Editorial | COVID-19 highlights the importance of a strong manufacturing base

A country like Malta with a small domestic market has to rely on a strong export base to ensure prosperity for its citizens.

Domestic consumption, including government spending, is a key component of this country’s economic setup but it will never be enough to sustain the quality of life we have become accustomed to.

It is this realisation that propelled policymakers in the 1960s and 1970s to diversify the economy by kick-starting tourism and creating a strong manufacturing base focussed on exports.

More recently, policymakers helped grow the services industry through financial services and remote gaming.

These activities not only create jobs but more importantly earn this country money from abroad that helps boost wellbeing.

The secret for success is the ability to have a diversified portfolio that enables the country to be resilient in times of crisis.

The COVID-19 experience has decimated tourism, and operators can only hope for the recovery to start next year. This has removed from Malta’s equation a major export industry and this has multiple repercussions.

Efforts must continue being made to get the tourism industry back on its feet but the experience has shed light on the importance of nurturing another export industry mainstay – manufacturing.

Throughout the COVID-19 crisis, Malta did not close its factories. The health authorities worked with companies to help them introduce mitigation and safety measures that enabled factories to continue operating.

The accessibility of the authorities and the flexibility of Maltese unions enabled operators to respond dynamically as the pandemic developed. This is not to say that manufacturing companies and their employees did not face problems but by and large the challenges were overcome.

This was a feather in the cap for the sector because it helped avoid the major disruptions witnessed in other countries where factories were closed as the coronavirus wreaked havoc.

More importantly, this is a lesson learnt on the importance of having a strong manufacturing base that could serve as the antidote to the sudden loss of income from tourism.

Malta must use the COVID-19 experience to attract more manufacturing firms to the island and encourage those already here to expand their operations.

The country’s health system, its use of the English language, its relative safety, its proximity to major European markets, its hardworking labour force, its good education system, its sea and air connections are all plus points to attract new business.

Niche sectors like the medical cannabis industry must get off the ground. Despite the effort to introduce legislation as quickly as possible two years ago making it possible for these pharma companies to open shop in Malta, not one medical cannabis manufacturer has started operating yet. The efforts in this sector have to be intensified.

The same holds for the aviation sector. Malta has a lot going for it here but a strategic airport master plan that started being drawn up in 2018 has failed to see the light of day.

There are new niche sectors in aviation that can be attracted to Malta, which require a strategic land use plan.

But there is also the issue of space that cannot be ignored. Having modern factory spaces is a must to be able to attract manufacturing firms. Malta Industrial Parks has to speed up its efforts to identify new spaces, including the redevelopment of disused factories into modern multi-storey facilities.

Never has the importance of manufacturing been highlighted as the current period we are in and part of the EU funds coming Malta’s way should be dedicated to strengthening this crucial export sector.