Update 3 | Labour leader says ‘letting business work’ will be party’s economic roadmap

Labour leader Joseph Muscat gave his audience of businesspeople and entrepreneurs a heartening message today, saying a new Labour government would abide by a 'guideline' to "let business do its job".

Having heard several members of various business lobbies complain of red tape and the effects of government-induced costs on competitiveness, no call was greater than that to let business go about its business of making money.

"The plea that has emerged from this congress is very clear: leave us alone to work," Muscat said. "What entrepreneurs want are not favours, schemes or changes, but the ability to work and generate growth," Muscat said.

The Labour leader said he will be proposing this guideline as the base of Labour's economic policy.

"There is nothing different from what we envisage, to what was said today," Muscat said.

Referring to all previous speakers during the Labour business forum, Muscat's speech was a nod of approval to all represented businesspeople.

"Retailers cannot be treated as second-class investors. Our roadmap will bear this principle. Tourism will always be a sector that we will push forward, because it's this sector's profits that are first trickle down in the economy. Construction cannot be left on its own and we need to support it."

Muscat said Labour's congress was a listening exercise for politicians, letting entrepreneurs "as the experts" do the talking. "Your message has been received well and clear. We will leave you to work."

Muscat also pledged a war on red tape, concurring with previous observations that more bureaucracy encouraged corruption. "Some confuse bureaucracy with accountability. But increasing papers is not a way of keeping track."

In his speech, the president of Malta's hoteliers' lobby Tony Zahra has made a plea for a bi-partisan national council that can tackle the issue of Enemalta's long-term debt, now well into €600 million.

Zahra, who yesterday unveiled the MHRA's latest positive figures for tourism but lamented the pressure of energy inflation on their revenues, said solving Enemalta's debt would require a national effort.

"Energy is an important element in our business, and I spend a lot of time trying to understand how we got to this 'not so nice' place today... Enemalta has suffered from a lack of long-term vision and it now must be taken out of the political equation and be tackled nationally," Zahra said.

"It's too important to be the subject of continuous bickering or political sniping. Enemalta could bring Malta to its knees."

Zahra said both parties should execute a long-term plan to make Enemalta a dynamic and efficient business through a national council.

"It's not easy to get Enemalta out of politics. Make no mistake. But if we don't change the model the cost to Malta will be very high indeed."

Zahra also called on finance minister Tonio Fenech to reduced VAT for hotels and restaurants from 7% to 5%. "If he thinks the 2% difference can be recouped by raising room prices, the finance minister is wrong... over the last years, this industry has lost €10 million and Mr Government is taking too much out of his industry, €30 out of every €100."

On his part, Joseph Muscat said energy was being ignored by the government, saying consumers were paying for a polluting power station that now must be converted to gas.

Muscat said raising wages could not be the solution to energy inflation. "Utility bills impinge on the quality of life of our families. It brings about calls for higher wages. But entrepreneurs wouldn't be in a position to increase the wages because it wouldn't reflect productivity, landing us in a vicious circle."

A well-attended business forum that kick-started Labour's national congress today at the Grand Hotel Excelsior heard Chemimart entrepreneur Reginald Fava call on politicians to give business "the importance it deserves", while several other businessmen complained about bureacracy and red tape. Fava even called the Malta Environment and Planning Authority "a national blight" that made investors wait for years for permits and making them lose thousands in money.

Fava, a former president of the Chamber of Commerce and for 50 years a leader in the medicinal imports business, said retailers were the pulse of the economy. "The retail sector in Malta employs 33,000, of which 11,000 are part-timers. Manufacturing, in comparison, employs 23,000, restaurants and hotels 20,000 and the financial sector employs 7,700," Fava said.

But the business leader also took time to complain that despite the enormity of retail trade in the Maltese economy, the business was "the most mistreated of all".

"The majority of businesses are SMEs, and many view this sector as the one most prone to wanting to rip customers off and evade their taxes. It's the most mistaken of impressions. This sector has never been given its appropriate attention by politicians, a practical example being the many visits that take place at factories but not one at a retail store," Fava said.

Malta has had a small business minister in the form of a parliamentary secretary since the 1990s.

On the other hand, Toly Products deputy chief executive William Wait spoke favourably of governmental assistance during the financial crisis.

He however made a proviso about the positive work being hindered by "excessive costs manufacturers are forced to pay", Wait, whose company produces plastic packaging components for cosmetic products, said.

"We are faced with rising costs from all sides, including the service charge for factories. Maltese manufacturers do not have consumers close to them, so costs such as the service charge and rent should be lower than our European counterparts'.

"Our competitors in mainland Europe do not face the 'long distance consumers' problem as much as we do. This affects our competitiveness: an extra cost not faced by our competitors," Wait said.

Wait also said that manufacturing jobs were being lost worldwide, and that similar developments in Malta were a reflection of global trends and technological advancement.

Wait did however say Maltese manufacturing had a future, saying Maltese manufacturers as at July 2012 were working at 77% of capacity. "We need to nurture and grow the existing firms and create clusters around them. Toly was successful with the clustering method. We need to target new niche, high, value-added manufacturing, encourage research and development and train our workforce for future challenges."

Wait also made a call to have more children at primary level exposed to entrepreneurship, appealing for profit not to be rendered as a 'sinful' activity.

"Industrialists shouldn't be demonised: making profit and investing is not a sin. Eliminate bureaucracy. The focus is always competitiveness. Policymakers should stop thinking that the smallest cost will not affect competitiveness."

Wait said a Toly sub-contractor's request to increase factory space from 300 to 600 square metres was met with a 799% rent increase, prior to the revision of the service charges, and then illustrated examples of bureaucracy curbing business enthusiasm: "I know of an investor who wanted to develop his business in Albert Town but spent four years running after the authorities, and when he gave up he went to Hungary where he is now employing 100 workers."

Also invited to speak was Malta Developers Association president Sandro Chetcuti, who made his case for the importance of the building industry and the need to stimulate the depresses construction by taking on empty housing.

"There is a lot of derelict housing that must be developed, even for safety reasons. But there is too much bureaucracy, even to fix up a rubble wall. We need to be left to work," Chetcuti said. "Why create obstacles for somebody who wants to invest?"

His calls for less red tape were echoed by Reggie Fava, as well as Endeavour's Vince Bezzina, an IT-finance entrepreneur: "All we're asking for is to leaves alone to work, get out of our way. Red tape brings corruption," he said to the audience's applause.

The former chairman of the Malta Drydocks, John Cassar White - also a close economic confidant for the Labour Party - called for more apprenticeship schemes in a bid to prepare students for the markets' needs.

Malta's financial services sector was given a positive picture by Grant Thornton's head of audit and assurance Mark Bugeja.

"There is no doubt the sector has grown but we still need to catch up with our EU counterparts, especially in gross value-added per hour. Our offshore centre perception, which is untrue, must be addressed as soon as possible."

Bugeja said banking and insurance had seen an aggregate dip in 2011 but an increase in domestic banking, and a growth in investment and insurance operators.

"It's the fastest growing sector, continuing to grow in the recession and unlike the rest of the EU, it contributed to a third of the country's economy with the best wages and 95% of employment being full-time. Salaries have been increasing since 1995, irrespectively of the gross value-added of this sector, which in itself could pose a problem in the future."