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Excerpts from a speech delivered by Michael Grech during a conference organized by Malta Enterprise in Gozo
For millennia man has managed to survive by being able to have a vision of what needed to be done in order to guarantee his survival. Thousands of years ago, the first people on Gozo were already taking up this challenge on a small barren island without any natural resources. In those early days our forefathers were already trading with other communities in the Mediterranean Sea. The circumstances of our small island, the fact that we were easy prey to pirates and other marauders, instilled in us Gozitans a great sense of survival.
There is a saying that goes “When the going gets tough the tough get going”. It cannot be truer than for us Gozitans considering that life has been pretty tough for us all the way. So we were obliged to keep on going all the time and in a way it has left its indelible mark on the Gozitan way of life.
However we are not here today to look at and contemplate the past. We are here to see what the difficulties we are facing today are and what challenges we will be facing in the future. Our main objective today is to identify our strengths and opportunities and try to eliminate our weaknesses and threats. In order to do this we have to identify and explore what are the main pillars for the economic sustainability of Gozo.
Since time immemorial agriculture has always been a very important source of revenue to the Gozitans. If we were to compare the ratio of agricultural production from Gozo with that of Malta, we will find that Gozo produces approximately 25% of the total agricultural produce consumed by the whole of Malta. An open EU frontier has brought with it new realities which sometimes can be harsh for our farmers. Today any importer can get fresh fruit and vegetables from Sicily in the space of a few hours.
Taking into consideration the small size of the farms in Gozo, it may be difficult for the local Gozitan farmer to compete with his counterpart in other parts of the EU who is managing a farm made up of thousand of hectares of land. However being small in size does not mean that you cannot compete with the big boys. The Gozitan farmer needs to focus on a particular niche market in his sector. One of these can for example be organic farming. With everyone now being conscious about the food that we consume it does make sense that instead of going for quantity we go for quality.
In this sector we also have to look at the current disadvantages that the Gozitan farmer is and will be facing in the future. One question which comes to mind is regarding the transport subsidy of goods between Gozo and Malta. Do we have any guarantee that this will remain in place for the future? There are those who argue that the word “subsidy” is blasphemy in the EU vocabulary. However we also have to remember that the EU should be all out for equality in the standard of living of its members and therefore the necessary aid should be given to those regions which are facing problems because of their size or geographic position as is the case of Gozo’s double insularity problem. Here is a case where the EU has to use what I call “Positive Discrimination” with Gozo and its inhabitants.
Another important section of farming that up till now has only just yet started to be explored and exploited is that of Agro-Tourism. I am very much convinced that this can be a successful niche market for the Gozitan entrepreneur. The Malta Environmental and Planning Authority should be more proactive in encouraging this type of development since apart from being quite a lucrative source of income for the island it would also be making sure that the environment is being embellished in the right way.
Tourism is another important pillar of the Gozitan economy. Let us look well around us and see where we stand in this sector. In my opinion tourism in Gozo can be split up into three sectors. We have the day trippers coming for a few hours, (normally for about six hours in all). Then there are the foreigners coming to Gozo for a full stay of between a week and ten days. And finally we have the internal tourism, which is the Maltese crossing over to Gozo either for a weekend or for a longer stay of between one and two weeks.
If we look at the day trippers scenario, the effect of these tourists on the Gozitan economy is not as effective as is desired. We have to keep in mind that the package is normally set up by a tour operator in Malta who will be taking up the lion’s share of the profits from the cost of the day’s excursion.
The other two scenarios are very similar to each other. In many cases tourists visiting Gozo for a longer period of time would either stay in a hotel or a self catering farmhouse or apartment. In the case of hotels we have seen entrepreneurs who have invested and are investing heavily in their hotels. However what are the difficulties that these investors are currently facing? Is Gozo tourism being properly advertised outside of Malta?
For Gozo to be able to take its fair share of up market tourism it does need to have a golf course. It does need to have a small airport able to take at least executive jets. It does need to have its own yatch marina where boats can enter without having to navigate their way between fishermen boats and ferries leaving and entering the island every twenty minutes. Gozo does need to have the facility to take cruise liner business visiting Malta.
Over the past few years we have seen a substantial number of factories closing down in Gozo. What was the reason for this? Was it a case where we did not do the necessary restructuring in time? Was it the case that companies shifted their operations to a lower cost environment and probably also one which is heavily incentivised? Probably it was a bit of both and there was not much that one could do especially in the textile industry. However industry is not just textiles. A giant like China, who has taken over most of the world’s production of textiles, is only good at producing and exporting these textiles. However almost 90 percent of the machinery used in this production is imported from Europe, Japan and the United States of America. Have we explored what the Chinese are really in need of and see if in any way we can supply them with what they require? Here I am remembering what a Chinese businessman said to me when I met him for the first time about 15 years ago. He asked me: “Do you want your children to be successful in life?” and I replied: “Definitely!” His answer was simple: “Teach them Chinese”.
We definitely need to do something very urgently to bring back to life our industrial estate in Gozo. We have to move on and be more innovative in the way we try to plan our future. Are we spending enough money and dedicating enough resources on Research and Development? In the pharmaceutical and IT sectors we can make some good inroads. Most probably we need an injection by a foreign entrepreneur who can bring in the necessary expertise for a start up. But again what are we willing to offer these people in order that they set up shop in Gozo. What type of incentives do we have to offer? Are we prepared to give these people a fiscal incentive?
To recuperate, let us take a SWOT picture of Gozo and its economy. What are our Strengths? Without any shadow of doubt it is our entrepreneurs and workforce. We hardly have any natural resources expect the brains of our people who through the centuries, considering that we always were dominated by one foreigner or other, we had to be imaginative and creative to survive. Unfortunately in the last few years we have seen a few of our brains leaving our island for new pastures. Let us try to stop this brain drain from Gozo. What are our Weaknesses? Without any doubt it is the huge amount of division that still exists within our relatively small community. It is the personal pique and hatred that is sometimes reminiscent of the Bolshevik Revolution towards those who are classified as the “rich”. Little does one realise that the idea of true socialism or communism is only a utopia which can never be turned into a reality. It is the procrastination of the taking of important decisions in the interest of the island. And we all know the saying that “procrastination is the thief of time”. And time is indeed a very expensive commodity for any businessman. What are our Opportunities? The opportunities are many. The EU has opened the possibility of a bigger market to our producers and exporters. It has also given the chance to our entrepreneurs to compete with the big boys of Europe.
What are the Threats? In my opinion we ourselves are the main threat to our own survival. It is the lethargy with which certain decisions are taken by people on certain boards and within certain government departments It is the bureaucracy, which is almost an institution of its own that is hindering the free and fluent flow of business. Why do we still have the mentality that if you are someone with power you have to wield that power with the strength of Thor the god of Thunder, to the detriment of someone who is trying to create wealth?
Michael Grech is chairman Michael Grech Financial Investment Services Limited and PRO of the Gozo Business Chamber
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