It is really unfortunate that we are celebrating Malta's fifth anniversary as an EU Member state under the dark clouds of an economic recession. These five years had served for us to bring forward a new generation of young Maltese qualified in all matters EU and who had to build their muscles practically on their own as they responded to all the exigencies imposed by Malta's EU membership.

For EU's smallest member state this was no mean feat. But today we have the institutions and the structure and the legislation that should serve Malta well for the next five years. We are still climbing the stiff learning curve, but I believe that Lawrence Gonzi in Malta and Richard Cachia Caruana in Brussels have reason to feel proud on May 1, 2009. It's a job well done.

 

Eddie Fenech Adami enjoys the pride of landing us there. But Lawrence Gonzi worked his heart out to ensure that our European experience is successful. It's so easy to criticise this or that. I can list so many things that do not function well, so many people who are really on cloud 9, but overall we should be so proud of what our country has succeeded to achieve.  In the EU we are respected and Brussels has a high opinion of the quality of our people and the seriousness of our endeavors.

 

I honestly feel proud that I am contesting for a seat in the European Parliament. I believe that my experience at local and EU level should serve me well to be an effective MEP. I am happy that P.N has given me the opportunity to contest as I believe that it is by far the Party with the strongest EU credentials. And this is true here in Malta and at EU levels as well. People here and in Brussels still remember the silly things said by Labour to denigrate the EU and its institutions.  Many here and in Brussels still believe that when it comes to EU matters, the Labour Party is a grey area.

 

We all now have to make a tremendous effort to make the next five years really successful. I believe we can, and we should. It is up to us to have the right policies and the right people in the right places. It cannot be that as participants in an internal market of 500 million we cannot attract more investments, more orders for our enterprises, more work for our people, more tourists, and more financial institutions. Investment promotion, business development, procurement of orders and work that is home ground to me. I feel I can turn an experience in the European Parliament into more work for the Maltese. This should be our main task in the five years ahead of us.

 

As I said it is unfortunate that we plan to move forward when this year we're pulling backwards economically. The usual political snipers are quick to blame it all on our economic managers. The truth, however, is that our economic restructuring was working more than most had thought or wanted to say only up to a few months ago. If this restructuring did not materialize we would today have faced a very sorry state of affairs indeed. To quote just one figure. The Labour Party candidate Prof Edward Scicluna had predicted on last December 16^th, that for every 2% drop in exports the Maltese economy should shed 1000 jobs directly and another 500 jobs indirectly, that is up to 1500 jobs. If the restructuring did not work and Government was as asleep as Joseph Muscat and GWU keep saying, then that should have happened. The truth is that over a 12 month period, and not the six months since the European economies on which we depend went into recession, we have lost only 900 jobs. The job situation is now more or less at a plateau level.

 

We need to be careful but the truth is that our economic managers are not the dupes Joseph Muscat and his economic advisors are making their people believe.  The top level Task Force lead by Lawrence Gonzi himself and which is working  hard to identify the firms and the problems that beset them are coming out with solutions that should, if the recession abroad  is not of very long  duration, bridge our little economy from here till the next push forward.

 

The major problem that beset us is the budget deficit. We all know it's a problem that hangs round our necks.  But who honestly wanted government not to give the income tax relief, not to spend on a new hospital, not to sustain pensions, not to build new rounds or to spend on saving our environment. Everyone sermonizes about the budget deficit but when it comes to raising new taxes or cutting on expenditures everyone scream, "but not in my back yard". I've been close to the budget managers for donkey's years and I'm always full of suggestion as to what savings we can make, what taxes we can cut and what new projects we should promote. But at the end of the day the Maltese exchequer is what it is. We're a small land with a very limited Budget and it is so hard to make a surplus when the tendency is for all of us to push for spend, spend, spend and no tax, no tax, no tax.

 

We are now running a budget deficit of 4.5% of our GDP. Most Euro Area member states recorded negative growth rates in the last quarter 2008. Over the last quarter 2008 and in the first quarter 2009 world trade has fallen by 20%. In 2009 world trade is expected to decline by another 13%. The most recent economic forecasts indicate an even worse outlook than at the beginning of the year. The March 2009 OECD forecast show a deadline of around 4% in GDP for the Euro Area compared to a decrease of around 2% in the European Commission's January 2009 interim forecasts. The outlook for 2010 is also more pessimistic with the OECD expecting a marginal drop of 0.3% in the Euro Area's GDP. The OECD forecast shows that unemployment will rise to around 10% in 2009 and to increase to 11.7% in 2010. Inflation is expected to slow down significantly to around 0.6% – 0.7% in 2009-2010 on the back of declining commodity prices and slower wage growth.

 

Is there anyone out there who believes all this is of no relevance to us? Our rate of economic growth has slowed down to 1.6% in 2008 from around 3.5% in 2005-2007.  Luckily for all of us the domestic sector, that sector for which I have fought to relieve from excessive bureaucratic burdens and to obtain for it more space to grow, for so many years, has continued to contribute positively to GDP growth reflecting buoyant consumption, whilst investment contracted. The contribution of the external sector was a minimal 0.1% in 2007 as both exports and imports fell by more than 13%.  Tourism is suffering greatly as the international economic and financial crises are negatively impinging on the travel trade worldwide. The Maltese tourism industry has been hard hit by these developments, with tourist departures declining by around 10% and gross tourism earnings falling by 2.7% during 2008. I could go on giving figures for the financial institutions and for the Freeport. As an economist I know the situation is serious, but I know also that contrary to the professors of doom now dominating the Labour party in Malta, solutions do exist and serious people are working on them.

 

The point is however that we all need to understand that it is all loose talk that we continue to speak as if we really do have much room to maneuver. We're a small economy. The budget deficit forces us not to spend lightly and to prioritise. That is what the Maltese Government is doing. Our job is to provide possible input in the national economic debate in one big effort to protect jobs and lay the grounds for the next economic expansion. Inventing silly issues like the GWU is doing at the Freeport and throwing around loose economic proposals as the Labour Opposition is doing, is simply not good enough. It's not credible. PEOPLE LIKE Prof Edward Scicluna need to look again at many of their predictions and many of their solutions. They cannot simply shoot here and there and stop short of serious recommendations. With a 20% drop in exports according to his predictions we should by now have already suffered 15,000 job loses. The country would have been in a state of panic were this prediction to have come through. We need now to face the truth of our limitations and act together in a more professional way.

 

Most of us in the constituted bodies are worried. Of course, we are. But we're holding tight and offering our full co-operation. Not as a political ploy. But because that's what the country and our people want from us under these difficult situations.

 

And the going may be tougher, before it gets better.

I never understand why so often we in Malta go against the trend. This is happening in Banking and in a very crude way. While in Europe Banks have been reducing interest rates, here in Malta the banks not only persist not to follow the instructions of the Central Bank and lower rates but they further insist with business owners that, in spite of what is stated in the sanction letter as to the rate chargeable above the bank's basic rate, they now demand at least an additional one per cent. Rather then help they offer the stick. Why are we suffering from this attitude? Why are local banks finding it so hard to give help in a real practical way when banks know very well that adverse economic situations abroad are having their negative repercussions in Malta too? Above all why is the public regulator, MFSA, defending the Banks and not business?

 

Our businessmen are suffering. Their choice is increasingly becoming tighter, either they go down and throw people out or they get through the hard times provided they obtain the necessary support. They most simply cannot do it on their own. They do not have the accumulated funds to finance their operations during a slowdown which is larger and deeper then what they normally plan for. I also honestly cannot understand why the Central Bank and MFSA, the two most relevant public regulators, together with the Office for Fair Trading are staying so cool about this matter. Public Regulators are needed most when things are bad for business users and customers, yet they are never there when we need them most. The Banks with their attitude are not helping the country to get out sooner from a very difficult period.

 

Due to the steady economic expansion, supported strongly by public deficit financing, Banks in Malta, over the last years, have enjoyed substantial large profits. Shareholders had an excellent period and the banks had their share in promoting business expansion even if oftentimes they bolstered speculative construction development rather than direct productive enterprise. Now that the crisis is moving so fast abroad it is also hitting Malta. The Banks rather than assisting Maltese businessmen through the most positive way they could best manage, giving the fantastic run of good profitability they enjoyed for many years, they are instead insisting primarily on their own profitability in disregard of that of most of their clients. I say most as, to be fair, they are not resorting to repossessions of houses and properties in a genuine effort not to create further difficulties to many people.

 

Many small and medium business owners believe that now it's time for all to share the burden. It can't be that businessmen make the Banks rich when the going is right and then the Banks continue to profit when business is down for all. I am worried that unless the Banks attitude changes with immediate effect, there will be serious, unavoidable consequence. The end result will be increased unemployment not only from the larger firms which seem to pre-occupy government most, but even more so from the smaller firms. These are the ones that traditionally do not default. The link between large and small enterprises is too close not to have immediate chain reaction.

 

Regrettably the world's local Bank, HSBC, has set the trend for Banks in Malta. HSBC has decided to start increasing interest rates even above the normal rates that the Bank used to charge before the crisis began. Now they are sometimes charging even 8.55% or 9% for certain facilities. Their theory with clients is that credit has become costly under current circumstances. This is contrary to what is happening in many countries in Europe. It is contrary to what is being recommended by the European Central Bank. In practice this will mean that we will create more inflation as Bank costs will be higher and businesses will strive to pass the extra cost on to consumers. This is an extremely dangerous economic pit-fall. We already have a high rate of inflation. Countries get out of recession as inflation falls and prices become more competitive and sales start growing again and investors re-stock and production gets moving.

 

Furthermore, many businesses, especially the smaller ones, have had no direct assistance from Banks by having the repayment of loans decreased with the savings in interests payable. Banks should usually be advising small business owners on how to cut on costs so that they can live through the bad times and help them to have the cash flow to bridge the bad times and survive. When repayments remain the same one is effectively paying a higher capital at a time when earnings are poor or absent. Is this the assistance that Banks have been boosting about in the local media? If small businesses are not going to be helped many will end up cash stripped. They have no option but to start to reduce employees. Some are already doing so. If no action is taken the trend will continue. A spiral effect will result as incomes fall and households spend less, and as a result cause a fall in gross private consumption, which in turn will cause more firms to have greater cash flow problems causing them to increase redundancies, which again further lower consumption thus deepening the recession.

 

The MFSA should find a way how to cause Banks to give moratorium periods also to small businesses as they now say that they do to hotels and to building contractors. The discrimination against small businesses cannot be understood. If this sector collapses the banks themselves will be in trouble and the whole economy will suffer. This is a sector which employs thousands and thousands of persons and if it is not going to be aided in some direct way, the effect on the economy will be harsh. The Banks will find themselves in very difficult situations as they push to collect their loans. One local Bank is now proposing that firms that will have excesses on their banking facilities will have to start paying penalties and higher interest. This penalty is sometimes up to 11%. This crude approach will surely hammer more small firms to an early death. Such measures will hit hard also other normally stronger companies. HSBC leads on these crude methods. Hopefully BOV will not follow. Lombard and APS have not as yet even considered to follow suit. These are the four major banks in Malta. Banif has retained a low interest rate and they should be applauded for such a serious move.

 

There are no rules to protect the consumer on various Bank charges. These include commitment fees which normally are charged until you withdrawn any first time facility, review fees which are charged with every sanction letter, and other fees which are loaded for any services given, like bank legal fees, etc… Banks continue to fail in their customer care on many business services, especially in certain local branches. This, in addition to the increased hassle that often small enterprises owners have to endure.

 

The MFSA, as Public Regulator, fails miserably to protect banking customers, whether business or households. Regulating our Banks, especially as we still have practically a dominant duopoly, is essential. The current economic situation is not so rosy and will get worse before it starts getting better.

 

Government is under tremendous pressure to protect the economy and protect jobs. This is not an easy battle. Government cannot win on its own. They need the support of all public regulators. The regulators are more prone to spend their efforts on chasing the smaller firms. Hardly ever do they bother the banks and other state corporations who do little, if anything, to help government and the country move out of adverse bad times in the shortest possible period.

Government can do with a little help from the Banks and the Public Regulators.

The revised Framework Agreement modifies several provisions of the pre-existing text, such as: the strengthening of parental leave as an individual right, by making a part of it fully non-transferrable; it offers workers a right to request flexible working arrangements when returning from leave; it calls on Member States and/or social partners to establish notice periods to be given by workers when exercising their right to parental leave. It also strives to recognise increasingly diverse family structures and to promote an equal sharing of family responsibilities between men and women. Furthermore, it respects the diversity of measures taken by the Member States in areas such as leave facilities, childcare and flexible working arrangements.

This agreement will be transposed into a Directive by the Council and therefore it will be translated into all the 23 languages of the European Official Journal in the second semester of the year.

 

 

The revised Framework Agreement modifies several provisions of the pre-existing text, such as: the strengthening of parental leave as an individual right, by making a part of it fully non-transferrable; it offers workers a right to request flexible working arrangements when returning from leave; it calls on Member States and/or social partners to establish notice periods to be given by workers when exercising their right to parental leave. It also strives to recognise increasingly diverse family structures and to promote an equal sharing of family responsibilities between men and women. Furthermore, it respects the diversity of measures taken by the Member States in areas such as leave facilities, childcare and flexible working arrangements.

This agreement will be transposed into a Directive by the Council and therefore it will be translated into all the 23 languages of the European Official Journal in the second semester of the year.

The Single Euro Payments Area represents the next major step towards closer European integration. SEPA is set to allow customers to make non-cash euro payments to any beneficiary located anywhere in the euro area using a single bank account and a single set of payment instruments. There will no longer be any differentiation between national and cross border payments within the euro area.

The project is essentially being run by the banking industry, the implementation of SEPA however is being undertaken by European banking communities and all other stakeholders. The European Central Bank (ECB) and the European Commission (EC) strongly support SEPA and with the EPC share a joint vision for the SEPA project.

With the adoption of the Euro as from 1 January 2008, the Maltese banking community acknowledged the importance to migrate to SEPA. The SEPA National Implementation Plan presents an overview of the Maltese National Community Organisational Structure and its commitment towards SEPA. The Malta Bankers' Association (MBA), which represents the local banking community is responsible for coordinating, monitoring the progress of, and the migration of SEPA at the national level.

The SEPA programme is all about harmonising millions of consumer 'retail' payments. As a result, there will be a number of changes to frequently used payment instruments in order to provide SEPA-wide standardised instruments.

As from 28 January 2008, the Maltese banking community can process incoming SEPA Credit Transfers and is committed to offer payment services users access to SEPA Credit Transfer (SCT) to be used within the SEPA area. Following the transposition of the Payments Services Directive into national law as from November 2009 in the euro-area, SEPA Direct Debits (SDD) will be supported and will open up the possibility of using a direct debit instrument in the SEPA area and Malta.

In a consultation exercise carried out in 2008 by the CBM on the retail payment services policy and the Payment Services Directive, broad support for the approach proposed by the Central Bank of Malta, in respect of the repositioning of cash and cheques and the regulatory framework applicable to cheques and other payment instruments was received. Respondents indicated strong support for a harmonised implementation of the Payment Services Directive, and encouraged regulators to work towards harmonised implementation across the EU in order to avoid inconsistencies. From the various concrete initiatives to promote value added services it was clear that regulatory review and robust market/regulator coordination will be needed to deliver many of the strongest potential advantages of SEPA and the PSD. Stakeholders broadly shared the Central Bank's view that developments are such that the present traditional methods of processing and executing retail customer's payments need to be changed. In particular, along with the Central Bank, stakeholders hope to see SEPA become a success leading to substantial development in e-payment, m-payment, e-invoicing, and e-reconciliation.

The launch of the SEPA Direct Debits, which will bring the project much closer to citizens' and businesses' everyday concerns, has been postponed until November 2009 in line with a number of other European countries as well as the legislation of the Payments Services Directive within the different countries. It has been acknowledged that this is going to be a very difficult task to manage the migration to full SEPA Direct Debits over a 14 month period.

Discussions with stakeholders remain important to gather the views of various sectors of society to ensure a good take up of the benefits brought by SEPA. Any comments should be directed to Abigail Mamo on 21232881/3 or

Source: MEUSAC ECOFIN Sectoral Committee.

Date:    Friday, 3rd July 2009

Venue:  Foundation for Human Resources Development, 1 Kampanella Str, San Gwann

Time:    09:00 – 10:00

 

For the eighth consecutive year The Foundation for Human Resources Development will be holding the HR Awards for local industry. An information meeting is being organized for companies including SMEs and human resources professionals who wish to participate in these awards. A detailed presentation will be given together with the necessary documentation to help and assist those who this year would like to distinguish themselves above all others.

These awards are open for small companies. Many small businesses have good quality human resources practices but they simply do not know it. FHRD will help you achieve this recognition and celebrate your success.

You can make this year a memorable year for you, your employees and your company.  Call on 2137 8895 and book a place for this meeting. Attendance is free of charge. You may book as well by emailing to Sandra Agius on

In a meeting for Green MT prospective members, led by Vince Farrugia Director General GRTU and Chairman of Green MT together with Joseph Attard CEO of Green MT, the following was discussed.

In the weeks to come, from now to the end of December 2009, Green Mt, GRTU‘s Environmental arm, will be operating a pilot project which involves the exemption of a number of limited producers from Eco Contribution on the basis that Green Mt collects/recovers 70% of the Waste Packaging placed by its first exempted members on the market.

This is one huge step forward and it will result in the collection, separation and recycling of just over 100 tons of Waste Packaging weekly. The firms involved in the pilot project are by far the largest packaging eco-contribution payers. That GRTU has been successful in obtaining an exemption form eco-contribution to these large tax payers is a tremendous advance.

GRTU has done this without forcing any other business to make a double payment of both eco-contribution as well as the Scheme's fees. In practice Green Mt in agreement with individual Local Councils will collect recyclables (grey bag) which material actually belongs to many different firms even tough some of these firms would not be contributing financially to the Pilot Project. GRTU moves on a step by step strategy and we will be servicing our members were others continue to fail to deliver.

This pilot project will without fail lead the way to another commitment. Government in agreement with GRTU will after January 01, 2009 be able through an Eco Contribution Reform honour its commitment of exempting all those traders, importers or producers from Eco Contribution once they are members of such a scheme.

In itself this is a bold step in creating a level playing field, something>> P 3- << P. 1-which is lacking today.

The 70% benchmark sounds like a harsh imposition but the honest trader is today sick and tired of paying Eco Contribution through the nose to cover up for tax evaders and so many illicit traders who never declare anything or are under-declaring, or have not even registered their environmental obligations with MEPA, the competent Authority.

GRTU is insisting that only firms belonging to an Approved Scheme adhering to this high compliance figure should be allowed a free hand under the supervision of the Scheme to which they belong but all others who do not adhere or belong to Schemes that do not operate to this high level set by the Authorities would suffer the brunt of higher Eco Contribution and the full force of Law Enforcement including inspections, auditing and whatever else lies on the Agenda of those who's job it is to ensure that the law is obeyed and evaders punished.

The business community is geared up to collect 70% of the waste packaging tonnage placed on the market. It is high time for Government to oblige! Government must clearly show that it does not pay ‘not to observe the law". GRTU is on the forefront of environmental issues.

Government must now act and be seen to be acting.

The time for bickering is over!

 

 

 

As soon as the electricity went off GRTU on behalf of its members stayed in regular contact with the Chief Executive Officer of Enemalta, engineer Karl Magri to ensure everything possible was being done to provide the supply of electricity at the earliest possible, making the least damages.

As of the first phone call we made it became apparent that the situation was one of crises. Unfortunately no matter how serious certain situations in this sector can be, nobody can predict them. GRTU is certain that Enemalta does its best to avoid these situations and works hard to mitigate the risk factor. Like all enterprises Enemalta should have a back-up to fall on.

 

In case where there is an upsurge following an electricity cut due to carelessness of Enemalta workers while fixing the problem, Enemalta is obliged to compensate for any damages this upsurge has caused. Enemalta has an insurance coverage for this and it is us who pay for it in the electricity tariffs. In the case of a total shutdown however or a large damage in supply the law places a safeguard in favour of Enemalta.

In countries where competition in this sector exists, the industrial and commercial consumer can choose between a supplier who is insured even in case of a complete outrage and others who do not cover this risk. For a company like Enemalta to be covered with such an insurance the price is phenomenal, this would materialise in a higher tariff. The commercial consumer who consumes more electricity could have the opportunity to decide whether to pay the higher tariff or pay an insurance that would cover him specifically.

In Malta we do not have this choice. It is for this reason that GRTU made its submissions when the tariffs where being revised, for Enemalta to start offering this option with a tariff that covers a full insurance and a lower tariff that would place the liability on the enterprise.

The reality is that to avoid further cuts we need to replace our decadent, inefficient and expensive power station. The argument around the new power stations needs to be closed and progress needs to start. We need to cut the talking and grumbling and start acting. This is what this country needs.

We need the cable that connects us with the rest of Europe to start operating so that we are provided with an immediate alternative in case of a cut and we would have a modern power station that would recuperate much more rapidly.

 

 

 

 

GRTU, Malta Chamber of Small and Medium Enterprises has over the last years been at the fore front of discussions with Government Authorities, mainly Ministry of Finance, Ministry of Resources and Rural Affairs, and Office of the Prime Minister in order to make sure that the appropriate Legal Notice regarding Eco Contribution Refunds can become a Reality.

GRTU has through its environmental arm Green MT held unending discussions with Government to create the said Eco Contribution Mechanism, Exemption from Eco Contribution Mechanism and also Permit Conditions for Waste Compliance Schemes.

 

GRTU has come far to make sure that producers of Waste Packaging and Waste Electrical and Electronic Equipment will soon have both Eco Refund in place, and Exemption Mechanism too. GRTU has gone through persistent long hours of work internally with its experts and members and externally in detail consultations with all relevant Authorities. GRTU's continuous endeavors will shortly bring along these Legal Notices for producers and importers in general.

All this would not have been made possible without the dedicated efforts of the senior experts of MRRA and MFIN. GRTU on behalf of its members expresses its gratitude to MRRA and MFIN.

GRTU holds firm its position that in the current economic slowdown, issuing the refund mechanism and creating Eco Exemption Mechanism to create a fair and level playing field is not only a need but a must for businesses even more so today. "Now that all this spade work has been professionally well done and GRTU has successfully acted with full corporation with Government to ensure a practical and just solution. Government should not delay the issue of these exemptions any further" concludes Vince Farrugia Director General, GRTU.

This Annual Policy Strategy paves the way for establishing a policy agenda for 2012. The European Economic Recovery Plan's implementation during the rest of 2009 and into 2010 will be a matter of high priority. To make sure that the EU comes out of the crisis stronger and better able to take advantage of the upturn we need to continue with the structural reforms under the Lisbon Growth and Jobs Strategy. Thus, the Commission will seek that all member states meet their commitment to pursue and coordinate their national efforts under the Lisbon Strategy for Growth and Jobs and under the Stability and Growth Pact.

The Commission will shortly be presenting proposals for financial services reform so it could address the exposed inadequacies and weaknesses following the crisis. One of the priorities in 2010 will be to manage the impact of crisis related changes in Europe's economy through state aid and merger control activity. Stepping up the fight against cartels and the enforcement of competition rules in network industries (energy, ICT, transport, post and financial services) will also aid economic recovery.

Furthermore, in 2009 it is expected that network industries will make gas markets, etc more competitive through the implementation of legislation and in 2010 the establishment of an integrated policy approach to the digital services economy and recast the current ICT policy framework. 2010 will also see the follow-up to the renewed broadband strategy to be rolled out by the Commission in 2009, including the likely extension of broadband access to rural areas.

The need of combating counterfeiting and piracy is to be addressed as well. Efforts to create a Community patent and patent litigation system will continue. As regards the transport sector, Commission will further seek the future of an EU transport policy.

Following the successful conclusion of UN's climate change conference in Copenhagen, EU decided to give it a key priority. Finally, the requirements for the Middle East Peace Process, Cuba, Georgia, Kosovo, support to the reunification process in Cyprus and climate change will depend on developments in the coming months. The Commission will complement its requests during the budgetary procedure.

Source: MEUSAC General Affairs Sectoral Committee