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Immediately after achieving independence, the Nationalist government of the day introduced many incentives in the form of tax breaks and subsidies to kick start the economy.
These measures were considered as a way of incentivising entrepreneurs to set up projects which would eventually employ people and generate wealth. Many a young and energetic businessman took up the challenge developing hotels and factories and today they are enjoying the fruits of their risk taking.
They were the pioneers who contributed in no small manner to the tourism and manufacturing base of the economy. They too contributed in no small manner to the upgraded standard of living in the country. Many fiscal concessions were also given to ex-pats to encourage them to settle in Malta. By so doing these persons too helped generate employment and their spending power also helped the then hitherto military dependent based fragile economy. Many of these incentives which made sense in the sixties and early seventies do not make sense today, but certainly much should and can be done today to kick start the economy by attracting foreign investment and by giving incentives to Maltese businessmen to help develop the economy. It is time to revive entrepreneurship in the country. It is time to launch the Malta Inc concept.
All incentives introduced must reflect today’s realities. Incentives to build hotels or to encourage foreigners to set up a home in Malta make little sense at the present time. The number of hotel beds and the scarcity of land availability make both these two options unsustainable. However with a bit of creative thinking many an incentive could be introduced in the forthcoming November budget. Incentives to encourage the embellishment and evening generation of Valletta would go a long way to really making Valletta the crown jewel of the country. Owners of residences and of businesses could be incentivised to restore their facades, closing hours could be extended to give life to the city, motorist without a Valletta entry pass could be allowed to freely enter Valletta after five o’clock to generate business activity, all cultural activities could be fiscally helped to cushion their expenses. All of this requires a financial commitment in the budget. Its implementation could serve to promote Valletta as the prime reason for visiting Malta -Valletta, a European cultural city.
Government could also offer its empty and unused residential and commercial properties for sale - some parts of Malta’s industrial estates resemble ghost towns. These idle assets could be converted into liquidity for Government coffers which could go towards lightening Government’s financial burden. Each property sold would lead to a number of alterations and improvements being carried out. This too would help economic activity as decorators, builders, polishers, tillers and other tradesman carry out works on these buildings.
Tenants occupying government flats could be encouraged as was recently announced to buy the properties they occupy. Inevitably owners, there is a bigger likelihood that these premises would be upgraded, maintained and kept in a good condition. This would also help breed the home ownership culture so in tune with the average Maltese person’s aspirations.
Government could consider giving incentives which encourage people to install solar energy in their residences in an attempt to reduce the country’s energy bill. The Government could give incentives and encourage people to make use of fuel saving means of transport.
In the UK the Prince’s Trust has made available small amounts capital to young people with good ideas that want to set up businesses. Fifty thousand businesses have been set up through the Trust since 1983. Malta does not have a Price Philip, but perhaps the government could introduce a scheme in conjunction with our very profitable Maltese banks.
The idea of offering venture capital and allowing enterprising people to set up business with a bank as an equal partner with the option for the individual to buy out the bank at a later stage, should be reconsidered.
Incentives could also be granted to nurture the niche markets likely to help develop our tourist industry like diving and film productions. The potential earnings for Malta via the film industry are enormous, but for this to develop further tax incentives and schemes which attract big names to our shores are essential. With a helping hand from the authorities many of these niche markets could develop into strong pillars of our tourism market. At the end of the day it is all about nurturing the tourist product.
The culture of incentivising people in order for government to meet its targets needs to be established. If government would like a lower fuel bill especially when the price of oil is escalating it must incentivise people to save energy and reward them when their water and electricity bill are lower. If Government wants the citizen to separate the waste it generates at home and at its place of work it should incentivise them to do so. There needs to be a system that rewards ones efforts.
Much of this should be the focus of Malta Enterprise, the Government body set up to attract foreign investment. They are correct to carry on finding niche foreign investment as has been so successfully done in the pharmaceuticals and IT sectors, but they must also focus on the national front. Maltese people are exceptionally enterprising. Government need go no further than to create the conducive atmosphere for investment. This is done by reducing bureaucracy and red tape, by simplifying all application processes, by reducing corporate taxation and most of all by having a business like approach where decisions are taken quickly.
Setting the entrepreneur spirit free can reap enormous benefits to the country. It may make sense to revisit the Government actions taken in the sixties and early seventies.
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