[WATCH] Prime Minister criticises bank duopoly for stringent conditions on lending

Prime Minister Joseph Muscat lashed out at Malta’s two largest banks who hold between them “a duopoly in our banking system who are putting the cart in front of the horse” and criticised them for the very limited access to funding that they are making available.

Financing has become ever more difficult and the excessive bureaucracy was turning people away from banks and not in a very nice way, he said.

Muscat agreed that banks needed to be careful when signing on new clients, but he insisted they should take calculated risks instead of introducing even more stringent regulations.

“That is not why we need banks in today’s society," he said. "Government cannot interfere in private banking operations, but we can only pass on the frustrations of the public and the business community."

Muscat was addressing a conference organised by Ernst & Young (EY) as it launched a report listing five proposals for the continued growth of Malta's economy and aimed at how the country can grasp opportunities to further boost its economic standing. 

The five proposals deal with the growing strength of FinTech - the use of technology in financial services - promoting Malta as a trading hub, Malta as a gateway for Asian e-commerce, new logistics, and regular immigrants. 

Muscat announced that a new half a million cubic metre logistics hub was planned for Hal Far, to be developed in partnership with the private sector.

He said he remained concerned on granting more land to Malta Freeport for possible expansion, even though he acknowledged the importance of logistics on today's economy. 

Muscat said there were cobwebs throughout the system that were stifling entrepreneurship as well as bureaucratic inefficiencies that made no sense whatsoever in today’s business reality.

“One such example is the jurassic idea of the general trading license, an idea that will be scrapped by the end of September,” he said.

In their place, government will be introducing a licensing system that was more streamlined and much more user-friendly.

Muscat said that in that same timeframe, Maltese ID card holders would be able to start a business online within one week.

He said that three weeks ago, he had discussed the issue of logistics services with Jack ma, the founder of popular shopping site Alibaba.

Muscat said the two parties were in discussion as to how Malta and Alibaba could work together, although – he admitted – there was no guarantee that anything would come of the talks.

Opposition leader Simon Busuttil said EY had the opposition’s full backing for the proposals it was presenting in its report.

He noted the proposals were in fact very much in line with the Nationalist Party’s own conclusions and recommendations it had included in a report entitled ‘An economy for the people’ drawn up by Claudio Grech in November 2015.

Busuttil said a great example of how a logistics company could be succesful and of how the industry was growing was Malta Freeport, which continued to grow and provide an excellent service.

He said what was needed was an integrated approach that linked existing sectors with new ones that could still be targeted and exploited.

In its report, EY said Malta needs to introduce a plug-and-play regulatory approach that would allow companies that carry out some banking functions without being a full-blown bank to only take on the regulatory elements that affect them. 

Malta also needed to develop policy measures to attract foreign tech talent to Malta, possibly through the adoption of fast-track VISA schemes for third country nationals.

On Malta establishing itself as a commodity trading hub, EY said the country has a potential window of opportunity to leverage existing strengths and tap into a market gap, by focusing on small to medium-sized commodity traders in search of an alternative jurisdiction. 

To this end, it said an extensive and thorough review of local legislation underpinning commodity training was needed to create a framework aligned with internationally-accepted regulations.