Shadow minister calls for state guarantees to innovative start-ups

Claudio Grech says Malta should 'tackle phobia of foreigners and magnestize foreign talent', encourage profit sharing and business mergers.

Shadow economy minister Claudio Grech delivers a speech in Parliament
Shadow economy minister Claudio Grech delivers a speech in Parliament

The government should offer state guarantees to ten start-ups that display innovative business plans every year, shadow economy minister Claudio Grech suggested.

He also called on the government to “magnetise” foreign talent to Malta, and to encourage profit sharing and company mergers.

Speaking in Parliament during a debate on the Budget, Grech said that the government should guarantee 50% of the chosen entrepreneurs’ first two years of investment, capped at €500,000.

He also suggested that the government offer tax credits for half of their business promotion costs.

“Many Maltese youths have innovative business ideas that fizzle out due to access to finance problems,” he said. “If, after five years under this scheme, only 10 businesses succeed, then the government will still have a positive return on investment.”

Grech, who has been tasked by Opposition leader Simon Busuttil to draft a document highlighting the PN’s economic vision for Malta, welcomed the government’s strategy of “economic continuity”, but warned that capital expenditure is relatively weak, that labour participation is too low, and that foreign direct investment is far too reliant on Malta’s booming financial services sector. 

While he didn’t explicitly back the GRTU’s calls for lower bank interest rates on lending, he argued that the lending rates offered by Maltese banks are around three times higher than those offered by banks in Luxembourg.

“A contrast exists between our banks’ high liquidity and the ability of funds to be converted into capital investment,” he said.

He suggested that Malta start “magnetizing foreign talent” to the island to develop their skills.

“All new economies relied on talent in research and innovation to grow,” he said. “Malta has a strong phobia of foreigners and its overseas marketing is poor. It is a cultural problem, one that will require a great dose of courage to tackle.”

He also called on the government to “develop the legal framework” that would encourage more businesses to merge, as a means of improving the country’s competitiveness.

“One of the chronic illnesses within Maltese businesses is that they prefer to compete against each other, rather than consolidate,” he said. “On an international level, this fragmentation and shortage of economies of scale and harms our competitiveness.”

‘Need to tackle Malta’s mediocrity’

Grech warned that Malta must tackle its “acceptance of mediocrity”.

“This is a problem that has been building up over the years, but we cannot truly promote the country as a modern country at the top end of the scale if we then close a blind eye to general mediocrity,” he said.

“A construction site was recently erected in a central location, making it look to the casual observer like a third world country,” he said. “Several billboards across the island are either abandoned or plastered with posters advertise events that occurred six months ago.

“They are small details, but they do damage the outside perception of Malta’s economic landscape.” 

More in Budget 2016