Seven warnings from Malta’s employers which politicians might not be heeding

Employers Association MEA says a number of fault-lines can change Malta’s positive economic trends which political parties should not ignore

jeanelle_mifsud
Jeanelle Mifsud
17 May 2017, 9:34am
1. Our economy will probably not be eligible to further EU structural funding post 2020

This is a reality that will have to be faced in the coming years and one has to analyse the extent of the ground of the past ten years which has been attributable to this injection of EU funds.

2. The possibility that the tax incentives which have been critical in attracting our financial services and gaming sectors will be removed or toned down

EU wide corporate tax reform is major threat facing these sectors, which have contributed to 29% of the economy's growth, apart from the ripple effects that they have on others sectors. These happen to be our most volatile economic sectors, as relocations to other countries can take place almost instantaneously.

3. Maintaining positive tourism figures once there is more stability in the Mediterranean region

Tourism has had an unprecedented boom during the past four years, and our capacity has increased to accommodate these levels of occupancy.

4. Increasing Maltas economic output capacity

In a country with limited resources and output capacity, we will have to make choices as a society, as some activities may interfere or even disrupt others. A classic case is the threat to sea cleanliness posed by the pollution being generated by fish farms. Will we have to choose between fish farms or quality tourism, or can there be a happy coexistence between the two activities. The same can be said about Malta’s carrying capacity as a tourist destination in terms of available accommodation, flight capacity, and environmental sustainability. The major future challenge may well be one not of utilising existing resources to full capacity, but rather of how to establish the best mix of economic activities to maximise sustainable economic performance together with environmental and quality of life considerations. In the same way that ten years ago Malta had to restructure its economy because of circumstances which were forced upon it, namely the outsourcing on our low-end manufacturing sector to low-cost destinations, the country will have to take important decisions which can well mean the deliberate phasing out or reduction of activities which yield a low return or which have an adverse effect on our society’s quality of life.

5. Reconciling economic growth with objectives related to environmental constraints and quality of life

This will become an increasingly sensitive issue in the coming years. In the same way that leisure time may take precedence over additional earnings, people’s priorities will also shift towards other quality of life indicators such as less pollution and open spaces.

6. The drop in national revenue once the sale of Maltese citizenship subsides

In November 2013, MEA had expressed its reservations about the sale of Maltese citizenship on the basis of national ethics and its impact on the country’s reputation as a destination for the financial services sector. The revenue is expected to be a one-off cash generator, and like the EU funds cannot be expected to result in a sustained injection in the economy. Political parties need to plan for contingency measure once this well dries up.

7. Ensuring that Maltas reputation of good governance does not deteriorate further

Our current rate of economic growth is strongly dependent on a reputation of decent and ethical good governance which has been built over decades. There is an urgent need to restore and rebuild upon this reputation in order for this growth to be sustainable.