Belief that subsidies attract investment ‘wrong’ – finance minister

The age of subsidizing companies in the belief this made the Maltese economy more attractive, was over, finance minister Edward Scicluna declared today.

"The belief that companies invest in Malta because we give them money is wrong. Investors want the space where to work, a skilled workforce to employ and easier accessibility to resources," Scicluna said.

Addressing the press in St George's Square, Scicluna said that none of the attractiveness surveys compiled by the IMF or the World Bank listed subsidies as an indicator for attractiveness, apart from the fact that the EU prohibits state aid.

"Investors seek a welcoming environment, they like Malta because of its use of the English language, an airport servicing flights to several destinations and the island's geographical position," Scicluna said.

He said it was for this reason that the government was incentivizing students to continue studying, that training schemes were being provided and that it was committed on the simplification of procedures. 

"Businesses tell us to remove the obstacles and let them work. And this is what we are doing," he said.

Budget critics have argued that while it addresses the distribution of wealth, there was nothing, or very few, which incentivised the creation of workplaces. The Opposition has argued that for people to join the work forces, places of work must be available.

But Scicluna is adamant that "the demand will come".

"We are preparing the supply. Investors come to Malta but they don't find the personnel to work with," he said.

The minister also declared that those who dubbed the budget "an election budget" in preparation for the EP elections "failed to understand the budget".

"This budget is about fiscal consolidation and respecting the financial framework we have to work with. We have an expenditure ceiling we have to adhere to and it is important that all ministers keep to the budgets they have been allocated," he warned.

But only last week, the European Commission issued its autumn forecast projecting a 3.4% deficit against the 2.7% projected by the government.

Scicluna's reaction was however upbeat, describing the Commission's report "a good advert" for Malta. He was referring to the Commission's description of Malta, "the wind in the sails has grown stronger".

"Since March, The European Commission is seeing a better future for Malta. It is projecting an economic growth higher than ours. But the message is also clear... If we don't respect our estimates and control our spending, there will be risks. It takes nothing to spend €40 million, reaching a 3.4% deficit," he said.