Editorial | A stimulus for manufacturing

A country like Malta with a small domestic market has to rely on a strong export base to ensure prosperity for its citizens and this renewed effort to invest in manufacturing is important because it further diversifies the economy

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A €400 million investment over eight years in industrial infrastructure announced by the government as part of its economic recovery plan is a welcome move.

Although details of the how this money will be spent are scant for the time being, it is an important stimulus for the manufacturing sector.

Last week, this leader noted that the forced absence of tourism as a result of COVID-19, highlighted the importance of the export manufacturing industry.

Throughout the pandemic, factories did not close and although they sustained reduced demand and had supply chains disrupted, they continued functioning.

‘Never has the importance of manufacturing been highlighted as the current period we are in,’ this leader wrote last week.

Manufacturing not only creates jobs but more importantly earns the country money from abroad that helps boost domestic wellbeing. The economic recovery plan recognises this and dedicates a substantial sum of money to improve industrial estates.

This money will go to expand the Life Sciences park in San Ġwann, create a logistics centre, build new multi-storey factories, invest in the business incubation park and improve the environment in industrial estates to create a welcome environment.

A lack of industrial space makes it very difficult for the government to attract foreign investment in manufacturing, which is why the investment is important.

This cash injection will not provide an immediate boost to the economy but it is important to prepare for the long-term recovery.

The important thing now is to get the money rolling. Malta Industrial Parks must have a list of projects, prioritise them and start drafting plans to move forward with the exercise.

This process must be modelled on the same lines adopted by Infrastructure Malta and its continued investment in new road projects. Deliverables must materialise the quickest possible and at a sustained pace.

But the investment in infrastructure alone will not be enough. Government through Malta Enterprise must embark on an aggressive international effort to attract new manufacturing companies to Malta. ME must also entice existing factories to expand.

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.

And with these benefits, Malta would be able to add a modern industrial and logistics infrastructure.

But the recovery plan also provides financial support to alleviate port and container handling charges, which are crucial to mitigate the higher expenses as a result of disrupted supply chains.

This is all the more important for an island economy that depends on shipping, and to a lesser extent, air travel, for its commercial links. Lowering costs for industry helps keep it competitive.

A country like Malta with a small domestic market has to rely on a strong export base to ensure prosperity for its citizens and this renewed effort to invest in manufacturing is important because it further diversifies the economy.

Diversification ensures the country will be resilient in times of crisis.

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