Issue link: https://maltatoday.uberflip.com/i/1147846
25.07.19 10 INTERVIEW Investing in Malta... the challenges Aer a career of almost 40 years at Malta Enterprise - the last six years as CEO - Mario Galea's tenure comes to an end at the end of the month. Business Today caught up with him to discuss the challenges Maltese and foreign business face when seing up shop in Malta, as well as Brexit, the labour force and Malta Enterprise's role in the future MASSIMO COSTA How has the role of Malta Enterprise evolved since you were appointed CEO in 2016? Malta Enterprise is geared to support all types of business in Malta - from the largest to the smallest. It supports around 70% of economic players on the island. Traditionally, Malta Enterprise was more associated with big business, such as Playmobil, Farsons and Foster Clark. But, as our role evolved, we started in- creasingly offering incentives to help smaller businesses, which are crucial for the economy. As small businesses grew, so did the de- mand for the services and products they offered. Had small business not grown, Malta could have faced an economic vacuum as it failed to meet the demands of an ever-growing labour force. is could have led to inflation. Incentives ME offered to small businesses have contributed towards the growth of the Maltese economy. What are the main goals of Malta Enterprise today? ME's goals are principally split into three. e first is to strengthen existing busi- nesses, both local and foreign. ere might have been times in the past when the Malta Development Corporation or ME might have placed more emphasis on attracting new businesses than on maintaining the ones we already have. But strengthening the businesses we al- ready have is crucial esppecially since their growth rate is often much higher than that of new businesses. One of ME's achievements over the past six years is that almost all the large foreign direct investments in Malta have expanded their operations; a sure sign of the country's increased competitiveness. e second aim is to attract more busi- nesses of a similar type to that which al- ready exists locally. For example, having Lufthansa Technik in Malta was very important when it came to attracting SR Techics, and is also leading to other companies involved in airplane main- tenance, repair and overhaul to consid- er Malta. Similarily, having De La Rue operating here had a role in attracting Crane Currency. Our third remit is to bring new busi- ness to Malta: creating new niches in ex- isting or new sectors. Medical cannabis, for instance, is a niche in the life sciences sector. We are also attracting new business in life sciences, data sciences, logistics, advanced engineering, and ITC, among others. Malta Enterprise offers a number of schemes and incentives for SMEs. What is the take-up for these incentives like? Money for incentives granted comes from people's taxes so the focus has to be on what economic growth is being creat- ed from these incentives. It's not only a matter of take-up, al- though a lot of our incentives generate extremely strong feedback. But one must take into account the economic and so- cial benefit of the measures. Last year, for example, we launched an incentive for industry players to pool resources when transporting employ- ees to and from the workplace, allowing employees from different firms to travel together and reduce the number of ve- hicles on the road. at creates a social benefit, and the incentive had a good take-up. More than take-up, therefore, I prefer to look at the incentives' effect on the economy, and I think that when one con- siders everything - economic growth, manufacturing growth, exports growth, employment growth, clustering growth, better sustainability and higher salaries - it is apparent that ME's incentives are providing a positive economic effect. What do you find are the major concerns of SMEs today? And what can Malta Enterprise do to help SMEs overcome those obstacles? Let's start with the opportunities first. Small businesses are as important to ME as big industry. Malta offers an advantage when it comes to small foreign businesses, be- cause our country, due to its size, is able to place significant focus on a relatively small company which would otherwise be lost in a larger country. A foreign company which will employ, for in- stance, 20 persons, will still receive its due attention in Malta. e same applies to Maltese compa- nies. I don't think there have ever been as many incentives offered to local com- panies as there are right now. Taking just one example, our micro invest scheme for the self-employed is providing €16 million worth of tax credits annually, with €4 million of this going to business- es in Gozo. As to challenges, I believe small busi- nesses still see bureaucracy as a threat. We've implemented the Business First initiative, which serves as the single point of contact for small businesses, and this received a lot of positive response. But a lot of small businesses still tend to feel slightly overwhelmed when they have to follow rigid bureaucratic processes, and I think we still need to provide more sup- port in this area. Growth inevitably neccesitates a big- ger labour force and - given Malta's la- bour market - training for sustainability in industry is indeed also a challenge. Moreover, we should also examine whether Maltese and foreign workers are being trained in Malta by the indus- try. When a Maltese worker is trained lo- cally, the return from any training re- ceived will still be translated into a posi- tive input into the local economy, even if they change jobs after being trained, But when a foreigner is trained in Mal- ta and then leaves the island, that invest- ment in training is lost. So these are challenges created by this for an increased labour force. e need to seek foreign workers is the result of the growth in the economy and its var- ious sectors, And since it likely to per- sist, we need to integrate local and for- eign workers and consider them a single workforce. e quality of the labour population in Malta is challenging, as is the matter of how much our workers are being pre- pared to meet the needs of the Maltese economy in the future. With rapidly changing technology, do we have enough people who are ready to take on the needs of the industry in the coming years? e re-engineering of Malta's industrial zones is another challenge. Most of the land for industry is taken up, so we need to start looking into multi-level indus- trial buildings which do not increase the footprint of existing industrial zones. Another major challenge is related to banking and the opening of corporate accounts for foreigners. I must say that, on the whole, when foreign businesses are guided by ME, they do not encounter significant obstacles with the banks. Banks are usually business-friendly, but international rules are making bank- ing transactions more complex world- wide Another issue is related to state aid rules imposed by the European Union. Malta is often not only competing with EU countries when it comes to attracting businesses, but also with those outside the EU, such as Turkey, Asian countries and others. ese countries are not sub- ject to the same state aid restrictions as us. What are the biggest challenges foreign investors face when starting or relocating a business to Malta? ME has a dedicated section which deals with attracting foreign investors. Many a time we approach foreign firms to come to Malta, after we carry out our research - there is a whole process involved in bringing them to Malta. e way we operate with Maltese busi- nesses is somewhat different, as it is usually they who approach us asking for assistance. When it comes to implementation, for- eign and local businesses have different needs as well. Foreigners have to think