Government committed to helping family businesses grow - Cardona

The Minister for the Economy, Investment and Small Businesses, Hon. Chris Cardona, has promised to do his utmost so that family-owned businesses in Malta continue to grow.

Cardona was speaking at a ‘Family Business Act Workshop’ organized by the ‘Malta Association of Family Enterprise’ (MAFE) at the Intercontinental Hotel in St Julians, where the Family Business Act – scheduled to be in place by June 2014 – was discussed.

“We, as a government, are intent on helping small family businesses in Malta grow.  I cannot stress enough how precious and important such businesses are for the growth of Malta’s economy and it is for this reason that they need our legal guidance and support,” he said.

Cardona explained that up to 70% of Maltese businesses are controlled by families but that only 30% of this number manage to get passed on to second generations. He said that even less - 10% - make it through to the third generation.  He explained that many times this is due to high fiscal implementations such as the high inheritance taxes imposed when the passing on a business to a family member.

“There are around 30,000 small family businesses in Malta, employing a total of nearly 38,000 people.  We want to make sure, through this Act, that the interests of these businesses and their employees are safeguarded in a manner that does not compromise their work conditions,” he said.

Mario Duca, the President of MAFE, said that the MAFE organization was set up “by family business owners for family business owners” which is why the enacting of such an Act is “very close to (their) heart.”

“MAFE is trying to lobby for better FISCAL conditions for these small businesses. The three factors which we need to define and safeguard are the ownership, business and family structures of these businesses and we believe that with better governance structures in these departments, the sector as a whole will be much better off to succeed in the long-term,” he said.

Duca explained that there were many issues that needed to be addressed before the setting up of the Act such as defining in thorough terms what a family constitutes of, as well as properly defining a family business.

“There is no real definition of what a family business is. We need to analyse to what degree persons should be considered part of a family business. Furthermore, we need to properly define the notion of the family. Its constantly-growing structure adds complexities which we need to address. What is certain, however, is that the option of doing nothing is not an option,” he said.

“The goal of this Act is to help such businesses to continue to operate through family ties, both in terms of management and ownership.  ,” he added.

If all goes to plan, Malta will hold the honour of being the first EU state with a Family Business Act.