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Business • December 12 2004


Malta’s competitiveness in focus


Matthew Vella

The laments at Competitive Malta’s conference on national competitiveness are merely echoes of well-known problems hampering the Maltese economy and its sustainability, but how will the collective shout of the hundred-odd corporate leaders who this week converged at Villa Bighi in Kalkara make it to the decision-making table?
Dr John C Grech, director of Economic and Management Consultancy Services, was upbeat in his diagnosis of a small-island economy that faces emerging competition from all sides and a growing disillusionment with a government that has become too big for its shoes. Whilst the problems are clear, and the solutions tentatively attractive and doable, one wonders at what the government is taking in from the business leaders who show considerable exasperation at the state of affairs in Malta.
“What I want to see is a discussion that does not get politicised, because these issues belong to everybody,” Grech told our sister paper The Malta Financial and Business Times. “However, I think it is Government’s primary responsibility to kickstart this initiative and to see what we want to arrive at.”
Competitive Malta was set up a year ago as a foundation sponsored by ten business organisations, amongst them EMCS, Vodafone, HSBC, Malta International Airport, Magro Brothers, Toly Products, VISET, BOV, Maltacom, and the Malta Council for Science and Technology. Membership today has increased to 25 organisations, which aims to bring together the expertise of chief executives to develop strategic options and suggestions for enhanced national competitiveness.
World Economic Forum senior economist Saadia Zahidi concluded her presentation on Malta’s decline in the WEF’s global competitiveness index (GCI) – a staggering 13 places down to 32nd in 2004 – as a clear sign that Malta “needs a recognisable brand that has to be followed through”, and that is indeed tourism.
Whilst her genuine parallels listed Switzerland as synonymous with chocolate and watches, one wonders whether Malta still can boast of sun, sea and history in its recipe for success. With the Malta Tourism Authority awaiting major surgical treatment following a Deloitte audit, Malta’s tourism product was one of the focuses of the discussions held with Competitive Malta’s chief co-ordinator Adrian Said, and other business leaders like Vodafone Malta’s Joe Grioli and VISET’s CEO Chris Falzon.
Both made candid admissions about the business and political culture in which the island’s main corporations are expected to function: Grioli laments that every “little thing” has to be discussed with the minister responsible, but his statement does not make it in time and Competitiveness Minister Censu Galea had already left the conference room, and adds that both Government and Opposition are firefighters which do not think beforehand; Falzon mulls over the current fixation with golf courses: “we should be taking stock of our natural resources, such as our ports. After all, with one golf course, whatever its size, we would be one out of so many around us.”
It shows that businessmen are speaking a different language to that employed by politicians, and the short-sightedness of the latter means that Malta is losing its competitive edge. That’s not just a suspicion, as Toly Products managing director Andy Gatesy says, his multinational already looking towards establishing another factory in China.
But the advantages of such a small island like Malta, he admits, is that the economies of scale can be positive as well, with contacts easily attainable, and distance not being an issue on such a small area.
Adrian Said, and so many of those present at Tuesday’s conference, took the GCI index and its severe analysis of Malta’s unfriendly macroeconomic environment, where business expectations spell out a fear of recession and too much wastage of resources within the public sector. They believe that Malta has to emulate the success of a private company.
The example Said chose was global sports shoes manufacturers and international brand Nike, whose unassuming USD 1,000 investment back in the sixties grew to a turnover of over USD 10 billion this year, whilst Malta’s would run at something like USD 4.3 billion, itself a young independent nation born in 1964.
Like Nike, the parallels run wide: Malta needs a vision and development strategy to face up to its competition, which now runs from Eastern Europe to Asia and back to North Africa. It needs to outperform, and produce something of superior value: not the holiday equivalent of a Soldini footballer’s shoe, the parallel would have it, but something of the latest fancy Nike boot, complete with air-lifts and endorsements by international sports stars. In short, Malta needs a tourism product that has to exceed expectations, with a strong brand image, and to target those specific markets which will respond. And most reassuringly, and most unlike Nike this time, the country should not be guided by profits, but to guarantee a satisfying standard of living for its ‘shareholders’, its citizens.
But Said also said that Malta is weakened by a perception that it is not FDI-friendly, and that its beneficial characteristics – safety, English-speaking, excellent health and educational services, and all the benefits of an ex-colony bathing under the sun – are not being exploited properly:
“We have to attract more industries the likes of branded pharmaceutical companies which invest in R&D, and develop Malta into a business services centre for the Mediterranean.” Concurrently, Said reminded of the need to ensure that the social fabric remains intact, with the equitable distribution of wealth remaining in focus, as well as environmental safeguarding and the cultural characteristics of the island, and preventing Maltese society from becoming “consumerist”, although that in itself is as anti-Nike as you can get

 





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