Re-inventing ourselves

The Malta Chamber has recently called for a five-to-10-year energy investment plan, to be developed in consultation with the private sector, with clear milestones and deliverables based on realistic growth projections and the available skills.  Needless to say, one cannot omit to comment on a two-year history of summer power cuts. Sanity dictates that an adequate electricity supply, linked to a stable distribution network, and adequate water supply and sewage systems are top priorities.

Again, the chamber has put forward proposals to support sustainable renewable energy adoption, including a feed-in tariff for businesses that offers better returns on investment. Touching on the aspect of competitiveness, the Chamber states that the country needs to transition towards a more sustainable approach to infrastructural development that considers economic growth, competitiveness, and environmental, and social sustainability.

The penny dropped when one remembers how many times a good governance reform is promised to be implemented with gusto by our political leaders. As almost all government boards and vital institutions (such as education and planning authority) are run by Castille acolytes, it is difficult for a new renaissance to happen, so by inference, businesses are being penalised for being good corporate citizens, while unethical operators thrive by evading or circumventing their obligations due to a lack of proper enforcement and good governance.

Next, we meet Kevin J Borg, Malta Employers’ Association Director General. He rightly so glorifies the Labour administration for significant growth in recent years, but according to his assessment this expansion has been largely driven by domestic growth not necessarily exports. The latter segment is being faced with increasing costs which trim profit margins to a minimum.  It comes as no surprise, therefore, that to receive reports entrepreneurs are becoming increasingly cautious about future investment decisions. Quoting Borg, Malta needs a reconfiguration of its priorities and a stronger focus on export-led growth through long-term planning to ensure that corrective policies remain in line with the country’s physical and social characteristics.  

But readers may ask how does this frank assessment of the present economic compass compare to the 10-year vision propagated by hon Silvio Schembri; minister for the economy, European Funds, and lands.  It was July 2021, when the period for public consultation window on a 10-year Economic Vision closed. Mimcol had been advising the ministry on developing this master plan and a number of conferences were held to explain its content.  

Gallantly, this vision focused on innovation and creativity, the use of digital media for productivity and competitiveness, converting education through skills development with sectoral employment, considerations of environmental issues, and the continued strengthening of the regulatory scope of the Plan. Do these targets sound familiar with today’s realities?  Start with economic growth. Are we really promoting green technologies and attracting sustainable industries?

The unfortunate bursting of the dream Blockchain bubble has landed us in awe and slowed our vim for digital literacy.  Talking today, we are not adhering to the 10-year vision on innovation.  To date, Malta spends the least amount of its reserves on research and development.  It manages a mere 0.7% of GDP, when as an isolated island economy, it should cater for six times this amount. Yet, it is not all doom and gloom since the job market is thriving and with a mere 9,000 registered unemployed. This means Jobsplus (a state jobs regulator) is doing a good job.

The evolving issue of cheap TCN’s engaged in their thousands with minimum skills only leads to a damp squib as regards creating quality jobs and addressing skills gaps in the labour market.  Alas, the 10-year vision was welcomed in 2021 as a blueprint for growth. It boasted of an ambitious drive which included technology, finance, tourism, and manufacturing. But the drive for numbers in tourism is backfiring as MHRA has warned government of over-reach in sustainable targets. Essentially, the 10-year plan had a number of desirable pillars.  One starts with Sustainable Economic Growth which involves these steps:

• Protecting growth for current industries while creating a culture of innovation for new niches;
• Introducing a framework for how all public and private stakeholders will contribute to an inclusive and long-term sustainable economic model of the country.
• Commitment to developing a world-class sustainable infrastructure in an increasingly globalized world;
• Creating vibrant investment for domestic and foreign entrepreneurs and developing it into a regional hub for new businesses.
• Providing the necessary conditions in which human capital in Malta can acquire the knowledge and skills needed today to build the economy of the future;
• Creating high-quality, well-paid jobs and fostering the certainty that Malta is the natural home for global talent by stimulating education and employment in order to further raise working capacity, enabling it to compete with the most advanced economies.

Can we stop and assess how many of these lofty ideals have been achieved so far. Hands on heart, did we succeed to restrict planning permits to protect assets for future public enjoyment?  Have we really activated a holistic green energy plan to move away from burning fossil fuel and pave the way for Renewables. Are we heading for carbon neutrality by 2050, when last week we rented 24 second-hand diesel generators by Enemalta.

The plan is to run these machines as a backup until by 2027, when a second subsea electricity cable comes into operation.  In conclusion, one lauds the 10-year plan in its ambitious desire to improve standards of State accounting, a proper procurement strategy and upholding the rule of law.

Perhaps, when drafting the next 2024/5 budget the government will try to activate a drive to improve low governance in key institutions, exploiting potential for FDI, considering so many double tax agreements and a full member of EU. One augurs that remediation is on the books to have our tiny fish in the Mediterranean pool able to rebrand and think big again.