Issue link: https://maltatoday.uberflip.com/i/1035530
maltatoday | WEDNESDAY • 3 OCTOBER 2018 11 OPINION BUSINESS www.creditinfo.com.mt info@creditinfo.com.mt Tel: 2131 2344 Your Local Partner for Credit Risk Management Solutions Supporting you all the way SINCE joining the European Union in 2004, Malta has worked hard to capitalise on the funding opportunities provided to the member states – particularly with regard to Structural and Cohesion funds. As a Government, we have recognised the success that Malta registered over recent years, mainly driven by the many talents that make up the Maltese entrepreneurial sector and we will ensure that the needs of local and foreign entrepreneurs are being continuously addressed in order to reap higher benefits. Through EU funds, my secretariat is supporting enterprises when undertaking investment projects aimed at securing sustainable business growth, by becoming more competitive, innovative and more resilient to market challenges. Last week, during a conference organised by the Malta Business Bureau, I had the honour and opportunity to discuss the ways in which EU funds are being utilised in order to support entrepreneurship in Malta. Over the past years, the Government has made it quite clear that we are striving to act as a platform to support a future entrepreneurial Malta, which is ready to drive the country's digital transformation in a world of hyper- innovation. EU funds and EU-funded projects have contributed to the economic and financial sustainability of Malta's fast-growing economy. Whether it is through the €30 million we are investing in SMEs, the €20 million we are investing in research and development, the Kappara and Marsa Junction or financial instruments in loans and guarantees or the ESF Funds for the re-skilling and up-skilling of our workforce, they all contribute to Malta's economic growth. For the next EU budget post-2020, we are planning and negotiating for these programmes to become more simplified and flexible. The Business Enhance Grants Scheme is one example of funds which are part-financed by the European Regional Development Fund 2014-2020, and which seeks to support enterprises, mainly SMEs and start-ups through the provision of a non-repayable grants. The scheme includes a start-up Investment Grant Scheme with a maximum grant of €300,000, an SME Growth Grant Scheme having a maximum grant of €500,000, an SME Diversification and Innovation Grant Scheme having a maximum grant of €200,000, an SME Internationalisation Grant Scheme having a maximum grant of €10,000, and an e-Commerce Grant Scheme having a maximum grant of €5,000. Additionally, in order for SMEs to be eligible for such funds, they require a business proposal, and even here, we have allocated a grant (maximum of €4,000) to aid SMEs in such process. So far, 145 SMEs have already benefited from funds under the 2014-2020 programme, where a total of €51 million have been allocated towards providing financial assistance to SMEs. We have also recently signed an agreement with the EIB group and the European Commission to increase financing available under the SME Initiative in Malta. The initial SME Initiative agreement in Malta has allowed Bank of Valletta and BNF Bank to deliver already approximately €60 million of new SME financing across the country within less than three years. Due to the successful uptake of this initial agreement, we, together with the EIB Group and the EC have decided to add additional resources to this initiative. This increase will trigger additional SMEs financing for an amount of €28 million, resulting in more SMEs benefiting from European resources on advantageous terms, such as reduced interest rates and improved collateral requirements, bringing the total SME financing to around €90 million. As a Government, we are doing whatever it takes to help SMEs overcome challenges and barriers. The first is the survival rate of newly- founded entities. The November 2017 EU report 'SME Performance Review' outlines that newly-founded entities created by self-employed have survival rates typically ranging between 30- 60% after the first five years. This is a worrying factor as it clearly underlines that there is a high probability of failure for new entrepreneurs within the first five years. Moreover, micro-entrepreneurs are disadvantaged compared to larger enterprises. The Facebook-OECD 'Future of Business Survey' pinpoints that large firms have a more positive evaluation of the state of their business than smaller firm. The Eurobarometer survey also highlights that complicated administrative procedures, high delivery costs and identifying business partners were indicated as the major barriers for exporting. This presents a learning curve challenge to start up micro- entrepreneurs, which may be overcome with access to factual and useful data related to their business development. The third and final point is the employee retention. We must face these challenges while also consolidating the present regulation and taxation system that nurtures champions – a system that fosters capital investment and encourages entrepreneurs and investors to finance this current productive economy. In the meantime, Government itself is learning and innovating. Aaron Farrugia is parliamentary secretary for EU funds and social dialogue Supporting entrepreneurship through EU funding Aaron Farrugia