Issue link: https://maltatoday.uberflip.com/i/1546553
MALTA'S economic perfor- mance remains remarkably strong. Growth has outpaced much of Europe, employment is high, new sectors have been cre- ated and the country has repeat- edly shown an ability to adapt to changing global conditions. The danger is not economic decline but something subtler—the risk that institutional renewal lags be- hind economic transformation. Malta's new challenges require the country to become more pro- ductive, more innovative, more competitive and more capable of converting growth into better wages, better infrastructure and higher-quality public services. These are not challenges that can be solved simply by adding more labour, attracting another sector or building more capacity. They require a state that can think long term, regulate intelligently, allo- cate resources well and act with credibility. In that sense, govern- ance is no longer a parallel debate to the economy. It is becoming one of the central economic ques- tions of our time. Governance is often discussed in moral, legal or political terms. Those dimensions are obviously important, but there is also a more practical economic dimension that receives far less attention. In- stitutions shape incentives. Incen- tives shape behaviour. Behaviour shapes productivity. If appoint- ments are perceived to reward loyalty more reliably than com- petence, talented people respond to that signal. If access appears more important than evidence in influencing decisions, businesses and investors adapt accordingly. If procurement rewards the wrong things, public spending becomes less productive. If planning deci- sions generate private gains while transferring infrastructure costs to society, capital is allocated in- efficiently. If courts take too long to resolve disputes, uncertainty becomes a cost of doing business. Governance therefore enters the economy through thousands of small decisions long before it ap- pears in a GDP statistic. This is why Malta now needs to think not only about governance but about governability. The two concepts are related but different. Governance concerns the institu- tions, rules, checks and accounta- bility mechanisms through which power is exercised. Governability concerns whether the system is actually capable of making de- cisions, implementing them ef- fectively and solving complex problems. A country can possess extensive formal safeguards and still govern badly. Equally, a gov- ernment can be highly effective in acting quickly while concentrating too much power in too few hands. The challenge is to construct a system that is both capable and constrained; strong enough to act, but sufficiently accountable to prevent arbitrariness. That balance becomes especial- ly important as Malta's econo- my becomes more sophisticated. Managing a small, rapidly grow- ing services economy was already complex. Managing the transition towards higher productivity, arti- ficial intelligence, digital finance, climate adaptation, ageing, in- frastructure pressure, housing constraints and an increasingly diverse population is considerably harder. These are interconnected problems that require institutions capable of joining up policy rather than treating each challenge as a separate file. A transport decision affects labour mobility. Housing affects migration. Migration af- fects wages and productivity. Ed- ucation affects competitiveness. Planning affects infrastructure. Capital allocation affects inno- vation. Governance determines whether these interdependencies are understood and acted upon coherently. Constitutional renewal This is where constitutional re- newal should enter the discussion. Malta's Constitution has provided stability through independence, republicanism, European inte- gration and enormous social and economic change. But a consti- tution should not be treated as a historical artefact. It is the operat- ing system of the state. When the society and economy it governs change profoundly, it is legitimate to ask whether the architecture of power, accountability and partici- pation remains fit for purpose. The core issue is not simply whether individual provisions should be amended. It is wheth- er the balance between executive authority, Parliament, the judi- ciary, regulators, the public ad- ministration, local government and citizens still reflects the needs of a modern European repub- lic. The present debate should therefore move beyond piece- meal institutional fixes and ask whether Malta requires a deeper constitutional settlement capable of strengthening checks and bal- ances, institutional independence and democratic legitimacy while simultaneously improving state capacity. Parliament is an obvious place to start. In a modern economy, legislation increasingly deals with highly technical areas such as fi- nancial regulation, artificial intel- ligence, competition, pensions, demographics, climate transition and digital markets. Meaningful scrutiny therefore requires exper- tise, time and resources. A legis- lature that is structurally weaker than the executive will struggle to fulfil its role regardless of the qual- ity of individual parliamentarians. Strengthening parliament should mean improving research capabil- ity, increasing access to specialist expertise, empowering commit- tees and creating a more serious deliberative function. A stronger parliament does not make govern- ment weaker. It can make policy better before mistakes become ex- pensive. Merit and institutional memory The same argument applies to public administration. Malta needs a stronger commitment to 18 maltatoday | SUNDAY • 13 SEPTEMBER 2026 NEWS JP Fabri Malta's next Economist New guest house proposed in Depiro Street's 'parapets' area A planning application is proposing a guest house in Triq Depiro, Sliema, next to a site where a residential de- velopment permit allowing higher buildings was previ- ously approved. Known as the 'parapets' area of Depiro Street, which runs from Sliema's Dingli Street down to Manuel Dimech Street, the houses are charac- terised by staircases leading to raised parapet entrances. The latest application in- volves townhouses 104 and 105 and proposes a five-floor, 29-room guest house while retaining the traditional façades, including the para- pets, along Triq Depiro. The plans foresee extending the façade by one floor, rep- licating the existing design, and constructing garages at basement and plinth levels. Guest house rooms would be located on levels one to four, with a receded fifth floor. The application also in- cludes the garden area at the rear, most of which would be retained. The proposal is immedi- ately next to townhouses 93 to 103, where a residential development was approved by the Planning Authority in 2020. That permit, which remains valid until 2028 and has yet to be implemented, allows for the demolition of the ex- isting dwellings and their re- placement with a residential block. The approved project provides for the retention of the traditional façades and their extension by another floor replicating the existing design. Garages are planned at basement and plinth lev- els, with apartments on the first, second, third and fourth floors and a receded level. Plans indicate that the pro- posed guest house would broadly follow the height ap- proved for the neighbouring residential development. The 2019 residential ap- plication was originally sub- mitted by John Bonavia and was subsequently associated with Marion Developments Ltd, represented by Thomas Mifsud. The new guest house application was submitted by Carlo Mifsud's company, 137D&M Ltd. The proposal comes amid continued pressure to con- vert residential properties in Sliema into tourist accom- modation, as developers seek to tap into the town's estab- lished tourism market. Guest houses classified as Class 3A are generally per- missible in designated res- idential areas under the re- gional Local Plans, while larger hotels classified as Class 3B are not permitted in residential zones. New rules for guest houses came into force in June and limit new developments to 20 rooms. However, the current application was submitted in May, before the new limit came into effect. JAMES DEBONO jdebono@mediatoday.com.mt