MBB calls for clusters policy support

In a meeting with Labour leader Joseph Muscat the Malta Business Bureau (MMB) said that local SMEs should be supported to counter the inherent challenge of economies of scale in order to remain competitive. It believes now is the right time to introduce a national clusters policy.

MBB President George Vella, who led the business delegation, stated that Malta’s small island-state status makes it challenging for SME’s and micro-enterprises to operate in the world’s largest market. An important element affecting the competitiveness of local SMEs and micro-enterprises is that due to our market size, they cannot benefit from the same degree of economies of scale that can be leveraged by their competitors operating on the mainland. This also affects Maltese businesses’ negotiating power on the international markets. The development of clusters foster market collaboration between firms operating in the same industry sectors and is one feasible way to enhance competitiveness whilst curbing the inefficiencies derived from the lack of economies of scale.

Mr Vella explained that, “the MBB believes now is the right time to introduce a national clusters policy. Such a clusters policy would include the expansion of policies in the ICT and pharmaceuticals industries to other economic sectors. This would facilitate business to engage in the sharing of information and expertise, joint-market initiatives, and joint bulk-negotiation and ordering through common purchasing systems. It would also allow business to form consortia in the accessing of EU funds. Businesses would also be able to guide each other in identifying new markets, which would boost their product diversification.”

Elaborating on the aspect of Malta’s insularity, Mr Vella noted that this highly affects the competitiveness of local businesses especially on the input-cost structure side such as in the purchasing of raw materials and transportation costs. For instance, Maltese companies have to factor in the cost of double-freighting when importing raw materials and exporting a manufactured product.

“More should be done to incentivise private operators and shipping lines to put in place new and more frequent maritime routes to Malta. This is crucial in order to have reliable access to more timely and cost-effective routes for distributors and export-oriented manufacturers in particular,” he added.

Malta’s tourism industry also reiterates its call for the ease of intra-EU connections and air-transport accessibility for a higher attraction of long-haul non-European tourists to Malta. “In light of the European Commission’s ambition to make Europe the world’s number one tourist destination, peripheral countries such as Malta should not fall behind other continental destinations” he added.

Another discussion point raised by the MBB was the transposition of EU directives. Malta’s performance in the recent Internal Market Scoreboard, scoring a near perfect transposition deficit, was raised with satisfaction. However, businesses also expect that the transposition of directives is done in such a way that it does not exceed the minimum requirements set out by the same EU directives, thus avoiding any unnecessary burdens to be shouldered by enterprises. 

“This practice, more commonly known as gold-plating, needs to be eradicated with all due urgency. A common commencement date for legislation deriving from EU directives would also be beneficial, as it would allow adequate preparation and cost-staggering for businesses”, noted Mr. Vella.