Reactions to COVID recovery plan: employers, businesses give general thumbs-up

Chamber of SMEs

The Chamber of SMEs said the recovery package was a much needed helping hand to enterprises and to our economy to reignite.

Malta Chamber of SMEs President Mr Paul Abela said hard times are ahead for Malta and the current months are crucial because they will define our economy post-COVID. “For many businesses these months have proven to be harder than when the COVID pandemic was at its peak in Malta and most businesses were closed. The moment businesses were given the go ahead to open, costs started piling up and income was close to none.”

Paul Abela said that addressing rental costs, utility costs and costs on human resources is key for business survival and we are pleased to note that the Covid Budget has addressed these in agreement with the proposals we presented.

“On a negative note, whilst we appreciate the step in the right direction the rental aid is still deemed as too low. Most businesses have continued paying rents throughout and a €2,500 to cover the rental burden during the pandemic still falls short of the desired impact. More efforts will be necessary in this regard if we want this measure to make a real difference.”

Incentives to encourage local spending was another important proposal from the SME Chambers’ side and this has also been taken up through vouchers that will generate economic stimulus, which ripple effects will go beyond this actual investment itself. “Having said this, tourism is still a clear priority which is essential for a more stable economic recovery. The budgets allocated to tourism are an achievement the SME Chamber has been contributing towards since the start of the pandemic,” Abela said.

The Malta Chamber of SMEs was also pleased that more of its proposals than have already been mentioned, have also been taken up. Amongst the proposals accepted are those of sustaining local produce and local businesses to strengthen Malta’s self- sufficiency, incentivising new economic niches to diversify our economy, the conversion of part of the Micro Invest Tax Credit into a grant, further fine-tuning of the Malta Development Bank Guarantee Scheme to facilitate access to finance and the waiver of license fees.

The Malta Chamber of SMEs said these measures, together with the further fine tuning of the rent subsidy scheme, will accumulate into the necessary help in terms of liquidity that businesses currently need to survive these current difficult months and enter a stage of recovery.

Chamber of Commerce

The Malta Chamber welcomed the measures, namely the reduction in operational costs for enterprises; kick-starting aggregate demand by stimulating domestic consumption especially
considering reduced tourism activity; and future-proofing the economy by supporting companies to obtain professional assistance to alter their business models and strategies.

The Chamber was particularly satisfied that government accepted and announced measures it had itself proposed such as: the retention of the wage subsidy on a selective and tapered basis, support for business operating costs particularly in terms of rental expenses and fuel costs, and direct support to help businesses re-engineer their business plans to consider new opportunities.

The Malta Chamber also welcomed measures aimed at embracing the opportunities presented by the COVID-19 crisis such as the acceleration towards digitalization of business processes and a strong direction towards a low carbon economy.

The Chamber was also highly appreciative of the investment in industrial infrastructure of €400 million to attract new investment in both existing and emerging industries.  “As Malta’s foremost business representative body, we welcome the measures announced tonight, as they widely reflect the sentiments of The Malta Chamber. Several of the incentives are expected to help businesses turn the COVID crisis into an opportunity of growth through a re-engineered economy” said Perit David Xuereb, President of the Malta Chamber.

Malta Hotels and Restaurants Association

MHRA President Tony Zahra noted that: “the economic regeneration plan demonstrates that the Government has the right feel of the economic and social situation brought on by Covid-19 and this plan will effectively contribute to reigniting the tourism sector and the rest of the economy. The coming months will not be easy for hotels and restaurants, however, an economic stimulus of circa €900 million will definitely boost confidence in the tourism sector as a whole and augurs well for consumers, employees and all other stakeholders including investors.”

The plan is very far reaching and includes in so far as the hospitality industry is concerned: €200 million in tax deferrals till the end of August; 50% refund on electricity bills for next three months, dedicating €30million to aid businesses hit badly by the pandemic; 7c reduction in fuel prices from Monday 15th June 2020; Inwork benefit scheme to be enhanced with a €4 million investment; COVID-19 wage supplement for tourism workers to be paid until end of September; €100 voucher to everyone aged 16+. Money is to be used in hotels, restaurants, and shops to help boost local economy; €50 million dedicated to helping business with operating costs related to rent; Businesses under Micro invest will benefit from a conversion of tax credits into grants; The cost of business licenses for an entire year will be refunded to allow businesses; €5 million invested in a promotional campaign for Maltese and Gozitans businesses.

“The Economic Regeneration Plan does not leave any stone unturned and is a clear demonstration that the government has taken on board the serious difficulties faced by all stakeholders of the industry and has come up with a package that is indeed impressive.”

Malta Employers Association

The MEA said the incentives announced by government were a timely intervention given the extent of the COVID crisis. It said it was understandable that igovernment is introducing measures to stimulate domestic demand combined with a spread of incentives to support businesses and encourage further investment to have a faster recovery once the COVID outbreak subsides.

The MEA said the measures will not restore the economy to pre-COVID levels of activity, nor are they expected to, but would boost economic activity and sustain both businesses and consumers in the coming months.

“The period July to September is critical for the country, as many businesses will decide whether to scale down or to retain their operations. The voucher scheme will not only inject funds where they are most needed, but also reassure those consumers who are holding back expenditure due to safety perceptions.”

However the MEA said the reduction of the wage supplement to €600 may result in an increase in redundancies; Shifting companies from the benefits of Annex A to Annex B is premature at this stage, as many businesses are retaining their employees by digging into internal resources; The grants to the construction industry to invest in modern equipment should be extended also to other sectors who need similar incentives to be able to shift to more environmental  friendly technology; The reduction in utility rates should be permanent, even if not at 50%, and extended to households.
“Nonetheless, overall it is a positive package that addresses the concerns of various stakeholders. The effectiveness of this package will depend on the business response to these fiscal injections, and also on the need to strictly enforce public health measures to keep the numbers of infected persons to a minimum and thus prevent a relapse which will be damaging and costly. Government is urged to maintain contact with the social partners to exchange information so that the situation will be monitored continuously, and further measures that extend beyond September 2020 may be discussed to reflect the prevailing situation”

Gozo Business Chamber

The GBC welcomed the package, noting that it was important to highlight that the wage supplement in the tourism sector will be retained in an integral way, and that the wage supplement for Annex B will also be retained. The GBC expects that the positive discrimination contained in Annex B for Gozitan based enterprises, should continue as is.

The GBC said the voucher system will also assist the domestic tourism sector in Gozo, which at this stage is crucial, given Gozo’s strong dependency on tourism.

“The assistance to be provided on rents and electricity bills will also give a much needed breathing space to a lot of businesses. Rents was one of the main concerns of businesses which have seen their earnings drop substantially during this period. The wavering of license fees should also provide a much needed assistance to businesses at this point in time.

“Overall it is a strong budget which should incentivise the economy to continue moving forward during these difficult times, and which should put the nation in a good position to restart the economy gradually. “

Association of Catering Establishments

Amongst the  announced measures, ACE commended the extension of wage subsidies in the catering establishments sector until the end of September, subsidies on rental, licenses  and utility expenses, and the provision of vouchers to be spent in leisure activities. “The latter will serve as a much-needed demand stimulant, which, paired with the cost subsidies, are expected to serve to bridge the gap in profitability and liquidity brought on by recent operational pressures and social distancing requirements regulating the dine-in product,” ACE president Reuben Buttigieg said.

Recent surveys carried out by the ACE amongst its members showcase a positive trend in performance achieved in the second week of operation following the lifting of measures restricting the ability for persons to dine in at restaurants, with revenues nevertheless falling on average 40% to 60% short of pre-pandemic normalised levels. “These measures will continue to encourage this upward trend, both directly in the industry, as well as throughout its supply chain, and will contribute to the sustenance and potential growth in employment base.”

National Youth Council

The National Youth Council welcomed the measures aimed at maintaining the quality of life for youth during the pandemic.

But KNŻ said that although they are being introduced three months later, the proposals concerning students have been welcomed and will be put into effect. It called for the payment due to students to be given as soon as possible to eliminate the discrimination which currently exists between working students and their colleagues.

“Regarding the proposals to strengthen mental health among youth, KNŻ regrets to note that services will not increase. Despite this, KNŻ urges the authorities to boost the existing services by advertising them amongst the young generation.”

Malta Developers Association

The developers' lobby said in a statement that during various meetings held with the government during the past weeks, it had put forward proposals to further boost the property market through the reduction of taxes related to sales, both in terms of capital gains and duty on documents.

Under the package, property buyers and sellers will benefit from a cut in capital gains tax. Buyers will have their tax cut from 5% to 1.5%, and sellers will see their tax decrease from 8% to 5%. The rates will apply on the capital value up to €400,000. The reduced rates will apply on all residential property contracts signed until the end of March next year. This measure will cost €32 million.

The MDA’s proposals were accepted in full, it said.  “We are very satisfied that our proposals have been taken up as this will mean that the property and construction sector can continue to help our economic recovery. Our country will be passing through difficult times and with the right incentives we believe that the property market can contribute significantly to kickstart our economy again,” MDA President Sandro Chetcuti said.

MDA Director General Marthese Portelli said that the lowering of property taxes has a two-pronged target. “These incentives will help demand to regain its momentum, benefitting both the buyer and the seller. Property buyers will be in a better position to continue with their plans and afford to buy the property they were after. It will also incentivise developers to invest more in the market and on higher quality and standards,” Portelli said.

The property development and construction sectors were one of the few economic activities which continued to operate and sustain its employees during the crisis without any help given from public coffers, the lobby added.