[WATCH] Businesses don't invest in corrupt countries, Muscat tells concerned Chamber

Chamber boss warns Muscat that corruption has damaged Malta's reputation, hits out at sale of ITS land

In his speech, Prime Minister Joseph Muscat only touched upon the Chamber's corruption concerns
In his speech, Prime Minister Joseph Muscat only touched upon the Chamber's corruption concerns
Investment does not come to corrupt countries, Muscat tells Chamber

Prime Minister Joseph Muscat has brushed off concerns by the Chamber of Commerce about the state of corruption in Malta, arguing that investment in the country wouldn’t be so high if corruption was so rife.

At the start of a meeting with business leaders, Chamber President Anton Borg warned that businesses are concerned about "the issues of good governance that we are allowing to constantly persist".

He noted that last year's EY Malta Attractiveness Survey reported a 15-percentage point drop from the previous year in the perception about the stability and transparency of the political, legal and regulatory environment. Moreover, Malta recently plunged ten places to its lowest ever ranking in Transparency International's Corruption Perception Index.

"The business community expects to operate in an environment where certain situations are not allowed to exist," Borg told Muscat. "Clearly, Malta's international reputation has suffered as could our future economic success if there are any repercussions on our financial services and remote gaming sectors that collectively contribute to around one quarter of our GDP. Our islands need stability and confidence in the rule of law."

Borg also criticised the recent transfer of public land in St George's Bay previously occupied by the Institute of Tourism Studies to the Seabank Group for €60 million.

"Although the sale will provide a positive effect in terms of added investment and business opportunity, the actual mechanics of the deal are cause for serious concern," he warned. "The innovative model used in this agreement clearly departs from the normal procedure of selling public land by tender or parliamentary resolution, and instead a mere Request for Proposal was issued which was subject to negotiation.

He added that the payment considerations for the sale of the Pembroke land may give rise to market distortions if it is adopted as a benchmark for future projects.

"People dealing in public land must act as if they were dealing with their own property, and must be made accountable for earning the full market value expected from the asset."

In his speech, Muscat only touched upon the Chamber's corruption concerns and did not even refer to its criticism of the ITS deal. 

"Last year, Malta achieved one of fastest GDP growth in Europe. Investment doesn't go to corrupt countries but countries that uphold the rule of law, which is why it has come and will keep coming to Malta."

Muscat softens hard line on Air Malta’s majority shareholding

During his speech, Muscat also appeared to soften his stance that the government must remain a majority shareholder of Air Malta

Anton Borg proposed that the government maintain only a third of Air Malta’s shares, sell another third to a foreign airline as a strategic partner, and float the remaining shares on the Malta Stock Exchange.

“Special class rights can still allow the government to protect the national interest without resorting to a majority shareholding,” Borg said. “The private sector is constantly asked to take tough decisions and, in the case of Air Malta, these tough decisions are very much overdue.”

He also suggested that Air Malta must cut its workforce, warning that it is loaded with “operational burdens which are the result of old working practices”.

Despite earlier insisting that government must remain a majority shareholder, Muscat said that “the government will take account of the Chamber’s proposed model and will not close the door to it”.

“Our red line is that the government must have effective control over Air Malta’s strategic decisions, so that it can continue to serve the economy. Some decisions on routes that are commercially viable may not necessarily be strategically viable, and may force some large companies to relocate from Malta.”

‘Convergence amongst social partners on minimum wage rise’

The Prime Minister also announced that social partners are reaching a “degree of convergence” on how best to increase Malta’s paltry minimum wage.

He was responding to Borg’s warnings to political parties to treat the minimum wage issue with caution, and to not place social partners under undue pressured rush to conclude ongoing discussions on the matter.

“We have no issue in raising the minimum wage but unfortunately the country is living with two dangerous delusions – the false beliefs that raising the minimum wage will eliminate poverty and that the minimum age can be raised in isolation and without triggering a spiral effect on all ages across the board.

“We expect our political leaders to avoid attempts to out-bid each other of an issue that can potentially destabilize industrial realtions and export competitiveness.

However, Muscat reiterated that the government will allow social partners time to reach an agreement, but will increase the minimum wage regardless is such an agreement is not reached.

“The minimum wage issue has been on the table for two years now, and we effectively increased it in our last Budget through schemes that are being footed by taxpayers’ money,” he said. “Cabinet had debated whether to permanently raise the minimum wage in the last Budget, but the Chamber had made such a song and dance when we simply introduced new excise duties that one can only imagine their reaction if he had increased the minimum wage.

“The Opposition leader has already declared that he will increase the minimum wage at a certain rate and we cannot ignore that scenario. My preferred option would be for an agreement to be found at social partner level, but the government will take its own decision if there’s no agreement.”