusinessToday that Maltese businesses were feeling a strong level of insecurity and those that had intended to invest have now said their plans are in doubt. Non-local businesses are also being badly impacted, with a number of foreign companies on the island already terminating their leases and indicating they will be moving out in the short-term, Mamo said. The GRTU survey published last week found that 65% of businesses reported a drop in sales over the past two weeks.

This has been the dire consequence of the political instability brought on by the fallout of the revelations emerging from the investigation into Daphne Caruana Galizia’s murder. The study, which surveyed 50 different economic sectors from all over Malta, showed that 15% of respondents reported an over 50% decrease in sales. Just as worryingly, the study also indicated that 46% of all respondents said they would be “reconsidering, postponing or cancelling their investment” plans for the next year, raising the issue of the long-term damage which the current upheaval will have on the business community. Mamo said that the GRTU was sounding its voice not only about the current imminent repercussions of the decrease in sales, but also about the fact that every day the political crisis continues damages Malta’s reputation in the longterm.

“If local established businesses and already established foreign investors are rethinking their investments in Malta let alone the new investors that we were hoping to attract. Malta is no longer attractive for the legitimate foreign business to consider as an investment location,” she said. Such investments were the reason why Malta had managed to turn a deficit in a surplus, and the reason the country could invest heavily in infrastructure, social benefits, and other measures, Mamo highlighted.

“Everyone is hitting the brakes on Malta and this will result in a bad economic performance that will affect our standard of living, the number of jobs available and how much they pay, and so on.” Mamo acknowledged that forecasts had indicated that the island’s economic performance could not maintain the same rhythm of the past few years, due to the normal economic cycles “But we anticipated that we would have a few years to adapt our spending and patterns to a much slower growth and save for a rainy day,” she said.

The events of the fast few weeks, however, have caused the country to overnight go “from one extreme to the other”. “We are totally unprepared for it and lacking a plan of how to handle the current crises and manage the situation. Lack of predictability and instability is very bad for business.

We will start appreciating the repercussions of this in real terms sooner than we think,” she added. Property sales take big hit as business confidence drastically down Developers’ lobby boss Sandro Chetcuti told this newspaper that property sales over the past few weeks had taken a significant hit amid the unprecedented political turbulence and ongoing protests. The MDA president said that business confidence had drastically been reduced, and he could confirm that the sale of property had suffered significantly as a result.

Chetcuti said that the quicker the situation was solved – which he hoped would happen once Joseph Muscat resigned in January – the better. After this, the process would have to start to plot the way forward. “We first have to wait for the political situation to be solved. Once it is solved, we can then focus more on plotting the way forward. It would be presumptuous of me to speak about what will need to be done to amend the situation in the market at this stage,” he said.

“Once the country has overcome the political situation, we then need to start thinking on how to fix the damage [to the market] which has taken place and how to restore the country’s reputation.” Chetcuti went on to emphasise that while the vast majority of people in business across all economic sectors were decent, honest and abided by the law, there were a small group who were giving the rest a bad reputation.

“Most businessmen and women do their business above board. It is only a few people who give a bad reputation to all of us. And it is not easy to fix such damage,” he said. His comments come within the context of the charging in court of Yorgen Fenech – the former CEO of Tumas Group, one of Malta’s biggest business empires – as masterminding the assassination of Caruana Galizia. Chetcuti also noted that “a few individuals” in the business community tended to jump from one bandwagon to the next, going from currying favour from administration to another. 

“Such individuals sometimes compromise high-profile people in politics,” Chetcuti added, “And this ends up tainting the reputation of the many business people who are very capable and do all their work above board.”

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