Protecting and uplifting Malta’s industry for the long term | Jason Azzopardi

In the long term, this staggering increase in the unavoidable costs which our employers, and thus we the consumers, have to pay is simply unsustainable | Jason Azzopardi

This is a call to “arms”. On behalf of our industry.

For the benefit of the almost 23,000 families whose livelihoods and wages depend on our industry. For the greater good of our economy.

This is not about cheap and petty partisan politics.

But if there is one thing I have learnt, as I waded and made my way across the political grasslands for the last five legislatures, is the moral imperative on us all to expunge “short-termism” at the expense of the long term good.

It was with this in mind and heart that last January I set about executing my new duties as the Opposition’s spokesperson for industry, as detailed by the Leader of the Opposition.

The several meetings with the main stakeholders, players and operators of the local manufacturing industry made me painfully aware of a major headache they were grappling with for the last few years: exponentially rising transportation and logistics costs.

In the long term, this staggering increase in the unavoidable costs which our employers, and thus we the consumers, have to pay is simply unsustainable. It is a major contributor to the excruciating increase in the cost of daily living we are suffering.

Some incontrovertible facts:

  • In 2016, a detailed study by one of Malta’s leading industry stakeholders found that while the Belgian and Italian industrial employer had an average of 2% and 6% respectively in transport costs, their Maltese counterpart had almost 20% for the same transport.
  • In the last 18 months, the container shipment costs from China to Malta went up from  around €2,000 per unit to €11,000 for the same trip and the same container.
  • Since 2012, Malta has annually been going down the Logistics Performance Index of the World Bank. From 43rd place in 2012 to 69th worldwide in 2020 and the EU Member State occupying the last place in this index. An index which is consulted by foreign investors to gauge how easy or not it would be to import and export to and from a country.
  • The same 2016 study showed that a minimum of €20 million is paid every year by our local Industry players in additional transportation costs simply because we are surrounded by the sea, costs which their competitors on the European mainland do not suffer.
  • The NSO Industrial Producer Price Index for August 2021 published this week makes very grim reading. It registered an increase of 4.22% when compared to the corresponding month of 2020. This Index monitors the changes in selling prices of all leading products. In other words, it provides an important X-Ray into how competitive our Industry is or can be.
  • What struck me most from this Index is the very sharp and unprecedented increase in the prices over the last year.
  • I invite you to view the attached table issued by the NSO which came up during a discussion I had with an old salt of the Maltese Industry the day it was issued. These objective truths cannot be neither denied nor hidden:
  • When compared to August 2020, the Industrial Producer Price Index increased by 4.22%. The price of intermediate goods rose by 7.82% (in other words, the price of raw materials imported by our factories and semi finished goods shot up);
  • The price of Industrial products was the highest since August 2017 (from an Index of 110 to 134), rising annually;
  • August 2021 saw the highest ever increase in industrial producer prices over the last 12 months, a consistent and steady increase month after month since August of last year;
  • August 2021 saw the highest ever monthly increase in the Industrial Producer Price Index since August 2017 (from 1% to a 6% increase over the previous month);

These bleak figures show how right and timely is the PN’s proposal, launched last month, for a National and Annual Fund of €40 million so that our Industry can compete on an equal playing field with its counterparts. This Aid will be a shot in the arm in the uplifting of the wages of our existing factory and industry workers and will be an irresistible incentive for new industry players to set up in Malta.

This money will be disbursed, in consultation with the stakeholders, to offset all the logistics and transportation costs being incurred by industry each year as a result of our insularity. This money will result in our GDP increasing by around 10 per cent annually.

I am satisfied that our signal proposal has already received the public support of the Chamber of Commerce, the Chamber of SMEs and the Malta Employers Association.

For this national fund to materialise, we are calling upon Government to immediately agree with the Opposition to present our compelling case to the European Commission for state aid regulations to be amended and this crucial aid to start being granted.

I believe we can do this. I believe we can change the status quo stifling our Industry. I believe that the long-term gain of our Industry takes precedence over any short-term antics.

Where is Government?

Jason Azzopardi is a Nationalist MP and spokesperson for industry